QuickLinks-- Click here to rapidly navigate through this documentAs filed with the Securities and Exchange Commission on
May 16, 2002September 1, 2004Registration No. 333-
================================================================================SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-----------------FORM S-3
REGISTRATION STATEMENTUnder
THE SECURITIES ACT OF 1933-----------------ACE LIMITED
(Exact
(Exact name of registrant as specified in its charter)Cayman Islands 98-0091805 (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation) ACE Global Headquarters Ed Ota, Esq. 17 Woodbourne Avenue ACE INA Holdings Inc. Hamilton, HM 08 Bermuda Two Liberty Place (441) 295-520 1601 Chestnut Street (Address, including zip Philadelphia, code, and telephone Pennsylvania 19103 number, including (215) 640-1000 area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service)
Cayman Islands
98-0091805(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
ACE Global Headquarters
Ed Ota, Esq.17 Woodbourne Avenue ACE INA Holdings Inc. Hamilton, HM 08, Bermuda Two Liberty Place (441) 295-5200 1601 Chestnut Street (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Philadelphia, Pennsylvania 19103
(215) 640-1000
(Name, address, including zip code, and telephone number, including area code, of agent for service)ACE INA HOLDINGS INC.
(Exact
(Exact name of registrant as specified in its charter)Delaware 58-2457246 (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation) Two Liberty Place Ed Ota, Esq. 1601 Chestnut Street ACE INA Holdings Inc. Philadelphia, Two Liberty Place Pennsylvania 19103 1601 Chestnut Street (215) 640-1000 Philadelphia, (Address, including zip Pennsylvania 19103 code, and telephone (215) 640-1000 number, including area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service)
Delaware 58-2457246 (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
Two Liberty Place
1601 Chestnut Street
Philadelphia, Pennsylvania 19103
(215) 640-1000
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)
Ed Ota, Esq.
ACE INA Holdings Inc.
Two Liberty Place
1601 Chestnut Street
Philadelphia, Pennsylvania 19103
(215) 640-1000
(Name, address, including zip code, and telephone number, including area code, of agent for service)ACE CAPITAL TRUST III
ACE CAPITAL TRUST IV(Exact
(Exact name of registrant as specified in its charter)Delaware Each Applied For (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation) c/o ACE INA Holdings Inc. Ed Ota, Esq. Two Liberty Place ACE INA Holdings Inc. 1601 Chestnut Street Two Liberty Place Philadelphia, 1601 Chestnut Street Pennsylvania 19103 Philadelphia, (215) 640-1000 Pennsylvania 19103 (Address, including zip (215) 640-1000 code, and telephone (Name, address, including number, including zip code, and telephone area code, of number, Registrant's principal including area code, of executive offices) agent for service) -----------------
Delaware Each Applied For (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
c/o ACE INA Holdings Inc.
Two Liberty Place
1601 Chestnut Street
Philadelphia, Pennsylvania 19103
(215) 640-1000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Ed Ota, Esq.
ACE INA Holdings Inc.
Two Liberty Place
1601 Chestnut Street
Philadelphia, Pennsylvania 19103
(215) 640-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)Copies to:
Peter N. Mear Edward S. Best L. Markus Wiltshire General Counsel and Mayer, Brown, Rowe & Maw Sidley, Austin, Brown & Secretary 190 South LaSalle Street Wood LLP ACE Limited Chicago, Illinois 875 Third Avenue ACE Global Headquarters 60603-3441 New York, New York 10022 17 Woodbourne Avenue (312) 782-0600 (212) 906-2000 Hamilton, HM 08, Bermuda (441) 295-5200 -----------------
Peter N. Mear Edward S. Best General Counsel and Secretary
ACE Limited
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton, HM 08, Bermuda
(441) 295-5200Mayer, Brown, Rowe & Maw LLP
190 South LaSalle Street
Chicago, Illinois 60603-3441
(312) 782-0600Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.
[_]oIf any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.
[X]ýIf this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[_]oIf this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
[_]oIf delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
[_] ================================================================================o CALCULATION OF REGISTRATION FEE
================================================================================
Proposed maximum Proposed maximum aggregate Title of Each Class of Amount to be aggregate offering offering Amount of Securities to be Registered (1) Registered(1)(2) price per unit (2) price (2) registration fee - ---------------------------------------------------------------------------------------------------------Ordinary Shares of ACE Limited (3)... Preferred Shares of ACE Limited (4).. Depositary Shares of ACE Limited (5). Debt Securities of ACE Limited (6)... Warrants to Purchase Ordinary or Preferred Shares of ACE Limited.... Warrants to Purchase Debt Securities of ACE Limited..................... Stock Purchase Contracts of ACE Limited............................ Stock Purchase Units of ACE Limited (7)................................ Debt Securities of ACE INA Holdings Inc. (6)........................... Preferred Securities of ACE Capital Trust III.......................... Preferred Securities of ACE Capital Trust IV........................... Guarantee of Debt Securities of ACE INA Holdings Inc. by ACE Limited (8)................................ Guarantee of Preferred Securities of ACE Capital Trust III and ACE Capital Trust IV by ACE Limited and certain backup undertakings (9) ------------------------------------------------------------------- Total................................ $1,500,000,000 100% $1,500,000,000 $138,000(10) - ---------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------
Title of Each Class of Securities to be Registered(1) Amount to be Registered(1)(2) Proposed maximum aggregate offering price per unit (2) Proposed maximum aggregate offering price(2) Amount of registration fee Ordinary Shares of ACE Limited(3)
Preferred Shares of ACE Limited (4)
Depositary Shares of ACE Limited (5)
Debt Securities of ACE Limited (6)
Warrants to Purchase Ordinary or Preferred Shares of ACE Limited
Warrants to Purchase Debt Securities of ACE Limited
Stock Purchase Contracts of ACE Limited
Stock Purchase Units of ACE Limited (7)
Debt Securities of ACE INA Holdings Inc. (6)
Preferred Securities of ACE Capital Trust III
Preferred Securities of ACE Capital Trust IV
Guarantee of Debt Securities of ACE INA Holdings Inc. by ACE Limited (8)
Guarantee of Preferred Securities of ACE Capital
Trust III and ACE Capital Trust IV by ACE
Limited and specified backup undertakings (9)Total $1,075,000,000 100% $1,075,000,000 $136,203
- (1)
- An indeterminate number or amount of
Ordinary Shares, Preferred Shares, Depositary Shares, Debt Securities, Warrants, Stock Purchase Contractsordinary shares, preferred shares, depositary shares, debt securities, warrants, stock purchase contracts andStock Purchase Unitsstock purchase units of ACE Limited,Debt Securitiesdebt securities of ACE INA Holdings Inc. andPreferred Securitiespreferred securities of ACE Capital Trust III and ACE Capital Trust IV as may from time to time be issued at indeterminate prices, with an aggregate initial offering price not to exceed$1,500,000,000$1,075,000 or the equivalent thereof in foreign currencies or currency units, or if anyDebt Securitiesdebt securities are issued with original issue discount,suchthe greater amount as shall result in an aggregate offering prices of$1,500,000,000.$1,075,000. CertainDebt Securitiesdebt securities of ACE INA Holdings Inc. may be issued and sold to either or both of ACE Capital Trust III or ACE Capital Trust IV in connection with the issuance ofPreferred Securitiespreferred securities by either or both of the ACE Trusts, in whicheven,event, theseDebt Securitiesdebt securities may later be distributed to the holders of the applicablePreferred Securitiespreferred securities upon a dissolution of ACE Capital Trust III and/or ACE Capital Trust IV and the distribution of the ACE Trust's assets. Securities registered, referred to as the offered securities, may be sold separately, together or as units with other offered securities.- (2)
- Estimated solely for the purpose of calculating the registration fee. Pursuant to Rule 457(o) of the rules and regulations under the Securities Act of 1933, which permits the registration fee to be calculated on the basis of the maximum offering price of all the securities listed, the table does not specify by each class information as to the amount to be registered, proposed maximum offering price per unit or proposed maximum aggregate offering price. Unless otherwise indicated in an amendment to this filing, no separate consideration will be received for ordinary shares, preferred shares or debt securities that are issued by ACE Limited or ACE INA Holdings Inc. upon conversion or exchange of
Debt Securities, Preferred Sharesdebt securities, preferred shares orDepositary Sharesdepositary shares registered under thisRegistrationregistration statement.- (3)
- Also includes
suchthe presently indeterminate number ofOrdinary Shares as may be issued be ACE Limited (a) upon conversion of or exchange for any Debt Securities or Preferred Shares that provide for conversion or exchange into Ordinary Shares, (b) upon exercise of Warrants to purchase Ordinary Shares or (c) pursuant to Stock Purchase Contracts. (4) Also includes such presently indeterminate number of Preferred Sharesordinary shares as may be issued by ACE Limited (a) upon conversion of or exchange for anyDebt Securitiesdebt securities or preferred shares that provide for conversion or exchange intoPreferred Shares,ordinary shares, (b) upon exercise of warrants to purchasePreferred Sharesordinary shares or (c) pursuant toStock Purchase Contracts.stock purchase contracts.- (4)
- Also includes the presently indeterminate number of preferred shares as may be issued by ACE Limited (a) upon conversion of or exchange for any debt securities that provide for conversion or exchange into preferred shares, (b) upon exercise of warrants to purchase preferred shares or (c) pursuant to stock purchase contracts.
- (5)
- To be represented by depositary receipts representing an interest in all or a specified portion of an
Ordinary Shareordinary share orPreferred Share.preferred share.- (6)
- Subject to
Notenote (1), an indeterminate principal amount ofDebt Securities,debt securities, which may be senior or subordinated.- (7)
- Each
Stock Purchasestock purchase unit consists of (a) aStock Purchase Contractstock purchase contract under which the holder, upon settlement, will purchase an indeterminate number ofOrdinary Sharesordinary shares and (b) a beneficial interest inDebt Securities, Preferred Securitiesdebt securities, preferred securities or debt obligations of third parties purchased with the proceeds from the sale of theStock Purchase Units.stock purchase units. Each beneficial interest will be pledged to secure the obligation of the holder to purchase theOrdinary Shares.ordinary shares. No separate consideration will be received for theStock Purchase Contractstock purchase contract or the related beneficial interests.- (8)
- No separate consideration will be received for the guarantees of the
Debt Securitiesdebt securities issued by ACE INA Holdings Inc.- (9)
- No separate consideration will be received for the guarantees of the
Preferred Securitiespreferred securities issued by ACE Capital Trust III or ACE Capital Trust IV. The guarantees include the rights of holders of the preferred securities under the guarantees andcertainbackup undertakings, comprised of obligations of ACE Limited under the ACE INA subordinated indenture and any supplemental indentures thereto and under the applicable trust agreement to providecertainindemnities in respect of, and be responsible for certain costs, expenses, debts and liabilities of, each of ACE Capital Trust III and ACE Capital Trust IV, each as described in this registration statement. All obligations under the applicable trust agreement, including indemnity obligations, are included in the back-up undertakings.(10) Pursuant to Rule 457(p) under the Securities Act of 1933, the amount of the registration fee payable hereunder has been offset by $30,438.74 of filing fees paid in respect of $127,358,750 of unsold securities previously registered under the registrant's Registration Statement on FormPURSUANT TO RULE 429, THE PROSPECTUS INCLUDED AS PART OF THIS REGISTRATION STATEMENT ALSO RELATES TO REGISTRATION STATEMENT ON FORM S-3,
(No. 333-78841). -----------------FILE NO. 333-88482.The registrant hereby amends this
Registration Statementregistration statement onsuchthe date or dates as may be necessary to delay its effective date until theRegistrantregistrant shall file a further amendment that specifically states that thisRegistration Statementregistration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until thisRegistration Statementregistration statement shall become effective onsuchthe date as theCommission,commission, acting pursuant tosaidSection 8(a), may determine.================================================================================TheSUBJECT TO COMPLETION DATED SEPTEMBER 1, 2004
PROSPECTUS
This information in this
prospectus supplement and accompanyingprospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectussupplement and accompanying prospectus areis not an offer to sellthese securities and are not soliciting annor does it seek any offer to buy these securities in anystatejurisdiction where the offer or sale is not permitted.SUBJECT TO COMPLETION, DATED May 16, 2002. PROSPECTUS $1,500,000,000$1,500,000,000
ACE Limited
Ordinary Shares, Preferred Shares, Depositary Shares, Debt Securities,
Warrants to Purchase Ordinary Shares,
Warrants to Purchase Preferred Shares,
Warrants to Purchase Debt Securities, Stock Purchase Contracts and
Stock Purchase Units
-----------------ACE INA Holdings Inc.
Debt Securities
Fully and Unconditionally Guaranteed by
ACE Limited
-----------------ACE Capital Trust III
ACE Capital Trust IV
Preferred Securities
Fully and UnconditionallyGuaranteed to the Extent Provided in this Prospectus by
ACE Limited
ACE, ACE INA or the applicable ACE Trust will provide the specific terms of these securities in supplements to this prospectus. The prospectus supplements may also add, update or change information contained in this prospectus. You should read this prospectus and any supplements carefully before you invest.
-----------------ACE's ordinary shares are traded on the New York Stock Exchange under the symbol "ACE."
ACE's principal executive offices are located at: ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton, HM 08, Bermuda, telephone number: (441) 295-5200. The principal executive offices of ACE INA and each of the ACE Trusts are located at: Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania 19103, telephone number (215) 640-1000. -----------------Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This prospectus may not be used to consummate sales of offered securities unless accompanied by a prospectus supplement.
The date of this prospectus is ,
2002.2004.
About This Prospectus
2
ACE Limited
2
ACE INA
3
The ACE Trusts
3
Use of Proceeds
4
Ratio of Earnings to Fixed Charges and Preferred Share Dividends of ACE
4
General Description of the Offered Securities
5
Description of ACE Capital Stock
6
Description of the Depositary Shares
20
Description of ACE Debt Securities
22
Description of ACE INA Debt Securities and ACE Guarantee
34
Description of the Warrants to Purchase Ordinary Shares or Preferred Shares
51
Description of the Warrants to Purchase Debt Securities
53
Description of Preferred Securities
54
Description of Preferred Securities Guarantees
65
Description of Stock Purchase Contracts and Stock Purchase Units
70
Plan of Distribution
71
Legal Opinions
73
Experts
73
Enforcement of Civil Liabilities Under United States Federal Securities Laws
74
Where You Can Find More Information
75You should rely only on the information contained or incorporated by reference in this prospectus or any supplement. None of ACE, ACE INA or either ACE Trust has authorized anyone else to provide you with different information. ACE, ACE INA and the ACE Trusts are offering these securities only in states where the offer is permitted. You should not assume that the information in this prospectus or any supplement is accurate as of any date other than the date on the front of those documents. ACE's business, financial condition, results of operations and prospects may have changed since that date.
Except as expressly provided in an underwriting agreement, no offered securities may be offered or sold in the Cayman Islands or Bermuda,
(althoughalthough offers may be made to persons in Bermuda from outsideBermuda) and offersBermuda. Offers may only be accepted from persons resident in Bermuda, for Bermuda exchange control purposes, wheresuchthese offers have been delivered outside of Bermuda. Persons resident in Bermuda, for Bermuda exchange control purposes, may require the prior approval of the Bermuda Monetary Authority in order to acquire any offered securities.In this prospectus, references to "dollars" and "$" are to United States currency, and the terms "United States" and "U.S." mean the United States of America, its states, its territories, its possessions and all areas subject to its jurisdiction.
This prospectus is part of a registration statement that ACE, ACE INA and the ACE Trusts filed with the Securities and Exchange Commission utilizing a "shelf" registration process, relating to the ordinary shares, preferred shares, depositary shares, debt securities, debt securities guarantee, warrants, stock purchase contracts, stock purchase units, preferred securities and preferred securities guarantees described in this prospectus. Under this shelf process, any or all of ACE, ACE INA and the ACE Trusts may sell the securities described in this prospectus in one or more offerings up to
a totalan aggregate initial offering price by all of ACE, ACE INA and the ACE Trusts of $1,500,000,000. This prospectus provides you with a general description of the securities ACE, ACE INA or an ACE Trust may offer. This prospectus does not contain all of the information set forth in the registration statement as permitted by the rules and regulations of the SEC. For additional information regarding ACE, ACE INA, the ACE Trusts and the offered securities, please refer to the registration statement. Each time ACE, ACE INA or an ACE Trust sells securities, it will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the heading "Where You Can Find More Information."ACE Limited is
athe Bermuda-based holding company of the ACE Group of Companies, incorporated with limited liabilityinunder the Cayman Islandswhich maintainsCompanies Law. ACE opened its business office in Bermuda in 1985 when it was initially incorporated and continues to maintain its business office in Bermuda. Throughourits various operating subsidiaries,we provideACE provides a broad range of insurance and reinsurance products to insureds worldwide through operations in the United States and almost 50 other countries.In addition, we provide funds at Lloyd's of London, throughAt June 30, 2004, ACEGlobal Markets, to support underwriting capacity for Lloyd's syndicates managed by Lloyd's managing agencies which are wholly owned subsidiaries of ACE. At December 31, 2001, wehad total assets of$37.1approximately $53.65 billion and shareholders' equity of$6.1approximately $9.22 billion.We derive ourACE derives its revenue principally from premiums, fees and investment income.We operateACE operates through four business segments:
Insurance--
- •
- Insurance—North
America, Insurance--Overseas General,American;- •
- Insurance—Overseas General;
- •
- Global Reinsurance; and
- •
- Financial
Products.Services.ACE was incorporated in August 1985. ACE's principal executive offices are located at ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton, HM 08, Bermuda, and its telephone number is (441) 295-5200.
ACE INA is an indirect subsidiary of ACE that was formed in December 1998 to acquire and hold the international and domestic property and casualty businesses
ofthat ACE acquired from CIGNACorporation.Corporation in 1999. ACE INA is a U.S. holding company and has no direct operations. ACE INA's principal asset is the capital stock of its insurance subsidiaries.The principal executive offices of ACE INA are located at Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania 19103, and its telephone number is (215) 640-1000.
2ACE Capital Trust III is a statutory
businesstrust created under Delaware law pursuant to (1) a trust agreement executed by ACE, as original sponsor of the ACE Trust, and the ACETrusteestrustees for the ACE Capital Trust III and (2) the filing of a certificate of trust with the Delaware Secretary of State on May 19, 1999. On August 5, 1999, ACE assigned its rights and obligations as sponsor of ACE Capital Trust III to ACE INA. ACE Capital Trust IV is a statutorybusinesstrust created under Delaware law pursuant to (1) a trust agreement executed by ACE INA, as sponsor of the ACE Capital Trust IV, and the ACETrusteestrustees for the ACE Trust and (2) the filing of a certificate of trust with the Delaware Secretary of State on May 14, 2002. Each trust agreement will be amended and restated in its entirety substantially in the form filed as an exhibit to the registration statement of which this prospectus forms a part. Each restated trust agreement will be qualified as an indenture under the Trust Indenture Act of 1939. Each ACE Trust exists for the exclusive purposes of:.
- •
- issuing and selling the preferred securities and common securities that represent undivided beneficial interests in the assets of the ACE Trust,
.- •
- using the gross proceeds from the sale of the preferred securities and common securities to acquire a particular series of ACE INA subordinated debt securities, and
.- •
- engaging in only those other activities necessary, convenient or incidental to the issuance and sale of the preferred securities and common securities and purchase of the ACE INA subordinated debt securities.
ACE INA will directly or indirectly own all of the common securities of each ACE Trust. The common securities of an ACE Trust will rank equally, and payments will be made thereonpro rata, with the preferred securities of that ACE
Trust, except that,Trust. However, if an event of default under the restated trust agreement resulting from an event of default under the ACE INA subordinated debt securities held by the ACE Trust has occurred and is continuing, the rights of the holder of the common securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise will be subordinated to the rights of the holders of the preferred securities. Unless otherwise disclosed in the applicable prospectus supplement, ACE INA will, directly or indirectly, acquire common securities in an aggregate liquidation amount equal to at least 3% of the total capital of each ACE Trust. Each of the ACE Trusts is a legally separate entity, and the assets of one are not available to satisfy the obligations ofany oftheothers. Unlessother.The following is true for each ACE Trust unless otherwise disclosed in the related prospectus
supplement,supplement:
- •
- each ACE Trust has a term of approximately 55 years but may dissolve
earlier as provided in the restated trust agreement of the ACE Trust. Unless otherwise disclosed in the applicable prospectus supplement,earlier;- •
- each ACE Trust's business and affairs will be conducted by the trustees, referred to collectively as the ACE
Trustees,trustees, appointed by ACE INA, as thedirect or indirectholder of all of the commonsecurities.securities;- •
- ACE INA, as the
direct or indirectholder of the common securities, will be entitled to appoint, remove or replace any of, or increase or reduce the number of, the ACETrustees of an ACE Trust, subject totrustees;
- •
- the
terms of the restated trust agreement of the ACE Trust. Theduties and obligations of the ACETrustees of an ACE Trusttrustees will be governed by the restated trust agreement of the ACETrust. Unless otherwise disclosed in the related prospectus supplement,Trust;- •
- two of the ACE
Trustees,trustees, referred to as theAdministrative Trustees,administrative trustees, of each ACE Trust will be persons who are employees or officers of or affiliated with ACEINA. OneINA;- •
- one ACE
Trusteetrustee of each ACE Trust will be a financial institutionreferred to as the Property Trustee,that is not affiliated with ACE INA and has a minimum amount of combined capital and surplus of not less than $50,000,000,whichand is referred to as the property trustee. The property trustee shall act as both the property trustee and as indenture trustee for the purposes of compliance with the provisions of the Trust IndentureAct, pursuant to the terms set forth in the applicable prospectus supplement. In addition,Act;- •
- one ACE
Trusteetrustee of each ACE Trust,(whichwhich may be theProperty Trustee,property trustee if it otherwise meets the requirements of applicablelaw)law, will have its principal place of business or reside in the State of Delaware and is referred to as the DelawareTrustee.trustee;- •
- ACE will pay all fees and expenses related to each ACE Trust and the offering of the preferred securities and common securities.
The office of the Delaware
Trusteetrustee for each ACE Trust in the State of Delaware is located at c/o Bank One Delaware, Inc., Three Christina Centre, 201 North Walnut Street, Wilmington, Delaware 19801. The principal executive offices for each of the ACE Trusts are located at c/o ACE INA Holdings Inc., Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania 19103. The telephone number of each of the ACE Trusts is (215) 640-1000.3Unless otherwise disclosed in the applicable prospectus supplement, ACE and ACE INA intend to use the net proceeds from the sale of the offered securities for general corporate purposes, which may include repayment of indebtedness, expansion of our net underwriting capacity and acquisitions. Each ACE Trust will invest all proceeds received from the sale of its preferred securities and common securities in a particular series of subordinated debt securities of ACE INA. ACE INA
whichwill usesuchthese funds for general corporate purposes, which may include repayment of indebtedness, expansion of our net underwriting capacity and acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED SHARE DIVIDENDS OF ACEFor purposes of computing the following ratios, earnings consist of net income before income tax expense,
(excludingexcluding interest costscapitalized)capitalized, plus fixed charges to the extent thatsuchthese charges are included in the determination of earnings. Fixed charges consist of interest costs,(includingincluding interest costscapitalized)capitalized, plus one-third of minimum rental payments under operating leases,(estimatedwhich are estimated by management to be the interest factor ofsuch rentals).
Three Months Three Months Ended Fiscal Year Ended Ended Year Ended March 31, December 31, December 31, September 30, ------------ ----------------- ------------ ------------- 2002 2001 2001 2000 1999 1998 1997 1998 1997 ---- ---- ---- ---- ---- ----- ----- ----- -----Ratio of Earnings to Fixed Charges. 5.32 3.82 (1) 3.6x 4.1x 48.4x 72.5x 22.4x 40.7x Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends........................ 4.84 3.55 (1) 3.6x 4.1x 48.4x 72.5x 22.4x 40.7x- --------these rentals.
Six Months Ended
June 30,Fiscal Year Ended
December 31,2004 2003 2002 2001 2000 1999 Ratio of Earnings to Fixed Charges 11.8 x 9.2 x (1 ) (2 ) 3.6 x 4.1 x Ratio of Earnings to Combined Fixed Charges and Preferred Share Dividends 9.7 x 7.9 x (1 ) (2 ) 3.4 x 4.1 x
- (1)
- Earnings for the year ended December 31, 2002 were insufficient to cover fixed charges by $39 million and combined fixed charges and preferred share dividends by $65 million.
- (2)
- Earnings for the year ended December 31, 2001 were insufficient to cover fixed charges by
$17.4$237 million and combined fixed charges and preferred share dividends by $263 million.The ACE Trusts had no operations during the periods set forth above.
4
GENERAL DESCRIPTION OF THE OFFERED SECURITIESACE may, from time to time, offer under this prospectus, separately or together:
.
- •
- ordinary shares,
.- •
- preferred shares, which may be represented by depositary shares as described below,
.- •
- unsecured senior or subordinated debt securities,
.- •
- warrants to purchase ordinary shares,
.- •
- warrants to purchase preferred shares,
.- •
- warrants to purchase debt securities of ACE,
.- •
- stock purchase contracts to purchase ordinary shares, and
.- •
- stock purchase units, each representing ownership of a stock purchase contract and, as security for the holder's obligation to purchase ordinary shares under the stock purchase contract, any
of (1)of:
- •
- debt securities of ACE INA, fully and unconditionally guaranteed by
ACE, (2)ACE;- •
- debt obligations of third parties, including U.S. Treasury
securitiessecurities; or(3)- •
- preferred securities of an ACE Trust.
ACE INA may from time to time offer unsecured senior or subordinated debt securities, which will be fully and unconditionally guaranteed by ACE.
Each of ACE Capital Trust III and ACE Capital Trust IV may offer preferred securities representing undivided beneficial interests in their respective assets, which will be fully and unconditionally guaranteed to the extent described in this prospectus by ACE.
The aggregate initial offering price of the securities offered
securitiesby ACE, ACE INA and the ACE Trusts will not exceed $1,500,000,000.
DESCRIPTION OF ACE CAPITAL STOCKThe following is a summary of
certainthe material provisions of ACE'sMemorandummemorandum ofAssociationassociation andArticlesarticles ofAssociation. Because this summary is not complete, youassociation. You should refer to ACE'sMemorandummemorandum andArticlesarticles for complete information regardingthetheir provisions, copies ofthe Memorandum and Articles, including the definitions of some of the terms used below. Copies of the Memorandum and Articleswhich are incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.Whenever particular sections or defined terms of the Memorandum and Articles are referred to, such sections or defined terms are incorporated herein by reference, and the statement in connection with which such reference is made is qualified in its entirety by such reference.ACE's authorized share capital consists of two classes of shares:
(1)
- •
- 500,000,000 ordinary shares, par value $0.041666667 per share, of which
261,897,433283,604,445 ordinary shares were issued and outstanding as ofMarch 31, 2002,June 30, 2004; and(2)- •
- 20,000,000 other shares,
6,000,0002,300,000 shares of which were issued and outstanding as ofMarch 31, 2002June 30, 2004, as8.25% Cumulative Redeemable Preferred Shares, Series A.7.80% cumulative redeemable preferred shares, series C.Ordinary Shares
TheOur ordinary shares are listed on the New York Stock Exchange under the symbol "ACE."
TheOur ordinary shares currently issued and outstanding are fully paid andnonassessable. Thenonassessable, which means that our ordinary shares are paid for in full at the time they are issued, and, once our ordinary shares are paid for in full, there is no further liability for further assessment or taxation. Any of our ordinary shares offered by a prospectus supplementupon issuance against full consideration,will also be fully paid andnonassessable.nonassessable once they are issued to the purchaser in exchange for the full purchase price.There are no provisions of Cayman Islands law or
the Memorandumour memorandum orthe Articlesarticles which impose any limitation on the rights of our shareholders to hold or vote ordinary shares by reason of their not being residents of the Cayman Islands.5Dividend Rights
After all dividends on
all classes or series ofour preferred shares have been paid or declared and set apart for payment, holders of our ordinary shares are entitled to receivesuchdividends as may be declared from time to time byACE's Boardour board ofDirectors, referred to as the Board,directors in its discretion, out of funds legally availabletherefor.for the payment of dividends.Liquidation
In the event of
anyour dissolution, liquidation or winding,up of ACE,whether voluntary or involuntary,after there shall have been paidwe will first pay or set aside for payment to the holders of any outstanding shares ranking senior totheour ordinary shares,as to distribution on liquidation, dissolution or winding up,the full amounts to which theyshall be entitled,are entitled. After these payments have been paid or set aside, theholdersholder oftheour then outstanding ordinary shares, will be entitled to receive,pro rata, according to the number of ordinary shares registered inthetheir names, any ofsuch shareholders, anyour remaining assetsof ACEwhich remain available fordistribution to its shareholders; provided,distribution. However, if, atsuchthe timeany holderofordinary shares hasour dissolution, liquidation or winding up, you have any outstanding debts, liabilities or engagements to or withACE (whetherus, whether presently payable ornot),not, either alone or jointly with any other person, whether a shareholder or not,(including,including, without limitation, any liability associated with the unpaid purchase price ofsuchour ordinaryshares),shares, the liquidator appointed to overseetheour liquidationof ACEwill deduct the aggregate amount of these debts, liabilities and engagements from the amount payable in respect ofsuchyour ordinaryshares the aggregate amount of such debts, liabilities and engagements andshares. The liquidator will then applysuchthis amount to any ofsuch holder'syour debts, liabilities or engagements to or with ACE,(whetherwhether presently payable ornot).not. The liquidator may distribute to you, in kind,totheholders of the ordinary sharesremaining assets of ACE or may sell, transfer or otherwise dispose of all or any part ofsuchour remaining assets to any other corporation, trust or entity and receive paymentthereforfor our remaining assets in cash, shares or obligations ofsuchthe other corporation, trust or entity or any combinationthereof, andof these. The liquidator may also sell all or part of the considerationsoreceived for the sale of our remaining assets andmaydistributethethis considerationreceivedor any balance or proceedsthereofof this consideration toholders of the ordinary shares.you.Voting Rights
The ArticlesOur articles provide that the quorum required for a general meeting of shareholders is not less than six shareholders present in person or by proxy holding at least 50% of the issued and outstanding shares entitled to vote at
such meeting. Athe meeting, and a quorum for considering a"special resolution"special resolution is 662/3%2/3% of the issued and outstanding shares entitled to vote atsuchthe meeting.Subject to applicable law and any provision of the Articles requiring a greater majority, ACEGenerally, we may, from time to time by specialresolutionresolution:
- •
- alter or amend
the Memorandumour memorandum orArticles;articles;- •
- voluntarily liquidate, dissolve or
windup itswind-up our affairs;- •
- increase
itsour share capital;- •
- consolidate and divide all or any of
itsour share capital;- •
- subdivide the whole or any part of
itsour share capital;- •
- reduce
itsour share capital, any capital redemption reserve fund or any share premium account; or- •
- change
itsour name or alteritsour objects.Each holder of our ordinary shares is entitled to one vote per share on all matters submitted to a vote of shareholders at any
suchmeeting, subject to the 10% voting limitation described below. All matters, including the election of directors, voted upon at any duly held shareholders' meeting will be carried by a majority of the votes cast at the meeting by shareholders represented in person or byproxy, except (1)proxy. However, the following actions, among others, require the approval of at least 662/3% of the outstanding voting shares, voting together as a single class:
- •
- the approval of a merger, consolidation or
amalgamation, oramalgamation;- •
- the sale, lease or exchange of all or substantially all of
theour assets,of ACE, which requires (inin addition to any regulatory or courtapprovals)approvals, and- •
- the
approvalamendment of specific provisions of our articles.In addition, at least 66
2/3% of the outstanding voting shares, voting together as a single class, (2) approval of a special resolution, (3) amendment of certain provisions of the Articles which require the approval of at least 66 2/3% of the outstanding voting shares, voting together as a single class and (4) as otherwise provided in the Articles. A special resolution requires the approval of at least 66 2/3%2/3% of the votes cast bysuchshareholders represented in person or by proxy at a duly convenedmeeting. The Articlesmeeting is required to approve a special resolution.Our articles provide that,
except as otherwise required by law and subject to the rights of the holders of any class or series of shares issued by ACE having a preference over the ordinary shares as to dividends or upon liquidation to elect directors in specified circumstances,generally, extraordinary general meetings of ACE's shareholders may be called only by(1) thedirectors or(2)at the request in writing of shareholders owning at least 25% of the outstanding shares generally entitled to vote.6Each ordinary share has one
vote, except that,vote. However, if and so long as, the"Controlled Shares"controlled shares of any person constitute 10% or more of the issued ordinary shares, the voting rights with respect tothethese controlled sharesowned by such personwill be limited, in the aggregate, to a voting power of approximately 10%, pursuant to a formula specified inthe Articles. "Controlled Shares"our articles. The term controlled shares generally means(1)all shares of ACE directly, indirectly, constructively orconstructivelybeneficially owned by any person,within the meaning of Section 958 of the U.S. Internal Revenue Code of 1986, as amended, referred to in this prospectus as the Code, and (2) all shares of ACE directly, indirectly or beneficially owned by such person within the meaning of Section 13(d) of the Exchange Act (includingincluding any shares owned by a group ofpersons as so defined and including any shares that would otherwise be excluded by the provisions of Section 13(d)(6) of the Exchange Act). Thepersons.Our ordinary shares have noncumulative voting rights, which means that the holders of a majority of
theour ordinary shares may elect all ofACE'sour directors, and, insuchthis event, the holders of the remaining shares will not be able to elect any directors.The BoardOur board is presently divided into three classes, two of which havefourfive directors and one of which hasfive directors.six directors, which we refer to as a classified board. At present, each class is elected for a three-year term, with the result that shareholders will not vote for the election of a majority of directors in any single year. Directors may be removed without cause only by the affirmative vote of the holders of at least 662/3%2/3% of the outstanding shares generally entitled to vote, voting together as a single class, cast at a meeting of shareholders. Directors may be removedwith cause by the affirmative vote of the holders of a majority of the votes cast at a meeting of shareholders.
ThisOur classified board
provisioncould prevent a party who acquires control of a majority of the outstanding voting power from obtaining control ofthe Boardour board until the second annual shareholders meeting following the date the acquiror obtains the controlling share interest.The classified board provisionThis could have the effect of discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of ACE and couldthusincrease the likelihood that incumbent directors will retain their positions.Preemptive Rights
No holder of ordinary shares, solely by reason of
suchholding our ordinary shares, has or will have any preemptive right to subscribe to any additional issue of shares of any class or series nor to any security convertible intosuchordinary shares.Other Classes or Series of Shares
The ArticlesOur articles generally authorize the directors to create and issue one or more other classes or series of shares and to determine the rights and preferences of each
suchclass or series. Among other rights, for each class or series,to the extent permitted by the Articles and applicable law. Among other rights,the directors may determine:.
- •
- the number of shares and the designation of
thatthe class orseries and the distinctive designation thereof; .series;- •
- the voting powers, full or limited, if any, of the
shares of that class or series; .shares;- •
- the dividend rights of the shares,
of that class or series,whether dividends will be cumulative and, if so, from which date or dates and the relative rights or priority, if any, of payment of dividends on shares,of that class or series andas well as any limitations, restrictions or conditions on the payment of dividends;.- •
- the relative amounts, and the relative rights or priority, if any, of payment in respect of shares,
of that class or series,whichthe holders of the shares of that class or seriesyou will be entitled to receive upon any liquidation, dissolution or winding up of ACE;.- •
- the terms and conditions,
(includingincluding the price or prices, which may vary under different conditions and at different redemptiondates),dates, if any, upon which all or any part of the sharesof that class or seriesmay be redeemed,andas well as any limitations, restrictions or conditions onsuch redemption; .redemption of the shares;- •
- the terms, if any, of any purchase, retirement or sinking fund to be provided for the
shares of that class or series; 7.shares;- •
- the terms, if any, upon which the shares
of that class or serieswill be convertible into or exchangeable for shares of any other class, classes or series, or other securities, whether or not issued by ACE;.- •
- the restrictions, limitations and conditions, if any, upon the issuance of indebtedness of ACE so long as any shares
of that class or seriesare outstanding; and.- •
- any other preferences and relative, participating, optional or other rights and limitations not inconsistent with applicable law or
the Articles.our articles.Preferred Shares
FromOur articles provide that the directors may, from time to time,
pursuant to the authority granted to the directors by the Articles to create other classes or series of shares, the Board maycreate and issueone or moreother classes or series of preferred shares setting forth the rights and preferences of eachsuchclass or series in aCertificatecertificate ofDesignation, Preferences and Rights. Thedesignation, which certificate of designations we would incorporate by reference into this prospectus. Our preferred sharesupon issuance against full consideration,will be fully paid andnonassessable.nonassessable once they are issued in exchange for payment of their full purchase price. The particular rights and preferences of the preferred shares offered by any prospectus supplement and the extent, if any, to which the general provisions described below may apply to the offered preferred shares, will be described in the applicable prospectus supplement.Because theThe following is a summary of the material terms of our preferred shares
is not complete,and you should refer tothe Memorandum, the Articlesour memorandum, articles and the applicableCertificatecertificate ofDesignation, Preferences and Rightsdesignations for complete information regarding the terms of any class or series of preferred shares described in a prospectus supplement.The applicable prospectus supplement will specify the terms of the class or series of preferred shares,
described in a prospectus supplement. Whenever particular sections or defined terms of the Memorandum, the Articles and the applicable Certificate of Designation, Preferences and Rights are referred to, such sections or defined terms are incorporated herein by reference, and the statement in connection with which such reference is made is qualified in its entirety by such reference. A prospectus supplement will specify the terms of a particular class or series of preferred shares as follows: .including:
- •
- the number of shares to be issued and sold and the distinctive designation
thereof; .of the class or series;- •
- the voting powers, full or limited, if
any, of the preferred shares; .any;- •
- the dividend rights,
of the preferred shares,whether dividends will be cumulative and, if so, from which date or dates and the relative rights or priority, if any, of payment of dividends,on preferred shares andas well as any limitations, restrictions or conditions on the payment ofdividends on the preferred shares and the ordinary shares; .dividends;- •
- the relative amounts, and the relative rights or priority, if any, of payment in respect of preferred shares, which the holders of the preferred shares will be entitled to receive upon any liquidation, dissolution or winding up of ACE;
.- •
- the terms and conditions,
(includingincluding the price or prices, which may vary under different conditions and at different redemptiondates),dates, if any, upon which all or any part of the preferred shares may be redeemed,andas well as any limitations, restrictions or conditions onsuchredemption;.- •
- the terms, if any, of any purchase, retirement or sinking
fund to be provided for the preferred shares; .fund;- •
- the terms, if any, upon which the preferred shares will be convertible into or exchangeable for shares of any other class, classes or series, or other securities, whether or not issued by ACE;
.- •
- the restrictions, limitations and conditions, if any, upon the issuance of indebtedness of ACE so long as any preferred shares are outstanding; and
.- •
- any other preferences and relative, participating, optional or other rights and limitations not inconsistent with applicable law,
the Memorandumour memorandum orthe Articles.articles.Dividends
TheYou, as a holders of preferred shares, will be entitled to receive dividends at the rate set by the
Board,board, payable on specified dates each year for the respective dividend periods ending onsuchthose dates,referred to in this prospectus 8as dividend periods,when and as declared by theBoard. Such dividendsboard. Dividends will accrue on each preferred share from the first day of the dividend period in whichsuchthe share is issued or fromsuchany other date as theBoardboard may fix forsuchthis purpose. All dividends on preferred shares will be cumulative,sowhich means that ifACE doeswe do not pay, or declare and set apart funds for payment of, the dividend, or any partthereof,of the dividend, on the issued and outstanding preferred shares for any dividend period, we must later pay in full, or declare and set apart for payment, the deficiency in the dividend on the preferred shares,must thereafter be fully paidwithout interest, before we may pay, ordeclareddeclare and set apart for payment,but without interest, beforeany dividendmay be paid or declared and set apart for paymenton the ordinary shares.The holders of preferred sharesYou will not be entitled to participate in any other or additional earnings or profits of ACE, except forsuchpremiums, if any,aswhich may be payable in case of redemption or liquidation, dissolution or winding up of ACE.Any dividend paid upon the preferred shares at aAt any time when any accrued dividends for any prior dividend period are delinquent, we will
beexpresslydeclareddeclare any dividend paid upon the preferred shares to be in whole or partial payment of the accrued dividendsto the extent thereof,beginning with the earliest dividend period for which dividends are then wholly or partlydelinquent, anddelinquent. This express designation of whole or partial payments will beso designatedcommunicated to each shareholder to whom payment is made.NoWe will not pay dividends
will be paidupon any shares of any class or series of preferred shares for a current dividend period unlessthere willwe havebeenpaid, or declared and set apart for payment, all dividends required to be paid to the holders of each other class or series of preferred shares for all past dividend periods ofsuchthe other class or series. If we pay any dividends
are paidon any of the preferred shares with respect to any past dividend period at any time when we are paying, or declaring and setting apart for payment, less than the total dividends then accumulated and payable for all past dividend periods on all of the preferred shares then outstanding,are to be paid or declared and set apart for payment,then we will pay the dividendsbeing paid will be paidon each class or series of preferred shares in the proportions that the dividends then accumulated and payable on each class or series for all past dividend periods bear to the total dividends then accumulated and payable for all past dividend periods on all outstanding preferred shares.Liquidation, Dissolution or Winding Up
In caseIf we liquidate, dissolve or wind up our business, whether voluntarily or involuntarily, we will pay you a sum out of
voluntary or involuntaryour assets equal to the liquidationdissolution or winding up of ACE,preference for theholders of eachclass or series of preferred shareswill be entitled to receive out of the assets of ACE in money or money's worth the liquidation preference with respect to that class or series of preferred shares, together withyou own plus all accrued but unpaid dividendsthereon (whetheron your preferred shares, whether or not earned ordeclared),declared. We will make these payments to you before any ofsuchour assets will be paid or distributed to holders of our ordinary shares.In case of voluntary or involuntary liquidation, dissolution or winding up of ACE, if theIf our assets are insufficient to pay the full amounts to which you and the holders of all of the classes or series of our preferred shares then outstandingthe full amounts to which theymay be entitled,the holders of each outstanding class or series of preferred sharesyou will share ratably insuchour assets in proportion to the amounts which would be payable with respect tosucheach class or series if all amounts payablethereonon each class or series of preferred shares were paid in full. The consolidation or merger of ACE with or into any other corporation, or a sale of all or any part of its assets, will not be deemed a liquidation, dissolution or winding up of ACE within the meaning of this paragraph.Redemption
Except as otherwise
provided with respect to a particular class or series of preferred shares,set forth in the applicable prospectus supplement, the followinggeneralredemption provisions will apply to each class or series of preferred shares.On or priorPrior to
the date fixed for redemption of a particular class or series ofredeeming any preferred shares,or any part thereof as specified in the notice of redemption for such class or series, ACEwe will deposit adequate funds forsuchthe redemption in trust fortheyour accountof holders of such class or series,with a bank or trust company that has an office in the United States, and that has, or is an affiliate of a bank or trust company that has, capital and surplus of at least $50,000,000.IfAfter we deposit these funds in trust, or have stated our intent to deposit these funds in a redemption notice, and you are given the name and address ofsuchthe bank or trust company,and the deposit of or intent to deposit the redemption funds in such trust account have been stated in the redemption notice,then, from and after the mailing of the notice and the making ofsuchthe deposit,theyour sharesof the class or series called for redemptionwill no longer be deemed to be outstanding for any purpose whatsoever andallyour rightsof the holders of such 9sharesin or with respect to ACE pursuant to these preferred shares will cease and terminate, exceptonly the right of the holders of the shares (1)for your rights:
- •
- to transfer
suchyour shares prior to the date fixed for redemption,(2)- •
- to receive the redemption price of
suchyour shares, including accrued but unpaid dividends to the date fixed for redemption, without interest, upon surrender of the certificate or certificates representing the shares to be redeemed, and(3)- •
- to exercise privileges of conversion, if any, not previously expired on or before the close of business on the fifth day preceding the date fixed for
redemption to exercise privileges of conversion, if any, not previously expired. Any moneys so deposited by ACE which remain unclaimed by the holders of the shares called for redemption and not converted will, at the end of sixredemption.Six years after the redemption date, any moneys we deposit in trust which remain unclaimed and not converted will be paid to
ACEus uponitsour request, after which repaymentthe holders of the shares called for redemptionyou can no longer look tosuchthe bank or trust company for the payment of the redemption price but must look only toACEus for the payment of any lawful claim forsuch moneys which holders of such shares may still have. After suchthese moneys. In addition, after this six-year period,theyour rightof any shareholder or other personto receivesuchthis payment may be forfeitedin the manner and with the effectas provided under Cayman Islands law. Any portion of the moneysso deposited by ACE,we deposit in respect of your preferred shares called for redemption that are converted into ordinary shares will be repaid toACEus uponitsour request.In case of the redemption of only a part of a class or series of preferred shares,
ACEwe will designate by lot, insucha manner as determined by theBoard may determine,board, the shares to be redeemed or will effectsuchthe redemptionprorata.rata.Conversion Rights
Except as otherwise provided
with respect to a particular class or series of preferred shares,in the applicable prospectus supplement, the followinggeneralconversion provisions will apply to each class or series of preferred shares that is convertible into ordinary shares.All ordinary shares issued upon conversion will be fully paid and nonassessable and will be free of all taxes, liens and charges with respect to
thetheir issue,thereofexcept taxes, if any, payable by reason of issuance of the ordinary shares in a name other thanthat of the holder of the shares converted and except as otherwise provided by applicable law or the Articles.your name.The number of ordinary shares issuable upon conversion of a particular class or series of preferred shares
at any timewill be the quotient obtained by dividing the aggregate conversion value of the shares ofsuchthe class or series surrendered for conversion by the conversion price per share of ordinary shares then in effect forsuchthe class or series.ACEWe will not be required, however, upon anysuchconversion to issue any fractional share of ordinary shares, but insteadACEwe will payto the holder who would otherwise be entitled to receive such fractional share, if issued,you a sum in cash equal to the value ofsuchthe fractional share based on the last reported sale price per ordinary share on the NYSE at the date of determination. Preferred shares will be deemed to have been converted as of the close of business on the date of receipt at the office of the transfer agent of the certificates, duly endorsed, together with written noticeby the holderofhisyour election to convert the shares.The basic conversion price per ordinary share for a class or series of preferred shares, as fixed by the
Board,board, will be subject to adjustment from time to time asfollows: . In case ACE (1) paysfollows.If we:
- •
- pay a dividend or
makesmake a distribution to all holders of outstanding ordinary shares as a class in ordinary shares,(2) subdivides- •
- subdivide or
splitssplit the outstanding ordinary shares into a larger number of shares or(3) combines- •
- combine the outstanding ordinary shares into a smaller number of shares,
thethen we will retroactively adjust your basic conversion price
per ordinary share in effect immediately prior to that event will be adjusted retroactivelyso thatthe holder of each outstanding share of each class or series ofyour convertible preferred shareswhich, by its terms, is convertible into ordinary shareswillthereafterbe entitled to receive, upontheconversion,of such sharethe number of ordinary shares whichthat holderyou would have owned and been entitled to receive after the happening of any of the events described above hadsuch share of such class or seriesyour shares been converted immediately prior to the happening of that event.An adjustment made pursuant to this clause will become effective retroactively immediately after such record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, split or combination. Such adjustments will be made successively whenever any event described in this clause occurs. 10. In case ACE issuesIf we issue to all holders of ordinary shares as a class any rights or warrants enabling them to subscribe for or purchase ordinary shares at a price per share less than the current market price per ordinary share at the record date for determination of shareholders entitled to receive
suchthese rights or warrants,thethen we will retroactively adjust your basic conversion priceper ordinary share in effect immediately prior thereto for each class or series of preferred shares which, by its terms, is convertible into ordinary shares will be adjusted retroactivelyby multiplyingsuchyour basic conversion price by afraction, thefraction. The fraction's numeratorof which will be the sum of number of ordinary shares outstanding at such record date and the number of ordinary shares which the aggregate exercise price (before deduction of underwriting discounts or commissions and other expenses of ACE in connection with the issue) of the total number of shares so offered for subscription or purchase would purchase at such current market price per share and the denominator of whichwill be the sum of the number of ordinary shares outstanding atsuchthe record date plus the number of ordinary shares which the aggregate exercise price, before deduction of underwriting discounts or commissions and our other expenses in connection with the issue, of the total number of shares offered for subscription or purchase would purchase at the current market price per share. The fraction's denominator will be the sum of the number of ordinary shares outstanding at the record date plus the number of additional ordinary sharessooffered for subscription or purchase.An adjustment made pursuant to this clause will become effective retroactively immediately after the record date for determination of shareholders entitled to receive such rights or warrants. Such adjustments will be made successively whenever any event described in this clause occurs. . In case ACE distributesIf we distribute to all holders of ordinary shares as a class evidences of indebtedness or assets,
(otherother than cashdividends), thedividends, then we will retroactively adjust your basic conversion priceper ordinary share in effect immediately prior thereto for each class or series of preferred shares which, by its terms, is convertible into ordinary shares will be adjusted retroactivelyby multiplyingsuchyour basic conversion price by afraction, thefraction. The fraction's numeratorof whichwill be the difference between the current market price per ordinary share at the record date for determination of shareholders entitled toreceive
suchthe distribution and the fair value,(asas determined by theBoard)board, of the portion of the evidences of indebtedness or assets,(otherother than cashdividends)dividends, so distributed applicable to one ordinaryshare and theshare. The fraction's denominatorof whichwill be the current market price per ordinaryshare. An adjustment made pursuant to this clause will become effective retroactively immediately after such record date. Such adjustments will be made successively whenever any event described in this clause occurs. For the purpose of any computation under the last clause above, the current market price per ordinaryshare,on any datewhich will be deemed to be the average of the high and low sales prices of the ordinary shares as reported in the New York StockExchange--CompositeExchange—Composite Transactions,(or suchor other principal market quotation as may then be applicable to the ordinaryshares)shares, for each of the 30 consecutive trading days commencing 45 trading days beforesuchthat date.No adjustmentAny adjustments described above will become effective retroactively immediately after the applicable record date, or, in the case of a subdivision, split or combination, immediately after the effective date, and these adjustments will be made
insuccessively whenever any event described occurs.We will not adjust the basic conversion price
for any class or series of preferred shares in effect immediately prior to such computationif the amount ofsuchthe adjustment would be less than 50 cents. However, any adjustments, which, by reason of the preceding sentence,arewe do notrequired to be mademake, will be carried forward and taken into account in any subsequent adjustment.Notwithstanding anything to the contrary,In addition, we will make any adjustment required for purposes of making the computations described abovewill be madenot later than the earlier of(1)three years after the effective datedescribeddescribe above forsuchthe adjustmentor (2)and the date as of whichsuchthe adjustment would result in an increase or decrease of at least 3% in the aggregate number of ordinary shares issued and outstanding on the first date on which an event occurred which required the making ofa computation described above. Allthe computation. We will make all calculationswill be madeto the nearest cent or to the nearest 1/100th of a share, as the case may be.In the case of any capital reorganization or reclassification of ordinary shares, or if
ACE consolidateswe consolidate with ormergesmerge into, orsellssell ordisposesdispose of all or substantially all ofitsour property and assets to, any other corporation, we will make proper provisionswill be madeas part of the terms ofsuchthe capital reorganization, reclassification, consolidation, merger or sale that anyshares of a particular class or series ofpreferred shares at the time outstanding willthereafterbe convertible into the number of shares of stock or other securities or property to which a holder of the number of ordinary shares deliverable upon conversion ofsuchthe preferred shares would have been entitled uponsuchthe capital reorganization, reclassification, consolidation or merger.11NoWe will not make any dividend adjustment with respect to any preferred shares or ordinary shares
will be madein connection with any conversion.Whenever
there is anwe issueofadditional ordinary shares requiring a change in the conversion price asprovideddescribed above, and wheneverthere occursany other event occurs which results in a change intheyour existing conversion rights,of the holders of shares of a class or series of preferred shares, ACEwe will file withitsour transfer agent or agents a statement signed bytheour Chairman, President and Chief Executive Officer, or by any of our ExecutiveOfficer of ACE,Officers, specifically describingsuchthe issue of additional ordinary shares orsuchthe other event,(and,including, in the case of a capital reorganization, reclassification, consolidation or merger, the termsthereof) andof the capital reorganization, reclassification, consolidation or merger. The statement will also contain the actual conversion prices or basis of conversion as changed bysuchthe issue or event and the change, if any, in the securities issuable upon conversion. Wheneverthere are issued by ACEwe issue any rights or warrants to all holders of our ordinary shares as a classany rights or warrantsenabling them to subscribe for or purchase ordinary shares,ACEwe will also file in like manner a statement describing the same and the considerationitwe willreceive therefrom. The statement so filedreceive. These statements will be open toinspection by any holder of record of shares of any class or series of preferred shares. ACEyour inspection.We will at all times
have authorized,authorize, and will at all times reserve and set aside, a sufficient number ofduly authorizedordinary shares for the conversion of all shares of all then outstanding classes or series of preferred shares which are then convertible into ordinary shares.Reissuance of Shares
AnyIf we retire any preferred shares
retiredby purchase or redemption, through conversion, or through the operation of any sinking fund or redemption or purchase account, these shares will have the status ofauthorized but unissued preferred
shares andshares. We maybe reissuedreissue these shares as part of the same class or series or maybe reclassifiedreclassify andreissued by the Boardreissue them in the same manner as any other authorized and unissued preferred shares.Voting Rights
Except as
indicatedset forth below,orgenerally, you, asotherwise required by applicable law, the holdersa holder of preferred shares, will have no voting rights.Whenever dividends payable on
any class or series of preferredyour shares are in arrears in an aggregate amount equivalent to six full quarterly dividends on all of the preferred shares,of that class or series then outstanding, the holders of preferred shares of that class or seriesyou will have the exclusive and special right, voting separately as a class, to elect two of our directors,of ACE,and we will increase the number of directors constituting theBoard will be increasedboard to the extent necessary to effectuatesuchthis right. Wheneversuchthis rightof the holders of any class or series of the preferred shareshas vested,such rightit may be exercised initially either at an extraordinary meeting of the holders ofsuch class or series ofthe preferred shares or at any annual meeting of shareholders and,thereafterafter its initial exercise, at annual meetings of shareholders.TheThis special voting rightof the holders of any class or series of the preferred shares voting separately as a class to elect members of the Boardwill continue untilsuch time asall dividends accumulated onsuch class or series ofthe preferred shares have been paid in full, at which timethat specialthis right will terminate, subject to revesting in the event of each and every subsequent default in payment of dividends in an aggregate amount equivalent to six full quarterly dividends.At any time when
suchthis special votingpowerright has vested,in the holders of any class or series of the preferred shares as described in the preceding paragraph, a proper officer of ACEwe will, upon the written request of the holders of record of at least 10%of such class or seriesof the preferred shares then outstanding addressed to the Secretary of ACE, call an extraordinary meeting of the holders ofsuch class or series ofthe preferred shares for the purpose of electing directors.SuchThis extraordinary meeting will be held at the earliest practicable date insucha placeas may be designated pursuant to the Articles (or,we designate or, if there be no designation, attheour principaloffice of ACEoffices in Hamilton,Bermuda).Bermuda. Ifsuchwe do not call this meetingshall not be called by the proper officers of ACEwithin 20 days after the Secretary of ACE has been personally served withsuchthe proper request, or within 30 days after mailing the same within the United12States by registered or certified mail addressed to the Secretary of ACE at itsour principal office, then the holders of record of at least 10%of such class or seriesof the preferred shares then outstanding may designate in writing one of their number to callsuchthe meeting atACE'sour expense, andsuchthis meeting may be called bysuchthis designated personso designatedupon the notice required for annual meetings of shareholders and will be held in Hamilton, Bermuda.Any holder of such class or series of preferred shares soThis designated person will have access totheour stock booksof ACEfor the purpose of causing meetings of shareholders to becalled pursuantcalled. However, we do not have to,these provisions. Notwithstanding the foregoing, no suchand will not, call an extraordinary meetingwill be calledduring the period within 90 days immediately preceding the date fixed for the next annual meeting of shareholders.At any annual or extraordinary meeting at which the holders of
any class or series ofthe preferred shares havethethis specialright,votingseparately as a class, to elect directors as described above,right, the presence, in person or by proxy, of the holders of 331/3% of such class or series1/3% of the preferred shares will be required to constitute a quorumof such class or seriesfor the election of anydirector by the holders of such class or series, voting as a class.director. At anysuchmeeting or adjournmentthereof, (1)of the meeting, the absence of a quorumof such class or series of the preferred shareswill not prevent the election of directors other than those to be electedby such class or series of the preferred shares,pursuant to this special votingas a class,right, and the absence of a quorum for the election ofsuchother directors will not prevent the election of the directors to be electedby such class or series of the preferred shares,pursuant to this special votingas a class, and (2)right. In addition, in the absence of either or bothsuch quorums,types of quorum, a majority of the holders present in person or by proxy of any class or series of stock for which a quorum is lackingwill have power tomay adjourn the meeting for the election of directors which they are entitled to elect, from time to time, until a quorum shall be present, without notice other than announcement at the meeting.During any period
induring which the holders ofany class or series of thepreferred shares have the special voting right,to vote asonly aclass for directors as described above, any vacancies in the Board will be filled only byvote of a majority,(eveneven if that be only a singledirector)director, of the remaining directorstheretoforepreviously elected by the holders of the class or series of stock which elected the directors whoseoffice shalloffices have becomevacant.vacant may fill any board vacancy. Duringsuchthis period, the directorssoelectedbypursuant to theholders of any class or series of the preferred shares willspecial voting right shall continue in office(1)until the next succeeding annual meeting or until their successors, if any, are elected bysuchthese holders and qualify or,(2)unless required by applicable law to continue in office for a longer period, until termination of the special voting right,of the holders of such class or series of the preferred shares to vote as a class for directors,if earlier. If and to the extentpermitted by applicable law, immediately upon any termination of the special voting right,
of the holders of any class or series of the preferred shares to vote as a class for directors as provided herein,the term of office of the directors then in officesoelectedbypursuant to theholders of such class or seriesspecial voting right will terminate.Whether or not
ACEour business is being wound up,theyour rightsattached to any class or series of preferred sharesmay only be varied with(1)either the written consentin writingof the holders of three-fourths of the issued shares ofthatyour class or series of preferred shares or(2)the sanction of a special resolution approved by at least 662/3%2/3% of the votes cast by the holders of the shares ofthatyour class or series of preferred shares at a duly convened meeting where at least one-third of the issued shares of that class or series are represented, either in person or by proxy.TheYour rightsattached to any class or series of preferred shareswill not be deemed to be varied by the creation or issue of any shares or any securities convertible into or evidencing the right to purchase shares ranking prior to or equally withsuchyour class or series ofthepreferred shares with respect to the payment of dividends or of assets upon liquidation, dissolution or winding up.Holders of preferred sharesYou are not entitled to vote on any amalgamation, consolidation, merger or statutory share exchange, except to the extent thatsuchthis type of a transaction would varytheyour rights,attached to any class or series of preferred shares,in which case anysuchvariation is subject to the approval process described above.Holders of preferred sharesYou are not entitled to vote on any sale of all or substantially all ofthe assets of ACE.our assets.On any item on which the
holders of the preferred sharesyou are entitled to vote,such holdersyou will be entitled to one vote for each preferred share held.Restrictions in Event of Default in Dividends on Preferred Shares
If, at any time,
ACE haswe have failed to pay dividends or amounts payable with respect to any obligations to retire preferred shares in full,on the preferred shares, thereafterafter that time and until dividendsin full,or these amounts, including all accrued and unpaid dividends for all past quarterly dividend periods on the preferred shares13outstanding, shall have been declared and set apart in trust for payment or paid, or if at any time ACE has failed to pay in full amounts payable with respect to any obligations to retirewe may not:
- •
- redeem less than all of the outstanding preferred shares
thereafter and until such amounts shall have been paid in full or set apart in trust for payment (1) ACE,without the affirmative vote or consent of the holders of at least 662/3%2/3% of the outstanding preferred sharesat the time outstandinggiven in person or by proxy, either in writing or by resolution adopted at an extraordinary meeting called for the purpose, at which the holders of the preferred shares shall vote separately as a class, regardless of class orseries, may not redeem less than all of the preferred shares at such time outstanding; (2) ACE may notseries;- •
- purchase any preferred shares except in accordance with a purchase offer made in writing to all holders of preferred shares of all classes or series upon
suchterms as theBoardboard, in its sole discretion after consideration of the respective annual dividend rate and other relative rights and preferences of the respective classes or series,will determine (whichdetermines, which determinationwillshall be final andconclusive)conclusive, will result in fair and equitable treatment among the respective classes orseries; provided that (a) ACE,series. However, we may use shares previously acquired and then held by it as treasury stock to meet the requirements of any purchase, retirement or sinking fund provisions with respect to any class orseries, may use shares of such class or series acquired by it prior to such failure and then held by it as treasury stock and (b)series. In addition, nothing will prevent us from completing the purchase or redemption of preferred shares for which a purchase contract was entered into for any purchase, retirement or sinking fund purposes, or the notice of redemption of which was initially mailed, prior tosuchthe failure; and(3) ACE- •
- we may not redeem, purchase or otherwise acquire, or permit any subsidiary to purchase or acquire, any shares of any other class of our stock
of ACEranking junior to the preferred shares as to dividends and upon liquidation.Preemptive Rights
No holder of preferred shares, solely by reason of
suchholding the preferred shares, has or will have any preemptive right to subscribe to any additional issue of shares of any class or series nor to any security convertible intosuchshares.7.80% Cumulative Redeemable Preferred Shares, Series C
In May 2003, we issued 2,300,000 shares of our 7.80% Cumulative Redeemable Preferred Shares, Series C, which we refer to as the ACE Series C Preferred Shares. The ACE Series C Preferred Shares are represented by depository shares, with each depository share representing 1/10 of an ACE Series C Preferred Share. The ACE Series C Preferred Shares rank senior to all ordinary shares now outstanding or that we may issue in the future, as to payment of dividends and distribution of assets upon our dissolution, liquidation or winding up.
Dividends
Dividends on the ACE Series C Preferred Shares are cumulative and are payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. We will only pay dividends on the ACE Series C Preferred Shares if our board of directors or an authorized committee of our board declares those dividends payable and ACE has funds legally available to pay those dividends.
Dividends on the ACE Series C Preferred Shares are fixed at a rate per year of 7.80% of the liquidation preference of $250 per preferred share (or $19.50 per preferred share).
Optional Redemption
On and after May 30, 2008, we may redeem the ACE Series C Preferred Shares, in whole at any time or in part from time to time at a redemption price of $250 per ACE Series C Preferred Share, plus accrued and unpaid dividends, if any, to the date of redemption. We may not redeem the ACE Series C Preferred Shares before May 30, 2008, except as described in the next paragraph and except that we may redeem the ACE Series C Preferred Shares before that date at a redemption price of $260 per ACE Series C Preferred Share, plus accrued and unpaid dividends, if any, to the date of redemption, if we
- •
- submit a proposal to our ordinary shareholders concerning an amalgamation, merger or other similar transaction involving ACE that requires; or
- •
- submit any proposal for any other matter that, as a result of any change in Cayman Islands law after May 7, 2003 (whether by enactment or official interpretation), requires,
in either case, a vote of the holders of our ACE Series C Preferred Shares, voting separately as a single class (alone or with one or more class or series of other preferred shares).
We also will have the option to redeem the ACE Series C Preferred Shares, at any time in whole or in part from time to time, at a redemption price of $250 per Preferred Share, plus accrued and unpaid dividends, if any, to the date of redemption, if there is a change in tax law that would require us or any successor corporation to pay any additional or "gross up" amounts with respect to the ACE Series C Preferred Shares.
Voting Rights
The holders of the ACE Series C Preferred Shares are not entitled to any voting rights, except as required by applicable law and as described above under "Description of ACE Capital Stock—Preferred Shares—Voting Rights". Holders of ACE Series C Preferred Shares are also entitled to vote separately as a class with respect to certain court approved schemes of arrangement or reconstruction in which we will not be the surviving entity.
Liquidation Rights
In the event of our voluntary or involuntary liquidation, dissolution or winding up, the holders of ACE Series C Preferred Shares will be entitled to receive out of our assets available for distribution to
shareholders—before any distribution of assets is made on our ordinary shares or any other class or series of our stock ranking junior to the ACE Series C Preferred Shares—a liquidating distribution in the amount of $250 per share, plus an amount equal to the sum of all accumulated and unpaid dividends, whether or not earned or declared, for the then-current dividend period and all prior dividend periods.
In the event our assets available for distribution to the holders of ACE Series C Preferred Shares upon any liquidation, dissolution or winding up, whether voluntary or involuntary, are insufficient to pay in full all amounts to which the holders are entitled, no distribution will be made on any other stock ranking equally with the ACE Series C Preferred Shares unless a pro rata distribution is made on the ACE Series C Preferred Shares, with the amount allocable to each series determined on the basis of the aggregate liquidation preference of the outstanding shares of each series and distributions to the shares of each series being made on a pro rata basis.
Transfer Agent
ACE'sOur registrar and transfer agent for
theour ordinary shares andthepreferred shares is Mellon Investor Services.Transfer of Shares
The ArticlesOur articles contain various provisions affecting the transferability of
ACE'sour shares. Under our articles, theArticles, the Boardboard has absolute discretion to decline to registeraany transfer of shares(1) unless a registration statement underfor any reason, including its determination that theSecurities Act is in effect with respect to such shares or a written opinion from counsel acceptable to the directors is obtained to the effect that such registration is not required or (2) if the Board determines that suchtransfer would result in a person having controlled shares that constitute 10% or more of any class or series of ACE's issuedshares. The Board alsoshares and that a registration statement under the Securities Act with respect to the shares hasabsolute discretion to decline to register any transfer of shares. The Boardnot been filed. However, the board has waived its right to decline to register any transfer of shares which have been traded in the public market,(including theincluding any ordinary and preferred shares offered by a prospectussupplement)supplement or which were outstanding immediately prior to ACE's initial public offering.Maples and Calder,
ACE'sour Cayman Islands counsel, has adviseditus that, while the precise form of the restrictions on transfers contained inthe Articlesour articles is untested, as a matter of general principle, restrictions on transfers of shares are enforceable under Cayman Islands law and are not uncommon.The transferor of such sharesYou will be deemed to ownsuchyour shares for dividend, voting and reporting purposes until a transfer ofsuchthe shares has been registered on our stock transfer records.The restrictions on voting and ownership of more than 10% of any class or series of our issued shares described above, as well as the provisions discussed below under "Anti-Takeover Effects of Articles of Association" and "Shareholder Rights Plan," may have the effect of discouraging an attempt to obtain control of
ACE through certain actions. The ArticlesACE.Our articles also provide that the
Boardboard may suspend the registration of transfer forsuchany periods as theBoardboard may determine, but shall not suspend the registration of transfer for more than 45 days in any year.14Lloyd's Related Requirements
Under Lloyd's regulations,
as currently in effect,any person who, along with any associates, beneficially holds 10% or more of the votes or economic interest in ACE, or who controls decisions byACE's Boardour board, isdeemed to bea "controller" of any ACE subsidiary that is either a Lloyd's corporate member or Lloyd's managing agent. Lloyd's imposes an absolute prohibition on any company being a10%controller of a Lloyd's corporate member or Lloyd's managing agent without first notifying Lloyd's and receivingtheirits consent.This prohibition is qualified in respect ofHowever, if a personwhobreaches the 20%, 33%, 50% or majority controller thresholds,in thatthe Lloyd's corporate member or Lloyd's managing agent must do all that lies within its powers to comply withLloyd's
requirements. In these latter circumstances, this essentiallyrequirements, which means that noticemust have beenwas given to the Council of Lloyd'sthatregarding therelevant threshold will be exceededbreach of the ownership percentage and that the Councilof Lloyd's hasdid notobjected.object. Lloyd's requires each"controller" of a Lloyd's corporate member or Lloyd's managing agentcontroller to execute and deliver a declaration and undertaking to Lloyd'scontainingwith representations concerning, among other things, the absence of criminal activities, censure, insolvency, civil liabilities and governmentinvestigations, etc., and submittinginvestigations. Lloyd's also requires each controller to submit to the jurisdiction of the English courts. Any person that becomes the owner of 10% (or subsequently 20%, 33%, 50% or a majority) oftheour ordinary shares would have to deliver this declaration and undertaking to Lloyd's,in the form prescribed byunless he received an exemption from Lloyd's. The decision to grant an exemption is completely within Lloyd'sunless Lloyd's exempts such person from this requirement. Lloyd's regulations give Lloyd's the right to withhold consent to a person becoming a controller of a Lloyd's corporate member, even where the declaration and undertaking has been provided, if Lloyd's, in its discretion, does not consider such person to be "fit and proper."discretion.In addition, under English law, if any person who is
connected with"connected with" a Lloyd's broker holds, or subsequently becomes the holder of, more than 5% oftheour ordinary shares,in ACE,that Lloyd's broker risks losing its Lloyd's license. For these purposes, a person istreated as connected with"connected with" a Lloyd's brokerifif:
- •
- that person is the subsidiary or holding company of a corporate Lloyd's broker or a subsidiary of
any sucha holdingcompany (all being regarded as related companies) orcompany;- •
- that person is a director of
suchthat Lloyd's broker;- •
- that person is a related company that controls or is controlled by a Lloyd's broker or any related company,
that controls (awhich is determined by a test based on having either one-third voting rights or control of theBoard)board; oris controlled by such a Lloyd's broker or any related company or, if the Lloyd's broker is a partnership,- •
- any person who is a partner in, or who controls or is controlled by,
(on a similar test) such athat Lloyd's broker or any company which is controlled by a partner insuch athat Lloyd's broker or any related company of anysuchpartner or any director of anysuchcontrolled or relatedcompany.company, if the Lloyd's broker is a partnership.Lien on Shares
The ArticlesOur articles provide that
ACEwe will have a first lien on all of our outstanding shares for all debts, liabilities or engagements to or withACE (whetherus, whether presently payable ornot) by the holder of such shares,not, except for sharesdeclared to be exempt bywhich theBoard.board declares exempt. This lienwould extendextends to the payment of dividends or other money payable in respect of any ordinary shares or preferred shares subject to the lien.The Articles also provide that theIn addition, our directors may deduct from any dividend payable toa shareholderyou all sums of money presently payable bysuch shareholderyou toACEus on any account.The BoardHowever, the board has exemptedfrom these provisionsthe ordinary and preferred shares offered byaany prospectussupplement.supplement from these provisions.Anti-Takeover Effects of our Articles
of Association The ArticlesOur articles contain
certainprovisions that make it more difficult for an entity to acquire control of ACE by means of a tender offer, open market purchase, proxy fight or otherwise. These provisions, as well as the shareholder rights plan described under "Shareholder Rights Plan" below, are designed to encourage persons seeking to acquire control of ACE to negotiate withitsour directors.The directorsWe believe that, as a general rule,theyour interestsof its shareholderswould be best served if any change in control results from negotiations withthe directors. Theour directors, who would negotiate based upon careful consideration of the proposed terms,such asincluding the price,to be paid to shareholders,the form of considerationto be paidand the anticipated tax effects of the transaction. However, these provisions could have the effect of discouraging a prospective acquiror from making a tender offer or otherwise attempting to obtain control ofACE. To the extent these provisions discourage takeover attempts, theyACE, which could depriveshareholdersyou of opportunities to realize takeover premiums fortheiryour shares or could depress the market price oftheyour shares.15In addition to those provisions of the Articles discussed above, set forth below is a description of other material provisions of the Articles. Because the following description is intended as a summary only and is therefore not complete, you should refer to the Articles, which are incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part, for complete information regarding these provisions.No Shareholder Action by Written Consent
The ArticlesOur articles provide that shareholders must take any action required or permitted to be taken by
ACE's shareholders must be takenthem at aduly calledannual general or extraordinary general meeting of its shareholders and may not be taken bywritten consent
in writingor otherwise. The affirmative vote of the holders of at least 662/3%2/3% of the outstanding sharesgenerally entitled to vote, voting together as a single class,is required to amend or repeal, or adopt any provision inconsistent with, this provision ofthe Articles.our articles.Availability of Shares of Capital Stock for Future Issuances
The availability ofOur directors may issue shares
for issue by ACE's directorswithout further action by shareholders,(except as may be required by applicable stock exchange requirements) could be viewed as enabling the directors to make more difficult a change in control of ACE,including by issuing warrants or rights to acquire shares to discourage or defeat unsolicited stock accumulation programs and acquisition proposals and by issuing shares in a private placement or public offering to dilute or deter stock ownership of persons seeking to obtain control of ACE. This could be enable the directors to make it more difficult for someone to effect a change in control of ACE.Shareholder Proposals
The ArticlesOur articles provide that if
a shareholder desiresyou desire to submit a proposal for consideration at either an annualgeneral meetingor extraordinary general meeting, or to nominate persons for election as directors, you must submit written notice ofsuch shareholder'syour intent to makesuch athe proposal or nomination to ACE's Secretary at our principal executive offices. This notice must begiven andreceivedby the Secretary of ACE at its principal executive officesnot later than(1) with respect to an annual general meeting,60 days prior to the anniversary date of the immediately preceding annual general meetingand (2)or, with respect to an extraordinary general meeting, the close of business on the tenth day following the date on which the noticeof such meetingis first sent or given to shareholders.TheThis notice must describe the proposal or nomination in sufficient detailfor a proposal or nomination to be summarized on the agenda for the meetingand must set forth(1)the following information:
- •
- your name and
address of the shareholder, (2)address;- •
- a representation that
the shareholder isyou are a holder of record of shares of ACE entitled to vote atsuchthe meeting andintendsyou intend to appear in person or by proxy at the meeting to presentsuchthe proposal ornomination and (3)nomination;- •
- the class and number of shares of ACE that are beneficially owned by
the shareholder. In addition, the notice must set forthyou; and- •
- the reasons for conducting
suchthe proposed business at the meeting and any material interest of yours in theshareholder in suchbusiness.In
the case ofaddition, a notice with regard to a nomination of any person for election as a directorthe noticemustset forth: (1)also contain:
- •
- the name and address of any person to be nominated;
(2)- •
- a description of all arrangements or understandings between
the shareholderyou and each nominee and any other person or persons;(3) such- •
- any other information regarding
suchthe nomineeproposed by such shareholderas would be required to be included in a proxystatement filed pursuant to Regulation 14A under the Exchange Act, whether or not we are then subject to such Regulation;statement; and(4)- •
- the consent of each nominee to serve as a director of ACE, if so elected.
The presiding officer of the annual general meeting or extraordinary general meeting will, if the facts warrant, refuse to acknowledge a proposal or nomination not
made in compliance with the foregoing procedure. The affirmative vote of the holders of at least 66 2/3% of the outstanding shares entitled to vote, voting together as a single class, will be required to amend or repeal, or adopt any provision inconsistent with, the foregoing provision of the Articles. Theproperly made.This advance notice
requirements regulating shareholder nominations andfor shareholders' proposals provision may have the effect of precluding a contest for the election of directors or the introduction of a shareholder proposalif the procedures summarized above are not followedand may discourage or deter a third party from conducting a solicitation of proxies to elect its own slate of directors or to introduce a proposal.16The affirmative vote of the holders of at least 662/3% of the outstanding shares will be required to amend or repeal, or adopt any provision inconsistent with, this provision. Shareholder Rights Plan
On May 7, 1999,
ACE'sour boardof directorsdeclared a dividend of one preference share purchase right for each outstanding ordinary share to shareholders of record at the close of business on June 1, 1999.Subject to certain exceptions,Generally, each right,when exercisable,entitles the holder to purchase fromACEus one one-thousandth of a series A junior participating preference share at an exercise price of $150, subject tocertainantidilution adjustments. Because of the nature of the preference shares' dividend, liquidation and voting rights, the value of the one one-thousandth of a preference sharepurchasable upon the exercise of each rightshould approximate the value of one ordinary share.TheThese purchase rights generally will only be exercisable:
.
- •
- 10 days following a public announcement that a person or a group of affiliated or associated persons has acquired, or obtained the right to acquire, 15% or more of
theour outstanding ordinaryshares of ACE,shares; or.- •
- 15 business days following the commencement of, or the announcement of an intention to make, a tender or exchange offer for 15% or more of
theour outstanding ordinaryshares of ACE. In the following description, ashares.Generally, if any person or group
thatacquires, or obtains the right to acquire, 15% or more oftheour outstanding ordinary shares,of ACE is referred to as an "Acquiring Person." Generally, if any person or group becomes an Acquiring Person,each right, except for rights held bythe Acquiring Person,this person or group, will entitle its holder to purchase ordinary shares having a value equal to two times the exercise price of the right. If ACE is acquired in a merger, amalgamation or other business combination transaction, or if 50% or more of ACE's assets or earnings power is sold, then proper provision will be made so that each holder of a right, except for a person or group acquiring, or obtaining theAcquiring Person,right to acquire, 15% or more of our outstanding ordinary shares, will be entitled to receive common stock of the acquiring or surviving company having a value equal to two times the exercise price of the right.ACE'sIn addition, our board
of directorshas the option, at any time after any person or groupbecomes an Acquiring Personacquires, or obtains the right to acquire, 15% or more of our outstanding ordinary shares, but beforethe Acquiring Personthey acquires 50% or more oftheour outstanding ordinary shares, to exchange each right, except for rights held bythe Acquiring Person,this person or group, for one ordinary share.AtFurther, at any time prior to the time that any person or groupbecomes an Acquiring Person, ACE'sacquires, or obtains the right to acquire, 15% or more of our outstanding ordinary shares, our boardof directorsmay redeem the rights in whole, but not in part, at a price of $0.01 per right.TheThese rights will expire on June 1, 2009 if they have not been previously exercised, exchanged or redeemed.17
DESCRIPTION OF THE DEPOSITARY SHARESGeneral
ACEWe may
at its option, elect tooffer depositary shares, each representing a specified fraction(to be set forth in the prospectus supplement relating to a particular series of preferred shares)of a share of a particular series of preferredshares as described below. In the event ACE elects to do so, depositaryshares. Depositary receipts evidencing depositary shares will be issued to those persons purchasing thepublic.fractional shares of the related preferred shares.The shares of any class or series of preferred shares represented by depositary shares will be deposited under a deposit agreement among ACE, a depositary selected by ACE and the holders of the depositary
receipts. The depositary will be a bank or trust company having its principal officereceipts, whom we refer to inthe United States and having a combined capital and surplus of at least $50,000,000.this section as owners. Subject to the terms of the deposit agreement, each ownerof a depositary sharewill be entitledin proportion to the applicable fraction of a preferred share represented by such depositary share,to all the rights and preferences of the preferred shares representedthereby (includingby the depositary share in proportion to the fraction of a preferred share represented by the depositary share, including dividend, voting, redemption and liquidationrights). The depositary shares will be evidenced by depositary receipts issued pursuant to the deposit agreement. Depositary receipts will be distributed to those persons purchasing the fractional shares of the related class or series of preferred shares in accordance with the terms of the offering described in the related prospectus supplement. Copies of the forms of deposit agreement and depositary receipt are filed as exhibits to the registration statement of which this prospectus forms a part, and the following summary is qualified in its entirety by reference to such exhibits. Pending the preparation of definitive depositary receipts, the depositary may, upon the written order of ACE, issue temporary depositary receipts substantially identical to (and entitling the holders thereof to all the rights pertaining to) the definitive depositary receipts but not in definitive form. Definitive depositary receipts will be prepared thereafter without unreasonable delay, and temporary depositary receipts will be exchangeable for definitive depositary receipts without charge to the holder thereof.rights.Dividends and Other Distributions
The depositary will distribute all cash dividends or other distributions received
in respect ofon the relatedclass or series ofpreferred shares to therecord holders of depositary shares relating to such class or series of preferred sharesowners in proportion to the number ofsuchdepositary sharesowned by such holders.owned. In the event of a distribution other than in cash, the depositary will distribute property received by it to therecord holders of depositary shares entitled thereto,owners, unless the depositary determines that it is not feasible to makesuchthe distribution, in which case the depositary may, withtheour approval,of ACE,sellsuchthe property and distribute the net proceeds fromsuchthe sale tosuch holders.the owners.Withdrawal of Shares
Upon surrender of the depositary receipts,
at the corporate trust office of the depositary (unlessunless the related depositary shares have previously been called forredemption),redemption, theholder of the depositary shares evidenced therebyowner is entitled to delivery of the number of whole shares of the relatedclass or series ofpreferred shares and any money or other property represented bysuchhis depositary shares. Holders ofdepositary shares will be entitled to receive whole shares oftherelated class or series of preferred shares on the basis set forth in the prospectus supplement for such class or series of preferred shares, but holders of suchwhole preferred shares will notthereafterbe entitled to exchangethemthe preferred shares for depositary shares. If the delivered depositary receiptsdelivered by the holderevidence a number of depositary shares in excess ofthe number of depositary shares representingthe number of whole preferred shares to be withdrawn, the depositary will deliver tosuch holder atthesame timeowner a new depositary receipt evidencingsuchthis excess numberof depositary shares.at the same time. In no event will fractional preferred shares be delivered upon surrender of depositaryreceipts to the depositary. 18receipts. Redemption of Depositary Shares
Whenever
ACE redeemswe redeem preferred shares held by the depositary, the depositary will redeemas of the same redemption datethe number of depositary shares representingshares ofthe relatedclass or series ofpreferredshares so redeemed.shares. The redemption price per depositary share will be equal to the applicable fraction of the redemption price pershare payable with respect to such class or series of thepreferredshares.share. If less than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by lot orpro rata as may be determined by thedepositary.depositary or us.Voting the Preferred Shares
Upon receipt of notice of any meeting at which the holders of the preferred shares are entitled to vote, the depositary will mail the information contained in
suchthe noticeof meetingto the recordholdersowners of the depositaryshares relating to such preferredshares. Each recordholder of such depositary sharesowner on the record date,(whichwhich will be the samedateas the record date for the preferredshares) will be entitled toshares, may instruct the depositaryashow totheexerciseof theits voting rights pertaining to theamount of the class or series ofpreferred shares represented bysuch holder'sthe owner's depositary shares. The depositary will endeavor, insofar as practicable, to vote the number of the preferred shares represented bysuchthese depositary shares in accordance withsuchthe instructions, andACEwe will agree to take all action which the depositary deems necessary in order to enable the depositary to do so. The depositary willabstain from votingnot vote preferred sharesto the extentif it does not receive specific instructions from theholders of depositary shares representing such preferred shares.record owners.Amendment and Termination of the Deposit Agreement
TheUnless otherwise provided in the applicable prospectus supplement, the form of depositary receipt
evidencing the depositary sharesand any provision of the deposit agreement may be amended at any timebe amendedby agreement betweenACEus and the depositary. However, any amendment which materially and adversely alters the rights of theholders of depositary receiptsowners will not be effective unlesssuch amendmentit has been approved by theholders of depositary receiptsowners representing at least a majority,(or,or, in the case of amendmentsrelating to oraffecting rights to receive dividends or distributions or voting or redemption rights, 662/3%, unless otherwise provided in the related prospectus supplement)2/3% of the depositary shares then outstanding.The deposit agreement may be terminated by ACEWe or the depositaryonlymay terminate the deposit agreement only:
- •
- if
(1)all outstanding depositary shares have beenredeemed, (2)redeemed;- •
- if there has been a final distribution
in respect ofon therelated class or series ofpreferred shares in connection with any liquidation, dissolution or winding up of ACE andsuchthe distribution has been distributed to theholders of depositary receiptsowners; or(3) upon- •
- with the consent of
holders of depositary receiptsowners representing not less than 662/3%2/3% of the depositary shares outstanding.Charges of Depositary
ACEWe will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements.
ACEWe will also pay charges of the depositary in connection with the initial deposit ofthe related class or series ofpreferred shares and any redemption ofsuchthe preferred shares.Holders of depositary receiptsOwners will pay all other transfer and other taxes and governmental charges andsuchany other charges as are expressly provided in the deposit agreement to be for their accounts.The depositary may refuse to
effect anytransferofa depositary receipt or any withdrawal ofshares of a class or series ofpreferred shares evidencedtherebyby the depositary receipts until allsuchtaxes and charges with respect tosuch depositary receiptthe receipts orsuchpreferred shares are paid by theholders thereof.owners.Miscellaneous
The depositary will forward all reports and communications which it receives from
ACE which are delivered to the depositaryus and whichACE iswe are required to furnish to the holders of the preferred shares.19Neither the depositary nor
ACEwe will be liable ifitthe depositary is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the deposit agreement.The obligations of ACEOur and thedepositary under the deposit agreementdepositary's obligations will be limited to performance of the duties under the deposit agreement ingooda manner that does not constitute bad faith,of their duties thereunder,and neitherACEwe nor the depositary will be obligated to prosecute or defend any legal proceeding in respect of any depositarysharesorclass or series ofpreferred shares unless satisfactory indemnity is furnished.ACE and the depositary may rely on written advice of counsel or accountants or on information provided by persons presenting preferred shares for deposit, holders of depositary shares or other persons believed to be competent and on documents believed to be genuine.Resignation and Removal of Depositary
The depositary may resign at any time by delivering to
ACEus notice of its election todo so,resign, andACEwe may at any time remove the depositary. Anysuchresignation or removal of the depositary will take effect upon the appointment of a successor depositary, which successor depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States and having a combined capital and surplus of at least$50,000,000. 20$50,000,000 or be an affiliate of such bank or trust company.
DESCRIPTION OF ACE DEBT SECURITIESThe following description of the ACE debt securities sets forth the material terms and provisions of the ACE debt
securities to which any prospectus supplement may relate.securities. The ACE senior debt securitiesare towill be issued under an indenture, referred to in this prospectus as the ACE senior indenture, betweenACEus andBank OneJ.P. Morgan Trust Company,N.A.National Association (as successor to The First National Bank of Chicago), as trustee, dated as of March 15, 2002, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. The ACE subordinated debt securitiesare towill be issued under an indenture, referred to in this prospectus as the ACE subordinated indenture, betweenACEus andBank OneJ.P. Morgan Trust Company,N.A.,National Association, as trustee, the form of which isfiledincorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. The ACE senior indenture and the ACE subordinated indenture are sometimes referred tohereinin this prospectus collectively as the ACE indentures and each individually as an ACE indenture. The specific terms applicable to a particulartermsissuance oftheACE debt securitiesoffered byand anyprospectus supplement, andvariations from theextent to which the general provisions describedterms set forth belowmay apply to the offered ACE debt securities,will bedescribedset forth in the applicable prospectus supplement.Because theThe following
summariesis a summary of the material terms and provisions of the ACE indentures and the ACE debtsecurities are not complete, yousecurities. You should refer to the forms of the ACE indentures and the ACE debt securities for complete information regarding the terms and provisions of the ACE indenturesincluding the definitions of some of the terms used below,and the ACE debt securities.Wherever particular articles, sections or defined terms of an ACE indenture are referred to, those articles, sections or defined terms are incorporated herein by reference, and the statement in connection with which such reference is made is qualified in its entirety by such reference.The ACE indentures are substantially identical, except forcertainthe covenants of ACE and provisions relating to subordination.General
The ACE indentures do not limit the aggregate principal amount of ACE debt securities which
ACEwe mayissue thereunder and provide that ACEissue. We may issue ACE debt securitiesthereunderunder the ACE indentures from time to time in one or more series.(Section 3.1)The ACE indentures do not limit the amount of otherIndebtedness (as defined below)indebtedness, or ACE debt securities other thancertainsecuredIndebtedness as described below,indebtedness, whichACEwe oritsour subsidiaries may issue.Unless otherwise provided in a prospectus supplement, the ACE senior debt securities will be our unsecured obligations
of ACEand will rank equally with all ofitsour other unsecured and unsubordinated indebtedness. The ACE subordinated debt securitiesof each serieswill be our unsecured obligationsof ACE,and will be subordinated in right of payment to the prior payment in full of allSenior IndebtednessofACE (whichour senior indebtedness, which term includes ACE senior debtsecurities) with respect to such series,securities, as described below under "Subordination of ACE Subordinated DebtSecurities" and in the applicable prospectus supplement.Securities."Because
ACE iswe are a holding company,itsour rights and the rights ofitsour creditors,(including the holdersincluding you, as a holder of ACE debtsecurities)securities, and shareholders to participate in any distribution of assets of any subsidiary upon the subsidiary's liquidation or reorganization or otherwise would be subject to the prior claims of the subsidiary's creditors, except to the extent thatACE may itself bewe are a creditorwith recognized claims againstof the subsidiary. The right of our creditors,of ACE (including the holders of ACE debt securities)including you, to participate in the distribution of stock owned byACEus incertainsome ofitsour subsidiaries, includingACE'sour insurance subsidiaries, may also be subject to approval bycertaininsurance regulatory authorities having jurisdiction oversuchthese subsidiaries.TheEach prospectus supplement
relating to the particular ACE debt securities offered therebywill describe the following terms of the offered ACE debt securities:.
- •
- the title of
such ACE debt securities andtheseries in which such ACE debt securities will be included, which may include medium-term notes; .series;- •
- any limit
uponon the aggregate principalamount of such ACE debt securities; 21. the date or dates, or the method or methods, if any, by which such date or dates will be determined, on whichamount;- •
- the principal
of such ACE debt securities will be payable; .payment dates;- •
- the
rate orinterest rates,at which such ACE debt securities will bear interest,if any, which rate may be zeroinif thecase of certainACE debt securities are issued atan issue price representinga discount from the principal amount payable at maturity, or the method by whichsuch rate orthe interest rates will be determined,(including,including, if applicable, any remarketing option or similarmethod), andmethod;
- •
- the date or dates from which
suchinterest, if any, will accrue or the method by whichsuchthe date or dates will be determined;.- •
- the
dateinterest payment dates and regular record dates;- •
- whether and under what circumstances we will pay additional amounts because of taxes or
datesgovernmental charges that might be imposed onwhich interest, if any, on suchholders of the ACE debt securitieswill be payableand,any regular record dates applicable to the date or dates on which interest will beif so,payable; .whether and on what termsACEwe will have the option to redeemsuchthe ACE debt securities in lieu of paying these additional amounts; whether and on what terms we will have the option to redeem the ACE debt securities in lieu of paying additional amounts in respect ofcertainBermuda or Cayman Islands taxes, fees, duties, assessments or governmental charges that might be imposed onholders of such ACE debt securities (andyou and the terms ofsuch option); .the option;- •
- the place or places where the principal of, any premium or interest on or any additional amounts with respect to
suchany ACE debt securities will be payable, where any ofsuchACE debt securities that are issued in registered form may be surrendered for registration of transfer or exchange, and where anysuchACE debt securities may be surrendered for conversion or exchange;.- •
- whether any of
suchthe ACE debt securities are to be redeemable attheour optionof ACEand, if so, the date or dates on which, the period or periods within which, the price or prices at which and the other terms and conditions upon whichsuch ACE debt securitiesthey may be redeemed, in whole or inpart, at the option of ACE; .part;- •
- whether
ACEwe will be obligated to redeem or purchase any ofsuchthe ACE debt securities pursuant to any sinking fund or analogous provision or attheyour option,of any holder thereofand, if so, thedatedates ordates on which, the period or periods within which, the price orpricesat whichand the other termsand conditions uponon whichsuchthe ACE debt securitieswillmust be redeemed or purchasedin whole or in part,pursuant tosuchthis obligation and any provisions for the remarketing ofsuchthe ACE debt securities so redeemed or purchased;.- •
- if other than denominations of $1,000 and any integral multiple
thereof,of $1,000, the denominations in which any ACE debt securities to be issued in registered form will be issuable and, if other thana denominationdenominations of $5,000, the denominations in which any ACE debt securities to be issued in bearer form will be issuable;.- •
- whether the ACE debt securities will be convertible into ordinary shares and/or exchangeable for other securities, whether or not issued by
ACE,us and, if so, the terms and conditions upon whichsuchthe ACE debt securities will besoconvertible or exchangeable;.- •
- if other than the principal amount, the portion of the principal amount,
(oror the method by whichsuchthe portion will bedetermined)determined, ofsuchthe ACE debt securities that will be payable upon declaration of acceleration of the maturitythereof; .of the ACE debt securities;- •
- if other than United States dollars, the currency of payment
including composite currencies, ofin which the principal of, any premium or interest on or any additional amountswith respect to any of suchon the ACE debtsecurities; .securities will be paid;- •
- whether the principal of, any premium or interest on or any additional amounts
with respect to suchon the ACE debt securities will be payable, attheour or your election,of ACE or a holder,in a currency other than that in whichsuchthe ACE debt securities are stated to be payable, and thedate ordateson which, the period or periods within which,and the other termsand conditionsupon whichsuchthis election may be made;22.- •
- any index, formula or other method used to determine the amount of
payments ofprincipal of, any premium or interest on or any additional amountswith respect to suchon the ACE debt securities;.- •
- whether
suchthe ACE debt securities are to be issued in the form of one or more global securities and, if so, the identity of the depositary forsuchthe global security or securities;.- •
- whether
suchthe ACE debt securities areACEseniordebt securitiesor subordinateddebt securitiesand, ifACEsubordinated,debt securities,thespecificapplicable subordinationprovisions applicable thereto; .provisions;
- •
- in the case of ACE subordinated debt securities, the relative degree, if any, to which
suchthe ACE subordinated debt securitiesof the serieswill be senior to or be subordinated to other series of ACE subordinated debt securities or other indebtedness of ACE in right of payment, whethersuchthe other series of ACE subordinated debt securities or other indebtedness is outstanding or not;.- •
- any deletions from, modifications of or additions to the
Eventsevents ofDefaultdefault or covenants ofACE with respect to such ACE debt securities; .ACE;- •
- whether the provisions described below under "Discharge, Defeasance and Covenant Defeasance" will be applicable to
suchthe ACE debt securities;.- •
- whether any of
suchthe ACE debt securities are to be issued upon the exercise of warrants and the time, manner and place forsuchthe ACE debt securities to be authenticated and delivered; and.- •
- any other terms of
suchthe ACE debt securities and any other deletions from or modifications or additions to the applicable ACEindenture in respect of such ACE debt securities.indenture. (Section 3.1)ACEWe will have the ability under the ACE indentures to "reopen" a previously issued series of ACE debt securities and issue additional ACE debt securities of that series or establish additional terms of that series.
ACE isWe are also permitted to issue ACE debt securities with the same terms as previously issued ACE debt securities.(Section 3.1)Unless otherwise
providedset forth in therelatedapplicable prospectus supplement, principal of premium and interest on and additional amounts, if any,with respect to anyon the ACE debt securities will initially be payable atthe office or agency maintained by ACE for such purposes (initiallythe corporate trust office of thetrustee). In the case oftrustee or any other office or agency designated by us. Interest on ACE debt securities issued in registeredform, interestform:
- •
- may be paid by check mailed to the persons entitled
theretoto the payments at their addresses appearing on the security register or by transfer to an account maintained by the payee with a bank located in the UnitedStates. Interest on ACE debt securities issued in registered formStates; and- •
- will be payable on any interest payment date to the persons in whose names the ACE debt securities are registered at the close of business on the regular record date with respect to
suchthe interest payment date.AllWe will designate the initial paying agents,
initially designated by ACE for the ACE debt securitieswhich will be named in therelatedapplicable prospectussupplement. ACEsupplement, and may, at any time, designate additional paying agents,orrescind the designation of any paying agent or approve a change in the office through which any paying agentacts, except that ACE will beacts. However, we are required to maintain a paying agent in each place where the principal of, any premium or interest on or any additional amounts with respect to the ACE debt securities are payable.(Sections 3.7 and 10.2)Unless otherwise
providedset forth in therelatedapplicable prospectus supplement, you may present the ACE debt securitiesmay be presentedfor transfer,(dulyduly endorsed or accompanied by a written instrument of transfer if so required by ACE or the securityregistrar)registrar, orexchangedexchange for other ACE debt securities of the same series(containingcontaining identical terms and provisions, in any authorized denominations, and of a like aggregate principalamount)amount, in each case at the office or agency maintained byACEus forsuchthis purposes,(initiallywhich will initially be the corporate trust office of thetrustee). Suchtrustee. Any transfer or exchange will be made without service charge,but ACEalthough we may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses then payable. ACEwillis notberequiredto (1)to:
- •
- issue, register the transfer of, or exchange ACE debt securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any
suchACE debt securities and ending at the close of business on the day ofsuch mailingmailing; or(2)- •
- register the transfer of or exchange any ACE debt security
so 23selected for redemption, in whole or in part, except the unredeemed portion of any ACE debt security being redeemed in part. (Section 3.5) ACE has appointed the trustee as security registrar. Any transfer agent (in addition to the security registrar) initially designated by ACE for any ACE debt securities will be named
Unless otherwise set forth in the
relatedapplicable prospectussupplement. ACE may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that ACEsupplement, we willbe required to maintain a transfer agent in each place where the principal of, any premium or interest on or any additional amounts with respect toonly issue the ACE debt securitiesare payable. (Section 10.2) Unless otherwise provided in the related prospectus supplement, the ACE debt securities will be issued onlyin fully registered form without coupons in minimum denominations of $1,000 and any integral multiplethereof.of $1,000. (Section 3.2)TheIf the ACE debt securitiesmay be represented in whole or in part by one or more global ACE debt securities registered in the name of a depositary or its nominee and, if so represented, interests in such global ACE debt security will be shown on, and transfers thereof will be effected only through, records maintained by the designated depositary and its participants as described below. Where ACE debt securities of any seriesare issued in bearer form,the specialany restrictions and considerations, includingspecialoffering restrictions andspecial United StatesU.S. Federal income tax considerations applicable tosuch ACE debtthese securities, and to payment on and transfer and exchange of,such ACE debtthese securities, will be described in therelatedapplicable prospectus supplement.The ACE debt securities may be issued as original issue discount securities,
(bearingwhich means that they will bear no interest orbearingbear interest at a rate which, at the time of issuance, is below marketrates) torates. ACE debt securities issued as original issue discount securities will be sold at a substantial discount below their principal amount.Special United StatesU.S. Federal income tax and other considerations applicable to original issue discount securities will be described in the
relatedapplicable prospectus supplement.If the purchase price,
of any ACE debt securities is payable in oneormore foreign currencies or currency units or if any ACE debt securities are denominated in one or more foreign currencies or currency units or ifthe principal of, or any premium or interest on, or any additional amounts with respect to, any ACE debt securities is payable in, or if any ACE debt securities are denominated in, one or more foreign currencies or currency units, the restrictions, elections,certain United StatesU.S. Federal income tax considerations, specific terms and other informationwith respect to such ACE debt securities and such foreign currency or currency unitswill be set forth in therelatedapplicable prospectus supplement.ACE will comply with Section 14(e) under the Exchange Act, and any other tender offer rules under the Exchange Act which may then be applicable, in connection with any obligation of ACE to purchase ACE debt securities at the option of the holders. Any such obligation applicable to a series of ACE debt securities will be describedUnless otherwise set forth in the
relatedapplicable prospectussupplement. Unless otherwise described in a prospectussupplement,relating to any ACE debt securities,other than as described below under"--Covenants"—Covenants Applicable to ACE Senior DebtSecurities--LimitationSecurities—Limitation on Liens on Stock of Designated Subsidiaries," the ACE indentures do notcontain any provisions that wouldlimitACE'sour ability to incur indebtedness orthat would affordprotect holders of the ACE debt securitiesprotectionin the event of a sudden and significant decline intheour credit qualityof ACEor a takeover, recapitalization or highly leveraged or similar transaction involvingACE.us. Accordingly,ACEwe could in the future enter into transactions that could increase the amount ofindebtednessits outstandingat that timeindebtedness or otherwise affectACE'sits capital structure or credit rating.You should refer to the prospectus supplement relating to a particular series of ACE debt securities for information regarding to any deletions from, modifications of or additions to the Events of Defaults described below or covenants of ACE contained in the ACE indentures, including any addition of a covenant or other provisions providing event risk or similar protection.Conversion and Exchange
The terms, if any, on which ACE debt securities
of any seriesare convertible into or exchangeable for, either mandatorily, at our or your option, property or cash, ordinary shares, preferred shares or other securities, whether or not issued byACE, property or cash,us, or a combination of any ofthe foregoing,these, will be set forth in therelatedapplicable prospectus supplement.Such terms may 24include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of ACE, in which the securities, property or cash to be received by the holders of the ACE debt securities would be calculated according to the factors and at such time as described in the related prospectus supplement.Global Securities
The ACE debt securities
of a seriesmay be issued, in whole or in part, in the form of one or more globalACE debtsecurities that will be deposited with, or on behalf of, a depositary identified in the applicable prospectus supplementrelating to such series. The specific termsand registered in the name of the depositaryarrangement with respect to a series ofor its nominee. Interests in any global ACE debtsecurities will be described in the prospectus supplement relating to such series. ACE anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a global security, the depositary for such global security or its nominee will credit, on its book-entry registration and transfer system, the respective principal amounts of the ACE debt securities represented by such global security. Such accounts will be designated by the underwriters or agents with respect to such ACE debt securities or by ACE if such ACE debt securities are offered and sold directly by ACE. Ownership of beneficial interests in a global security will be limited to persons that may hold interests through participants. Ownership of beneficial interests in such globalsecurity will be shown on, and transfers of thetransfer of that ownershipACE debt securities will be effected only through, records maintained by the depositaryorand itsnominee (with respect to interestsparticipants as described below.The specific terms of
participants) and on the records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global security. So long asthe depositaryfor a global security, or its nominee, is the registered owner of such global security, such depositary or such nominee, as the case may be,arrangement will beconsidereddescribed in thesole owner or holderapplicable prospectus supplement.Payment of Additional Amounts
We will make all payments on the ACE debt securities
represented by such global security for all purposes under the applicable ACE indenture. Except as described below, owners of beneficial interests in a global security will not be entitled to have ACE debt securities of the series represented by such global security registered in their names and will not receive or be entitled to receive physical delivery of ACE debt securities of that series in definitive form. Principal of, any premium and interest on, and any additional amounts with respect to, ACE debt securities registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the global security representing such ACE debt securities. None of ACE, the trustee, any paying agent or the security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the global security for such ACE debt securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. ACE expects that the depositary for a series of ACE debt securities or its nominee, upon receipt of any payment with respect to such ACE debt securities, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interest in the principal amount of the global security for such ACE debt securities as shown on the records of such depositary or its nominee. ACE also expects that payments by participants to owners of beneficial interests in such global security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in street name, and will be the responsibility of such participants. The ACE indentures provide that if (1) the depositary for a series of ACE debt securities notifies ACE that it is unwilling or unable to continue as depositary or if such depositary ceases to be eligible under the applicable ACE indenture and a successor depositary is not appointed by ACE within 90 days of written notice, (2) ACE 25determines that ACE debt securities of a particular series will no longer be represented by global securities and executes and delivers to the trustee a company order to such effect or (3) an Event of Default with respect to a series of ACE debt securities has occurred and is continuing, the global securities will be exchanged for ACE debt securities of such series in definitive form of like tenor and of an equal aggregate principal amount, in authorized denominations. Such definitive ACE debt securities will be registered in such name or names as the depositary shall instruct the trustee. (Section 3.5) It is expected that such instructions may be based upon directions received by the depositary from participants with respect to ownership of beneficial interests in global securities. Payment of Additional Amounts ACE will make all payments of principal of and premium, if any, interest and any other amounts on, or in respect of, the ACE debt securities of any serieswithout withholdingor deduction at source for, or on accountof any present or future taxesfees, duties, assessmentsor governmental chargesof whatever nature imposed or levied by or on behalfof the Cayman Islands or Bermuda, each referred to as a taxing jurisdiction,or any political subdivision or taxing authority thereof or therein,unlesssuch taxes, fees, duties, assessments or governmental chargeswe are required tobe withhelddo so by applicable law ordeducted by (x) the laws (or any regulations or rulings promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings, including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof.regulation.If
a withholding or deduction at source iswe are requiredACEto withhold amounts, we will, subject tocertainthe limitationsand exceptionsdescribed below, pay tothe holder of any such ACE debt security suchyou additional amountsas may be necessaryso that every net paymentof principal, premium, if any, interest or any other amountmade tosuch holder,you, after the withholding,or deduction,willnotbeless thanthe same amount provided for insuchthe ACE debt security and the applicable ACEindenture to be then due and payable. ACEindenture.We will not be required to pay any additional amounts
for or on account of: 1.for:
- •
- any tax
fee, duty, assessmentor governmental chargeof whatever naturewhich would not have been imposed but for the fact thatsuch holder (a) wasyou:- •
- were a resident
domiciliary or nationalof, or engaged in business or maintained a permanent establishment orwaswere physically present in, the relevant taxing jurisdictionor any political subdivision thereofor otherwise had some connection with the relevant taxing jurisdiction other thanby reason ofthe mere ownership of, or receipt of paymentunder, suchon, the ACE debt security,(b)- •
- presented
suchthe ACE debt security for payment in the relevant taxing jurisdiction,or any political subdivision thereof,unlesssuchthe ACE debt security could not have been presented for payment elsewhere, or(c)- •
- presented
suchthe ACE debt security for payment more than 30 days after the date on which the paymentin respect of such ACE debt securitybecame dueand payable or provided for, whichever is later, except to the extent that the holderunless you would have been entitled tosuchthese additional amounts ifityou had presentedsuchthe ACE debt security for paymenton any daywithinthatthe 30-day period;2.- •
- any estate, inheritance, gift, sale, transfer, personal property or similar tax
assessmentor other governmental charge;3.- •
- any tax
assessmentor other governmental charge that is imposed or withheldby reasonbecause oftheyour failureby the holder or the beneficial owner of such ACE debt securityto comply with any reasonable request byACE addressed to the holder within 90 days of such request (a)us:- •
- to provide information concerning
theyour nationality, residence or identity or that of theholderbeneficial owner; orsuch beneficial owner or (b)- •
- to make any
declaration or other similarclaim or satisfy any information or reporting requirement, which in either case is requiredor imposedbystatute, treaty, regulation or administrative practice ofthe relevant taxing jurisdictionor any political subdivision thereofas a precondition to exemption from all or part ofsuchthe taxassessmentor other governmental charge; or4.- •
- any combination of
items (1), (2) and (3). 26the above items. In addition,
ACEwe will not pay additional amountswith respect to any payment of principal of, or premium,ifany, interest or any other amounts on, any such ACE debt security to any holder who isyou are a fiduciary or partnership or other than the sole beneficial owner ofsuchthe ACE debt securitytoif theextent such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of abeneficiary or partner or settlorwith respect to such fiduciary or a member of such partnership or a beneficial owner whowould not have been entitled tosuchthe additional amounts had it been the holder of the ACE debt security. (Section 10.4)Covenants Applicable to ACE Senior Debt Securities
Limitation on Liens on Stock of Designated Subsidiaries
Under the ACE senior indenture,
ACEwe will covenant that, so long as any ACE senior debt securities are outstanding,itwe will not, nor willitwe permit anySubsidiarysubsidiary to, create, incur, assumeincur,or guarantee or otherwise permit to exist anyIndebtednessindebtedness secured by anymortgage, pledge, lien,security interestor other encumbrance uponon any shares of capital stock of anyDesignated Subsidiary (whether such shares of stock are now owned or hereafter acquired) without effectively providingdesignated subsidiary unless we concurrently provide that the ACE senior debt securities(and,and, ifACE so elects,we elect, any otherIndebtedness of ACEindebtedness that is not subordinate to the ACE senior debt securities and with respect to which the governing instruments require, or pursuant to whichACE is otherwisewe are obligated, to provide suchsecurity)security, will be secured equallyand ratablywithsuch Indebtednessthis indebtedness for at least the time periodsuchthis otherIndebtednessindebtedness is so secured. (Section 10.5 of the ACE senior indenture)For purposes of the ACE senior indenture, "capital stock" of any PersonThe term "designated subsidiary" means any
and all shares, interests, rights to purchase, warrants, options, participationspresent orother equivalentsfuture consolidated subsidiary, the consolidated net worth ofor interests in, however designated, equitywhich constitutes at least 5% ofsuch Person, including preferred stock, but excluding any debt securities convertible into such equity.our consolidated net worth. (Section 1.1 of the ACE senior indenture)The term "Designated Subsidiary" means any present or future consolidated Subsidiary of ACE, the Consolidated Net Worth of which constitutes at least 5% of ACE's Consolidated Net Worth. (Section 1.1 of the ACE senior indenture) As of April 30, 2002, ACE's Designated Subsidiaries were ACE Bermuda, Tempest, ACE INA and ACE USA..For purposes of the ACE indentures, the term
"Indebtedness""indebtedness" means, with respect to anyPerson, (1)person:
- •
- the principal of and any premium and interest
on (a)on:- •
- indebtedness
of such Personfor money borrowed and(b)- •
- indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which
such Personthe person is responsible or liable;(2)- •
- all
Capitalized Lease Obligations of such Person; (3)capitalized lease obligations;- •
- all obligations
of such Personissued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement,(butbut excluding trade accounts payable arising in the ordinary course ofbusiness); (4)business;- •
- all obligations
of such Personfor the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction,(othergenerally other than obligations with respect to letters of credit securing obligations (other than the obligations describedin (1) through (3)above), entered into in the ordinary course of businessof such Personto the extentsuchthese letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the thirdBusiness Daybusiness day following receipt bysuch Personthe person of a demand for reimbursement following paymenton theor a letter ofcredit); (5)credit;- •
- all obligations of the type referred to
in clauses (1) through (4)above of otherPersonspersons and all dividends of otherPersonspersons for the payment of which, in either case,such Personthe person is responsible or liable as obligor, guarantor or otherwise;(6)- •
- all obligations of the type referred to
in clauses (1) through (5)above of otherPersonspersons secured by any mortgage, pledge, lien, security interest or other encumbrance on any property or asset ofsuch Person (whetherthe person, whether or notsuchthe obligation is assumed bysuch Person),theamount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured;person; and(7)- •
- any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described
as Indebtedness in clauses (1) through (6)above. (Section 1.1)27Limitations on Disposition of Stock of Designated Subsidiaries
The ACE senior indenture also provides that, so long as any ACE senior debt securities are outstanding and except in a transaction otherwise governed by
suchthe ACEindenture, ACEindentures, we will not issue, sell, assign, transfer or otherwise dispose of any shares of, securities convertible into, or warrants, rights or options to subscribe for or purchase shares of, capital stock,(otherother than preferred stock having no voting rights, of anykind) of any Designated Subsidiary, anddesignated subsidiary. Similarly, we will not permit anyDesignated Subsidiarydesignated subsidiary to issue,(otherother than toACE) any shares (other than director's qualifying shares)us, these types oforsecurities,convertible into, orwarrants, rights or options,to subscribe for or purchaseother than director's qualifying sharesof, capital stock (other thanand preferred stock having no voting rights, of anykind) of any Designated Subsidiary,designated subsidiary, if, after giving effect toany suchthe transaction and the issuance of the maximum number of shares issuable upon the conversion or exercise of allsuchthe convertible securities, warrants, rights or options,ACEwe would own, directly or indirectly, less than 80% of the shares of capital stock ofsuch Designated Subsidiary (otherthe designated subsidiary, other than preferred stock having no votingrights of any kind); provided, however, that (1) any issuance, sale, assignment,rights.However, we may issue, sell, assign, transfer or
other disposition permitted by ACE may only be made forotherwise dispose of securities if the consideration is at least a fair market valueconsiderationas determined byACE'sour boardof directors pursuant to a resolution adopted in good faith and (2) the foregoing will not prohibit any such issuanceordisposition of securitiesif required byanylaw orany regulation or order of any governmental or insurance regulatory authority. Notwithstanding the foregoing, (1) ACEregulation. We may also merge or consolidate anyDesignated Subsidiarydesignated subsidiary into or with another direct or indirectSubsidiary of ACE,subsidiary, the shares of capital stock of whichACE ownswe own at least 80%, and (2) ACE may,or, subject to the provisions described under"--Consolidation,"—Consolidation, Amalgamation, Merger and Sale of Assets" below, sell,assign,transfer or otherwise dispose of the entire capital stock of anyDesignated Subsidiarydesignated subsidiary at one timeforif the consideration is at leastafair market valueconsiderationas determined byACE's board of directors pursuant to a resolution adopted in good faith.our board. (Section 10.6 of the ACE senior indenture)Consolidation, Amalgamation, Merger and Sale of Assets
Each ACE indenture provides that
ACEwe maynot (1)not:
- •
- consolidate or amalgamate with or merge into any
Personperson or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to anyPerson,person, or(2)- •
- permit any
Personperson to consolidate or amalgamate with or merge intoACE,us, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety toACE,us,unless,
(a) in
- •
- the
case of (1) above, such Personperson is aCorporationcorporation organized and existing under the laws of the United States of America, anyState thereof orstate of the U.S., the District of Columbia, Bermuda,orthe Cayman Islands or any other country that, on March 15, 2002, was a member of the Organization for Economic Cooperation andwillDevelopment;- •
- the surviving entity expressly
assume, by supplemental indenture satisfactory in form toassumes thetrustee, the due and punctualpayment ofthe principal of, any premium and interestall amounts onand any additional amounts with respect toall of the ACE debt securitiesissued thereunder,and the performance ofACE'sour obligations undersuchthe ACE indenture and the ACE debtsecurities issued thereunder, andsecurities;- •
- the surviving entity provides for conversion or exchange rights in accordance with the provisions of the ACE debt securities of any series that are convertible or exchangeable into ordinary shares or other securities;
(b)and- •
- immediately after giving effect to
suchthe transaction and treating any indebtedness which becomes our an obligationof ACE or a Subsidiaryas a result ofsuchthe transaction as having been incurred byACE or such Subsidiaryus at the time ofsuchthe transaction, noEventevent ofDefault,default, and no event which after notice or lapse of time or both would become anEventevent ofDefault,default, will have happened and becontinuing; and (c) certain other conditions are met.continuing. (Section 8.1)Events of Default
Each of the following events will constitute an
Eventevent ofDefaultdefault underthe applicableeach ACEindenture with respect to any series of ACE debt securities issued thereunder (whatever the reason for such Event of Default and whether it will be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1)indenture:
- •
- default in the payment of any interest on,
any ACE debt security of such series,or any additional amounts payable with respectthereto,to, any ACE debt security whensuchthe interestbecomesorsuchadditional amounts become due and payable, and continuance ofsuchthis default for a period of 30 days;28(2)- •
- default in the payment of the principal of or any premium on,
any ACE debt security of such series,or any additional amounts payable with respectthereto,to, any ACE debt security whensuchthe principal,orpremiumbecomesorsuchadditional amounts become due and payable either at maturity, upon any redemption, by declaration of acceleration or otherwise;(3)- •
- default in the deposit of any sinking fund payment, when
and as due by the terms of any ACE debt security of such series; (4)due;- •
- default in the performance, or breach, of any covenant or warranty
of ACE contained in the applicable ACE indenturefor the benefit ofsuch series or inthe holders of the ACE debt securities,of such series,and the continuance ofsuchthis default or breach for a period of 60 days afterthere has been givenwe have received written noticeas provided in such ACE indenture; (5)from the holders;- •
- if any event of default
as defined in anyunder a mortgage, indenture or instrument under whichthere may be issued,we issue, or by whichthere may be securedwe secure orevidenced,evidence, anyIndebtednessofACE (includingindebtedness, including anEventevent ofDefaultdefault under any other series of ACE debtsecurities),securities, whethersuch Indebtednessthe indebtedness now exists or ishereafterlater created or incurred, happens and consists of default in the payment of more than $50,000,000 in principal amount ofsuch Indebtednessindebtedness at the maturitythereof (afterof the indebtedness, after giving effect to any applicable graceperiod)period, or results insuch Indebtednessthe indebtedness in principal amount in excess of $50,000,000 becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, andsuchthis default is not cured orsuchthe acceleration is not rescinded or annulled within a period of 30 days afterthereACE hasbeen givenreceived writtennotice as provided in the applicable ACE indenture; (6) ACE shallnotice;
- •
- we fail within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $50,000,000, which is not stayed on appeal or is not otherwise being appropriately contested in good faith;
(7) certain events in- •
- our bankruptcy, insolvency or
reorganization of ACE;reorganization; and(8)- •
- any other
Eventevent ofDefault provideddefault, which will be described inor pursuant tothe applicableACE indenture with respect to ACE debt securities of such series.prospectus supplement. (Section 5.1)If an
Eventevent ofDefaultdefault with respect to the ACE debt securities of any series,(otherother thanan Eventevents ofDefault described in (7) of the preceding paragraph)bankruptcy, insolvency or reorganization, occurs and is continuing, either the trustee or the holders of not less than 25% in principal amount of the outstanding ACE debt securities ofsuchthe seriesby written notice as provided in the applicable ACE indenturemay declare the principal amount,(or suchor a lesser amount as may be provided for in the ACE debt securities, ofsuch series) ofall outstanding ACE debt securities ofsuchthe series to be immediately due and payableimmediately.by written notice. At any time after a declaration of acceleration has been made, but before a judgment or decree for payment of money has been obtained by the trustee,and subject to applicable law and certain other provisions of the applicable ACE indenture,generally, the holders of not less than a majority in principal amount of the ACE debt securities ofsuchthe series mayunder certain circumstances,rescind and annulsuchthe declaration of acceleration.An EventAny event ofDefault described in (7) of the preceding paragraphbankruptcy, insolvency or reorganization will cause the principal amount and accrued interest,(or suchor the lesser amount as provided for in the ACE debt securities,of such series)to become immediately due and payable without any declaration or other act by the trustee or any holder. (Section 5.2)Each ACE indenture provides that, within 90 days after the occurrence of any event which is, or after notice or lapse of time or both would become, an
Eventevent ofDefault with respect to the ACE debt securities of any series, each referred to in this prospectus as adefault the trustee will transmitin the manner set forth in such ACE indenture,notice ofsuchthe default tothe holderseach holder of the ACE debt securitiesof such seriesunlesssuchthe default has been cured orwaived; provided, however, thatwaived. However, except in the case of a default in the payment of principal of, or premium,if any,or interest, if any, on or additional amounts or any sinking fund or purchase fund installment with respect to any ACE debt security,of such series,the trustee may withholdsuchthis notice if and so long as the board of directors,theexecutive committee oratrust committee of directors and/or responsible officers of the trustee determines in good faithdeterminethat the withholding ofsuchthe notice is in the best interest of theholders of ACE debt securities of such series; and provided, further, that in the case of any default of the character described in (5) of the second preceding paragraph, no such notice to holders will be given until at least 30 days after the default occurs.holders. (Section 6.2)29If an
Eventevent ofDefaultdefault occurs and is continuing with respect to the ACE debt securities of any series, the trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the holders of ACE debt securitiesof such seriesby all appropriate judicial proceedings. (Section 5.3) Each ACE indenture provides that, subject to the duty of the trustee during any default to act with the required standard of care, the trustee will be under no obligation to exercise any of its rights or powers undersuchthe ACE indenture at the request or direction of any of the holders,of ACE debt securities,unlesssuchthe holdersshallhave offeredtothe trustee reasonable indemnity. (Section 6.1) Subject tosuchthese indemnification provisions,for the indemnification of the trustee, and subject to applicable law and certain other provisions of the applicable ACE indenture,the holders of a majority in principal amount of the outstanding ACE debt securities of any series will generally have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the ACE debt securities ofsuchthe series. (Section 5.12)Modification and Waiver
ACE and the trustee may modify or amend either ACE indenture with the consent of the holders of not less than a majority in principal amount of the outstanding ACE debt securities of each series affected
thereby; provided, however, that no suchby the modification or amendment,may,so long as the modification or amendment does not, without the consent ofthe holder ofeachoutstanding ACE debt securityaffectedthereby, .holder:
- •
- change the stated maturity of the principal of,
orany premium or installment of interest on or any additional amounts with respect to any ACE debt security,.
- •
- reduce the principal amount of, or the rate,
(oror modify the calculation ofsuch rate)the rate, of interest on, or any additional amounts with respect to, or any premium payable upon the redemption of, any ACE debt security,.- •
- change the obligation of ACE to pay additional amounts,
with respect to any ACE debt security, .- •
- reduce the amount of the principal of an original issue discount security that would be due and payable upon a declaration of acceleration of the maturity
thereofof the original issue discount security or the amountthereofprovable in bankruptcy,.- •
- change the redemption provisions
of any ACE debt securityor adversely affect the right of repayment at the option of any holder,of any ACE debt security, .- •
- change the place of payment or the coin or currency in which the principal of, any premium or interest on or any additional amounts with respect to any ACE debt security is payable,
.- •
- impair the right to institute suit for the enforcement of any payment on or after the stated maturity of any ACE debt security
(or,or, in the case of redemption, on or after the redemption date or, in the case of repayment at the option of any holder, on or after the repaymentdate), .date,- •
- reduce the percentage in principal amount of the outstanding ACE debt securities, the consent of whose holders is required in order to take specific actions,
.- •
- reduce the requirements for quorum or voting by holders of ACE debt securities in
Section 15.4 of each ACE indenture, .specified circumstances,- •
- modify any of the provisions
in the applicable ACE indentureregarding the waiver of past defaults and the waiver ofcertainspecified covenants by the holders of ACE debt securities, except to increase any percentage vote required or to provide that other provisions ofsuchthe ACE indenture cannot be modified or waived without the consent of the holder of each ACE debt security affectedthereby, .by the modification,- •
- make any change that adversely affects the right to convert or exchange any ACE debt security into or for ordinary shares of ACE or other securities,
(whetherwhether or not issued byACE),ACE, cash or property in accordance with its terms,.- •
- modify any of the provisions of the ACE subordinated indenture relating to the subordination of the ACE subordinated debt securities in a manner adverse to holders of ACE subordinated debt securities, or
.- •
- modify any of the above provisions. (Section 9.2)
30In addition, no supplemental indenture may, directly or indirectly, modify or eliminate the subordination provisions of the ACE subordinated indenture in any manner which might terminate or impair the subordination of the ACE subordinated debt securities of any series to
Senior Indebtedness with respect to such seriessenior indebtedness without the prior written consent of the holders ofsuch Senior Indebtedness.the senior indebtedness. (Section 9.7 of the ACE subordinated indenture)ACE and the trustee may modify or amend either ACE indenture and the ACE debt securities of any series without the consent of any holder in order to, among other things:
.
- •
- provide for a successor to ACE pursuant to a consolidation, amalgamation, merger or sale of assets;
.- •
- add to the covenants of ACE for the benefit of the holders of all or any series of ACE debt securities or to surrender any right or power conferred upon
ACE by the applicable ACE indenture; .ACE;- •
- provide for a successor trustee with respect to the ACE debt securities of all or any series;
.
- •
- cure any ambiguity or correct or supplement any provision
in either ACE indenturewhich may be defective or inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under either ACE indenture which will not adversely affect the interests of the holders of ACE debt securities of any series;.- •
- change the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of ACE debt
securities under either ACE indenture; .securities;- •
- add any additional
Eventsevents ofDefaultdefault with respect to all or any series of ACE debt securities;.- •
- secure the ACE debt securities;
.- •
- provide for conversion or exchange rights of the holders of any series of ACE debt securities; or
.- •
- make any other change that does not materially adversely affect the interests of the holders of any ACE debt securities then
outstanding under the applicable ACE indenture.outstanding. (Section 9.1)The holders of at least a majority in principal amount of the outstanding ACE debt securities of any series may, on behalf of the holders of all ACE debt securities of that series, waive compliance by ACE with
certain covenants of the applicable ACE indenture.specified covenants. (Section 10.8 of the ACE senior indenture; Section 10.6 of the ACE subordinated indenture) The holders of not less than a majority in principal amount of the outstanding ACE debt securities of any series may, on behalf of the holders of all ACE debt securities of that series, waive any past default and its consequencesunder the applicable ACE indenturewith respect to the ACE debt securities of that series, except adefault (1)default:
- •
- in the payment of principal of, any premium or interest on or any additional amounts with respect to ACE debt securities of that
seriesseries; or(2)- •
- in respect of a covenant or provision
of the applicable ACE indenturethat cannot be modified or amended without the consent of the holder of each outstanding ACE debt security of any series affected. (Section 5.13)Under each ACE indenture, ACE
is required tomust annually furnish the trustee annually a statementas toregarding its performanceby ACEofcertain of itsspecified obligationsunder that ACE indentureandas toany default insuch performance.its performance under the applicable ACE indenture. ACE is also required to deliver to the trustee, within five days after its occurrence,thereof,written notice of anyEventevent ofDefault,default, or any event which after notice or lapse of time or both would constitute anEventevent ofDefault,default, resulting from the failure to perform, or breach of, any covenant or warranty contained in the applicable ACE indenture or the ACE debtsecurities of any series.securities. (Section 10.9 of the ACE senior indenture; Section 10.7 of the ACE subordinated indenture)Discharge, Defeasance and Covenant Defeasance
ACEWe may discharge
certainour payment obligationsto holders of any series of ACE debt securities that have not already been delivered to the trustee for cancellation and that either have become due and payable or will become due and payable within one year (or scheduled for redemption within one year) by depositing with the trustee, in 31trust, funds in U.S. dollars or in the Foreign Currency (as defined below) in which such ACE debt securities are payable in an amount sufficient to pay the entire indebtednessonsuch ACE debt securities with respect to principal and any premium, interest and additional amounts to the date of such deposit (if such ACE debt securities have become due and payable) or to the maturity thereof, as the case may be. (Section 4.1) Each ACE indenture provides that, unless the provisions of Section 4.2 thereof are made inapplicable tothe ACE debt securities,ofwhich we refer to as defeasance, orwithin any series pursuantelect toSection 3.1 thereof, ACE may elect either (1) to defease andbe discharged fromany and allcomplying with the covenants in the ACE indentures, except for certain ministerial obligations,with respect to suchlike registering transfers or exchanges of the ACE debt securities,(except for, among other things, the obligationwhich we refer topay additional amounts, if any, upon the occurrence of certain events of taxation, assessment or governmental charge with respect to payments on such ACE debt securities and other obligations to register the transfer or exchange of such ACE debt securities, to replace temporary or mutilated, destroyed, lost or stolen ACE debt securities, to maintain an office or agency with respect to such ACE debt securities and to hold moneys for payment in trust), referred to in this prospectus as defeasance, or (2) to be released from its obligations with respect to such ACE debt securities under certain covenants as described in the related prospectus supplement, and any omission to comply with such obligations will not constitute a default or an Event of Default with respect to such ACE debt securities, referred to in this prospectusas covenant defeasance.Defeasance or covenant defeasance, as the case may be, will be conditioned upon the irrevocable deposit by
ACEus with theTrustee,trustee, in trust, ofana cash amountin U.S. dollarsorin the Foreign Currency in which such ACE debt securities are payable at stated maturity, or Government Obligations (as defined below),government obligations, or both,applicable to such ACE debt securitieswhich, through the scheduled payment of principal and interest in accordance with their terms, will provide money in an amount sufficient to pay the principal of, any premium and interest on and any additional amounts with respect to,suchthe ACE debt securities on the scheduled due dates. (Section 4.2)Such a trustWe may only
be establisheddo this if, among otherthings, (1)things:
- •
- the
applicabledefeasance or covenant defeasance does not result in a breach or violation of, or constitute a default under, the applicable ACE indenture or any other material agreement or instrument to which ACE is a party or by which it isbound, (2)bound;
- •
- no
Eventevent ofDefaultdefault or event which with notice or lapse of time or both would become anEventevent ofDefaultdefault with respect to the ACE debt securities to be defeased will have occurred and be continuing on the date of establishment ofsuch athe trust and, with respect to defeasance only, at any time during the period ending on the 123rd day aftersuch datethat date; and(3) ACE- •
- we has delivered to the trustee an opinion of counsel
(as specified in the ACE indenture)to the effect thatthe holders of such ACE debt securitiesyou will not recognize income, gain or loss forUnited StatesU.S. Federal income tax purposes as a result ofsuchthe defeasance or covenant defeasance and will be subject toUnited StatesU.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case ifsuchthe defeasance or covenant defeasance had notoccurred, and suchoccurred. The opinion of counsel, in the case of defeasance, must refer to and be based upon a letter ruling of theInternal Revenue ServiceI.R.S. received byACE,us, aRevenue Rulingrevenue ruling published by theInternal Revenue ServiceI.R.S. or a change in applicableUnited StatesU.S. Federal income tax law occurring after the date of the applicable ACE indenture. (Section 4.2)"Foreign Currency" means any currency, currency unit or composite currency, including, without limitation, the euro, issued by the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments. (Section 1.1) "Government Obligations" means debt securities which are (1) direct obligations of the United States of America or the government or the governments which issued the Foreign Currency in which the ACE debt securities of a particular series are payable, for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such government or governments which issued the Foreign Currency in which the ACE debt securities of such series are payable, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government or governments, and which, in the case of clauses (1) and (2), are not callable or redeemable at the option of the issuer or issuers thereof, and will also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or any other amount with respect to 32any such Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian with respect to the Government Obligation or the specific payment of interest on or principal of or any other amount with respect to the Government Obligation evidenced by such depository receipt. (Section 1.1) If after ACE has deposited funds and/or Government Obligations to effect defeasance or covenant defeasance with respect to ACE debt securities of any series, (1) the holder of an ACE debt security of that series is entitled to, and does, elect pursuant to Section 3.1 of the applicable ACE indenture or the terms of such ACE debt security to receive payment in a currency other than that in which such deposit has been made in respect of such ACE debt security, or (2) a Conversion Event (as defined below) occurs in respect of the Foreign Currency in which such deposit has been made, the indebtedness represented by such ACE debt security will be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, any premium and interest on, and any additional amounts with respect to, such ACE debt security as such ACE debt security becomes due out of the proceeds yielded by converting the amount or other properties so deposited in respect of such ACE debt security into the currency in which such ACE debt security becomes payable as a result of such election or such Conversion Event based on (a) in the case of payments made pursuant to clause (1) above, the applicable market exchange rate for such currency in effect on the second business day prior to such payment date, or (b) with respect to a Conversion Event, the applicable market exchange rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event. (Section 4.2) "Conversion Event" means the cessation of use of (1) a Foreign Currency both by the government of the country or countries which issued such Foreign Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community or (2) any currency unit or composite currency for the purposes for which it was established. All payments of principal of, any premium and interest on, and any additional amounts with respect to, any ACE debt security that are payable in a Foreign Currency that ceases to be used by the government or governments of issuance will be made in U.S. dollars. (Section 1.1) In the event ACE effects covenant defeasance with respect to any ACE debt securities and such ACE debt securities are declared due and payable because of the occurrence of any Event of Default other than an Event of Default with respect to any covenant as to which there has been covenant defeasance, the amount in such Foreign Currency in which such ACE debt securities are payable, and Government Obligations on deposit with the trustee, will be sufficient to pay amounts due on such ACE debt securities at the time of the stated maturity but may not be sufficient to pay amounts due on such ACE debt securities at the time of the acceleration resulting from such Event of Default. However, ACE would remain liable to make payment of such amounts due at the time of acceleration.Subordination of ACE Subordinated Debt Securities
The ACE subordinated debt securities
of each serieswillto the extent set forth in the ACE subordinated indenture,generally be subordinate in right of payment to the prior payment in full of allSenior Indebtedness with respect to such series.senior indebtedness. (Section 16.1 of the ACE subordinated indenture) Upon any payment or distribution of our assets,of ACE of any kind or character,whether in cash, property or securities, to creditors uponanyour dissolution, winding-up, liquidation or reorganization,of ACE,whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon allSenior Indebtedness with respect to the ACE subordinated debt securities of any seriessenior indebtedness will first be paid in full, or paymentthereofprovided for in money in accordance with its terms, before the holders of ACE subordinated debt securitiesof such seriesare entitled to receive or retain any payment on account of principal of, or any premium or interest on or any additional amounts with respect to the ACE subordinated debtsecurities of such series, and tosecurities. This means thatendthe holders ofsuch 33Senior Indebtednesssenior indebtedness will be entitled to receivefor application to the payment thereof,any payment or distribution of any kind or character,whether in cash, property or securities,including anysuchpayment or distribution which may be payable or deliverable by reason of the payment of any otherIndebtednessindebtedness of ACE being subordinated to the payment of ACE subordinated debt securities,of such series,which may be payable or deliverable in respect of the ACE subordinated debt securitiesof such seriesupon anysuchdissolution, winding-up, liquidation or reorganization or in anysuchbankruptcy, insolvency, receivership or other proceeding. (Section 16.3 of the ACE subordinated indenture)By reason of
suchsubordination, in the event of our liquidation or insolvency,of ACE,holders ofSenior Indebtedness with respect to the ACE subordinated debt securities of any seriesour senior indebtedness and holders of our other obligationsof ACEthat are not subordinated tosuch Senior Indebtednesssenior indebtedness may recover more ratably than the holders of the ACE subordinated debtsecurities of such series.securities.Subject to the payment in full of all
Senior Indebtedness with respect to the ACE subordinated debt securities of any series, thesenior indebtedness, your rights,of the holdersas a holder of the ACE subordinated debt securities,of such serieswill be subrogated to the rights of the holders ofsuch Senior Indebtednesssenior indebtedness to receive payments or distributions of our cash, property or securitiesof ACEapplicable tosuch Senior Indebtednessthe senior indebtedness until the principal of, any premium and interest on and any additional amounts with respect to the ACEsubordinatedsenior debt securitiesof such serieshave been paid in full. (Section 16.4 of the ACE subordinated indenture)No payment of principal
(includingof, including redemption and sinking fundpayments) ofpayments, or any premium or interest on or any additional amounts with respect to the ACE subordinated debt securities of any series may bemade (1)made:
- •
- if any
Senior Indebtedness with respect to such seriessenior indebtedness is not paid when due and any applicable grace period with respect tosuchthe default has ended andsuch defaulthas not been cured or waived or ceased to exist, or(2)- •
- if the maturity of any
Senior Indebtedness with respect to such seriessenior indebtedness has been accelerated because of a default. (Section 16.2 of the ACE subordinated indenture)The ACE subordinated indenture does not limit or prohibit
ACEus from incurring additionalSenior Indebtedness,senior indebtedness, which may includeIndebtednessindebtedness that is senior to the ACE subordinated debt securitiesof any series,but subordinate to our other
obligations of ACE.obligations. The ACE senior debt securities will constituteSenior Indebtednesssenior indebtedness with respect to the ACE subordinated debtsecurities of each series under the ACE subordinated indenture.securities.The term
"Senior Indebtedness""senior indebtedness" meanswith respect toall indebtedness of ACE outstanding at any time, except:
- •
- the ACE subordinated debt securities of
any particular series, all Indebtedness of ACE outstanding at any time, except (1)theACE subordinated debt securities of such series, (2) Indebtednessseries;- •
- indebtedness as to which, by the terms of the instrument creating or evidencing the
same,indebtedness, it is provided thatsuch Indebtednessthe indebtedness is subordinated to or ranks equally with the ACE subordinated debtsecurities of such series, (3) Indebtedness of ACEsecurities;- •
- indebtedness to an
Affiliate of ACE, (4)affiliate;- •
- interest accruing after the filing of a petition initiating any bankruptcy, insolvency or other similar proceeding unless
suchthe interest is an allowed claim enforceable against ACE in a proceeding under federal or state bankruptcylawslaws; and(5)- •
- trade accounts payable.
Senior
Indebtedness with respect to the ACE subordinated debt securities of any particular seriesindebtedness will continue to beSenior Indebtedness with respect to the ACE subordinated debt securities of such seriessenior indebtedness and be entitled to the benefits of the subordination provisions irrespective of any amendment, modification or waiver of any term ofsuch Senior Indebtedness.the senior indebtedness. (Sections 1.1 and 16.8 of the ACE subordinated indenture)The ACE subordinated indenture provides that
the foregoingthese subordination provisionsinsofar as they relate to any particular series of ACE subordinated debt securities,may be changed prior tosuch issuance.issuance of the ACE subordinated debt securities. Anysuchchange would be described in therelatedapplicable prospectus supplement.34New York Law to Govern
The ACE indentures and the ACE debt securities will be governed by, and construed in accordance with, the laws of the
Statestate of NewYork applicable to agreements made or instruments entered into and, in each case, performed in that state.York. (Section 1.13)Information Concerning the Trustee
ACEWe may, from time to time, borrow from or maintain deposit accounts
withand conduct other banking transactions withBank OneJ.P. Morgan Trust Company,N.A.National Association and its affiliates in the ordinary course of business.Under each ACE indenture,
Bank OneJ.P. Morgan Trust Company,N.A.National Association is required to transmit annual reports to all holders regarding its eligibility and qualifications as trustee under the applicable ACE indenture and related matters. (Section 7.3)35
DESCRIPTION OF ACE INA DEBT SECURITIES AND ACE GUARANTEEThe following description of the ACE INA debt securities and the ACE guarantee sets forth the material terms and provisions of the ACE INA debt securities and the ACE guarantee to which any prospectus supplement may relate. The ACE INA senior debt securities are to be issued under an indenture, referred to in this prospectus as the ACE INA senior indenture, among ACE INA, ACE and
Bank OneJ.P. Morgan Trust Company,N.A.National Association (as successor to The First National Bank of Chicago), as trustee, dated as of August 1, 1999, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. The ACE INA subordinated debt securities are to be issued under an indenture, referred to in this prospectus as the ACE INA subordinated indenture, among ACE INA, ACE andBank OneJ.P. Morgan Trust Company,N.A.National Association (as successor to The First National Bank of Chicago), as trustee,the formdated December 1, 1999, a copy of which isfiledincorporated by reference as an exhibit to the registration statement of which this prospectus forms a part. The ACE INA senior indenture and the ACE INA subordinated indenture are sometimes referred to herein collectively as the"ACEACE INAindentures"indentures and each individually as an"ACEACE INA indenture."The specific terms applicable to a particulartermsissuance oftheACE INA debt securitiesoffered byand anyprospectus supplement, andvariations from theextent to which the general provisions describedterms set forth belowmay apply to the offered ACE INA debt securities,will bedescribedset forth in the applicable prospectus supplement.Because theThe following
summariesis a summary of the material terms and provisions of the ACE INA indentures, the ACE INA debt securities and the ACEguarantee are not complete, youguarantee. You should refer tothe forms ofthe ACE INA indentures and the ACE INA debt securities for complete information regarding the terms and provisions of the ACE INA indentures,including the definitions of some of the terms used below,the ACE INA debt securities and the ACE guarantee.Wherever particular articles, sections or defined terms of an ACE INA indenture are referred to, such articles, sections or defined terms are incorporated herein by reference, and the statement in connection with which such reference is made is qualified in its entirety by such reference.The ACE INA indentures are substantially identical, except forcertainthe covenants of ACE INA and ACE and provisions relating to subordination.General
The ACE INA indentures do not limit the aggregate principal amount of ACE INA debt securities which ACE INA may
issue thereunder and provide thatissue. ACE INA may issue ACE INA debt securitiesthereunderunder the ACE INA indenture from time to time in one or more series.(Section 3.1)The ACE INA indentures do not limit the amount of otherIndebtedness (as defined below)indebtedness or ACE INA debt securities, other thancertainsecuredIndebtedness as described below,indebtedness whichACE,we, ACE INA or their respective subsidiaries may issue.Unless otherwise
providedset forth inathe applicable prospectus supplement, the ACE INA senior debt securities will be unsecured obligations of ACE INA and will rank equally with all of its other unsecured and unsubordinatedindebtedness. The ACE INA subordinated debt securities of each series will be unsecured obligations of ACE INA,indebtedness, subordinated in right of payment to the prior payment in full of allSenior Indebtedness (whichof ACE INA's senior indebtedness, which term includes ACE INA senior debtsecurities) of ACE INA with respect to such series,securities, as described below under "Subordination of ACE INA Subordinated DebtSecurities" and in the related prospectus supplement.Securities." The ACE INA subordinated debt securities of any series issued to an ACE Trust will rank equally with each other series of ACE INA subordinated debt securities issued to other ACE Trusts.Because ACE INA is a holding company, its rights and the rights of its creditors,
(including the holdersincluding you as a holder of ACE INA debtsecurities) and shareholderssecurities, to participate in any distribution of assets of any subsidiary upon that subsidiary's liquidation or reorganization or otherwise would be subject to the prior claims of the subsidiary's creditors, except to the extent that ACE INAmay itself beis a creditorwith recognized claims againstof the subsidiary. The rights of creditors of ACE INA,(including the holdersincluding you as a holder of ACE INA debtsecurities)securities, to participate in the distribution of stock owned by ACE INA incertain ofits subsidiaries, including ACE INA's insurance subsidiaries, may also be subject to the approval ofcertaininsurance regulatory authorities having jurisdiction oversuchthe subsidiaries.36In the eventIf ACE INA subordinated debt securities are issued to an ACE Trust in connection with the issuance of
preferred securities and commonsecurities by that ACE Trust,suchthose ACE INA subordinated debt securities may subsequentlymaybe distributedpro rata to the holders ofsuch preferredthe securitiesand common securities in connection withof the ACE Trust under the dissolution of that ACETrustTrust. This type of distribution would only occur upon the occurrence ofcertainspecified events, which will be described in the applicable prospectus
supplement relating to such preferred securities and common securities.supplement. Only one series of ACE INA subordinated debt securities will be issued to an ACE Trust in connection with the issuance ofpreferred securities and commonsecurities by that ACE Trust.The applicable prospectus supplement
relating to the particular ACE INA debt securities offered therebywill describe the following terms of the offered ACE INA debt securities:.
- •
- the title
of such ACE INA debt securities andtheseries in which such ACE INA debt securities will be included, which may include medium-term notes; .series;- •
- any limit
uponon the aggregate principalamount of such ACE INA debt securities; .amount;- •
- the
date or dates,principal payment dates;- •
- the interest rates, if any, or the method
or methods, if any,by whichsuch date or datesthe interest rates will be determined,on which the principal of such ACE INA debt securities will be payable; . the rateincluding, if applicable, any remarketing option orrates at which such ACE INA debt securities will bearsimilar option. This interestif any, whichrate may be zero in the case ofcertainACE INA debt securities issued at an issue price representing a discount from the principal amount payable atmaturity, or the method by which such rate or rates will be determined (including, if applicable, any remarketing option or similar method), andmaturity;- •
- the date or dates from which
suchinterest, if any, will accrue or the method by whichsuchthe date or dates will be determined;.- •
- the
date orinterest payment dateson which interest, if any, on such ACE INA debt securities will be payableandanyregular record datesapplicable to the date or dates on which interest will be so payable; .dates;- •
- whether and under what circumstances ACE INA will pay additional amounts
in respectbecause ofcertaintaxesfees, duties, assessmentsor governmental charges that might be imposed on holders ofsuchthe ACE INA debt securitieswill be payableand, if so, whether and on what termsACE INAwe will have the option to redeemsuchthe ACE INA debt securities in lieu of payingsuchthese additionalamounts (and the terms of such option); .amounts;- •
- the place or places where the principal of, any premium or interest on or any additional amounts with respect to
suchthe ACE INA debt securities will be payable, where any ofsuchthe ACE INA debt securities that are issued in registered form may be surrendered for registration of transfer or exchange, and where anysuchof the ACE INA debt securities may be surrendered for conversion or exchange;.- •
- whether any of
suchthe ACE INA debt securities are to be redeemable at the option of ACE INA and, if so, the date or dates on which, the period or periods within which, the price or prices at which and the other terms and conditions upon whichsuch ACE INA debt securitiesthey may be redeemed, in whole or in part, at the option of ACE INA;.- •
- whether ACE INA will be obligated to redeem or purchase any of
suchthe ACE INA debt securities pursuant to any sinking fund or analogous provision or attheyour optionof any holder thereofand, if so, the date or dateson which the period or periods within which, the price or prices at whichandtheother terms and conditionsuponon whichsuchthe ACE INA debt securities will be redeemed or purchasedin whole or in part,pursuant tosuchthis obligation, and any provisions for the remarketing ofsuchthe ACE INA debt securitiessoredeemed or purchased;.- •
- if other than denominations of $1,000 and any integral multiple
thereof,of $1,000, the denominations in which any ACE INA debt securities to be issued in registered form will be issuable and, if other than a denomination of $5,000, the denominations in which any ACE INA debt securities to be issued in bearer form will be issuable;.- •
- whether the ACE INA debt securities will be convertible into other securities of ACE INA and/or exchangeable for securities of ACE or other issuers and, if so, the terms and conditions upon which
suchthe ACE INA debt securities will besoconvertible or exchangeable;37.- •
- if other than the principal amount, the portion of the principal amount,
(oror the method by whichsuchthis portion will bedetermined)determined, ofsuchthe ACE INA debt securities that will be payable upon declaration of acceleration of the maturitythereof; .of the ACE INA debt securities;
- •
- if other than United States dollars, the currency of payment
including composite currencies, ofin which the principal of, any premium or interest on or any additional amountswith respect to any of suchon the ACE INA debtsecurities; .securities will be payable;- •
- whether the principal of, any premium or interest on or any additional amounts
with respect to suchon the ACE INA debt securities will be payable, at the election of ACE INA ora holder,you, in a currency other than that in whichsuchthe ACE INA debt securities are stated to be payable and thedate ordateson which, the period or periods within which,andtheother termsand conditionsupon whichsuchthis election may be made;.- •
- any index, formula or other method used to determine the amount of payments of principal of, any premium or interest on or any additional amounts
with respect to suchon the ACE INA debt securities;.- •
- whether
suchthe ACE INA debt securities are to be issued in the form of one or more global securities and, if so, the identity of the depositary forsuchthe global security or securities;.- •
- whether
suchthe ACE INA debt securities areACE INAseniordebt securitiesorACE INAsubordinateddebt securitiesand, ifACE INAsubordinated,debt securities,thespecificapplicable subordinationprovisions applicable thereto; .provisions;- •
- in the case of ACE INA subordinated debt securities issued to an ACE Trust, the terms and conditions of any obligation or right of ACE INA or
a holderyou to convert or exchangesuchthe ACE INA subordinated debt securities into preferred securities of that ACE Trust;.- •
- in the case of ACE INA subordinated debt securities issued to an ACE Trust, the
formspecifics of the restated trust agreement and, if applicable, the agreement relating to ACE's guarantee of the preferred securities of that ACE Trust;.- •
- in the case of ACE INA subordinated debt securities, the relative degree, if any, to which
suchthe ACE INA subordinated debt securities of the series and the related ACE guaranteein respect thereofwill be senior to or be subordinated to other series of ACE INA subordinated debt securities and the related ACEguarantee in respect thereofguarantee(s) or other indebtedness of ACE INA or ACE, as the case may be, in right of payment, whethersuchthe other series of ACE INA subordinated debt securities or other indebtedness is outstanding or not;.- •
- any deletions from, modifications of or additions to the
Eventsevents ofDefaultdefault or covenants of ACE INA or ACE with respect tosuchthe ACE INA debt securities;.- •
- whether the provisions described below under "Discharge, Defeasance and Covenant Defeasance" will be applicable to
suchthe ACE INA debt securities;.- •
- whether any of
suchthe ACE INA debt securities are to be issued upon the exercise of warrants, and the time, manner and place forsuchthe ACE INA debt securities to be authenticated and delivered; and.- •
- any other terms of
suchthe ACE INA debt securities and any other deletions from or modifications or additions to the applicable ACE INA indenture in respect ofsuchthe ACE INA debt securities. (Section 3.1)ACE INA will have the ability under the ACE INA indentures to
"reopen"reopen a previously issued series of ACE INA debt securities and issue additional ACE INA debt securities of that series or establish additional terms of that series. ACE INA is also permitted to issue ACE INA debt securities with the same terms as previously issued ACE INA debt securities. (Section 3.1)Unless otherwise
providedset forth in therelatedapplicable prospectus supplement, principal of, premium and interest on and additional amounts, if any,with respect to anyon the ACE INA debt securities will initially be payable atthe office or agency maintained 38by ACE INA and ACE for such purposes (initiallythe corporate trust office of the
trustee). In the case oftrustee, or any other office or agency designated by ACE INA for this purpose. Interest on ACE INA debt securities issued in registeredform, interestform:
- •
- may be paid by check mailed to the persons entitled
theretoto the payments at their addresses appearing on the security register or by transfer to an account maintained by the payee with a bank located in the UnitedStates. Interest on ACE INA debt securities issued in registered formStates; and- •
- will be payable on any interest payment date to the persons in whose names the ACE INA debt securities are registered at the close of business on the regular record date with respect to
suchthe interest payment date.AllACE INA will designate the initial paying agents,
initially designated by ACE INA for the ACE INA debt securitieswhich will be named in therelatedapplicable prospectussupplement. ACE INAsupplement, and may, at any time, designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agentacts, except thatacts. However, ACE INAand ACE will beis required to maintain a paying agent in each place where the principal of, any premium or interest on or any additional amounts with respect to the ACE INA debt securities are payable.(Sections 3.7 and 10.2)Unless otherwise
providedset forth in therelatedapplicable prospectus supplement, you may present the ACE INA debt securitiesmay be presentedfor transfer,(dulyduly endorsed or accompanied by a written instrument of transfer if so required by ACE INA or the securityregistrar)registrar, orexchangedexchange for other ACE INA debt securities of the same series(containingcontaining identical terms and provisions, in any authorized denominations, and of a like aggregate principalamount)amount, in each case at the office or agency maintained by ACE INA forsuch purposes (initiallythese purposes. This office will initially be the corporate trust office of thetrustee). Suchtrustee. Any transfer or exchange will be made without service charge,butalthough ACE INA may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses then payable. ACE INAwillis notberequiredto (1)to:
- •
- issue, register the transfer of, or exchange, ACE INA debt securities during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any
suchACE INA debt securities and ending at the close of business on the day ofsuch mailingmailing; or(2)- •
- register the transfer of or exchange any ACE INA debt security
soselected for redemption, in whole or in part, except the unredeemed portion of any ACE INA debt security being redeemed in part. (Section 3.5)ACE INA has appointed the trustee as security registrar.
AnyThe security registrar and any transfer agent(in addition to the security registrar)initially designated by ACE INAfor any ACE INA debt securitieswill be named in therelatedapplicable prospectus supplement. At any time, ACE INA mayat any timedesignate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agentacts, except thatacts. However, ACE INAand ACE will beis required to maintain a transfer agent in each place where the principal of, any premium or interest on or any additional amounts with respect to the ACE INA debt securities are payable. (Section 10.2)Unless otherwise
providedset forth in therelatedapplicable prospectus supplement, we will only issue the ACE INA debt securitieswill be issued onlyin fully registered form without coupons in minimum denominations of $1,000 and any integral multiplethereof.of $1,000. (Section 3.2)TheIf the ACE INA debt securitiesmay be represented in whole or in part by one or more global ACE INA debt securities registered in the name of a depositary or its nominee and, if so represented, interests in such global ACE INA debt security will be shown on, and transfers thereof will be effected only through, records maintained by the designated depositary and its participants as described below. Where ACE INA debt securities of any seriesare issued in bearer form,the specialany restrictions and considerations, includingspecialoffering restrictions andspecial United StatesU.S. Federal income tax considerations applicable to,such ACE INA debt securitiesand to payment on and transfer and exchange of,such ACE INA debtthese securities, will be described in therelatedapplicable prospectus supplement.The ACE INA debt securities may be issued as original issue discount securities,
(bearingwhich means that they will bear no interest orbearingbear interest at a rate which, at the time of issuance, is below marketrates) torates. ACE INA debt securities issued as original issue discount securities will be sold at a substantial discount below their principal amount.Special United StatesU.S. Federal income tax and other considerations applicable to original issue discount securities will be described in therelatedapplicable prospectus supplement.If the purchase price,
of any ACE INA debt securities is payable in oneormore foreign currencies or currency units or if any ACE INA debt securities are denominated in one or more foreign currencies or currency units or ifthe principal of,orany premium or interest on or any additional amounts with respect to, any ACE INA debt securities is payable, or if any ACE INA debt securities are denominated, in one or more foreign currencies or currency units, the restrictions, elections,certain United StatesU.S. Federal income tax considerations, specific terms and other informationwith respect to such ACE INA debt securities and such foreign currency or currency unitswill be set forth in therelatedapplicable prospectus supplement.39ACE INA will comply with Section 14(e) under the Exchange Act, and any other tender offer rules under the Exchange Act which may then be applicable, in connection with any obligation of ACE INA to purchase ACE INA debt securities at the option of the holders. Any such obligation applicable to a series of ACE INA debt securities will be describedUnless otherwise set forth in the
relatedapplicable prospectussupplement. Unless otherwise described in a prospectussupplement,relating to any ACE INA debt securities,other than as described below under"--Covenants"—Covenants Applicable to ACE INA Senior DebtSecurities--LimitationSecurities—Limitation on Liens on Stock of Designated Subsidiaries," the ACE INA indentures do not contain any provisions that would limit the ability of ACE INAor ACEto incur indebtedness or that would afford holders of ACE INA debt securities protection in the event of a sudden and significant decline in the credit quality of ACE INA or ACE or a takeover, recapitalization or highly leveraged or similar transaction involving ACE INA or ACE. Accordingly, ACE INA or ACE could in the future enter into transactions that could increase the amount of its outstanding indebtednessoutstanding atthattime or otherwisecould affectACE INA's or ACE'sits respective capital structure or credit rating.You should refer to the prospectus supplement relating to a particular series of ACE INA debt securities for information regarding any deletions from, modifications of or additions to the Events of Defaults described below or covenants of ACE INA or ACE contained in the ACE INA indentures, including any addition of a covenant or other provisions providing event risk or similar protection.ACE Guarantee
ACEWe will fully and unconditionally guarantee all payments
with respect toon the ACE INA debt securities. Unless otherwiseprovidedset forth inathe applicable prospectus supplement,the ACEour guarantee of the ACE INA senior debt securities will be an unsecured obligation of ACE and will rank equally with all of its other unsecured and unsubordinatedindebtedness (including the ACE senior debt securities). The ACEindebtedness. Our guarantee of the ACE INA subordinated debt securitiesof any particular serieswill be an unsecured obligation of ACE, subordinated in right of payment to the prior payment in full of all ACESenior Indebtedness (which term includes ACEseniordebt securities and the ACE guarantee of the ACE INA senior debt securities) with respect to such series as described below under "Subordination of ACE Guarantee" and in the related prospectus supplement. The ACEindebtedness. Our guarantee of the ACE INA subordinated debt securitiesof any seriesissued to an ACE Trust will rank equally withthe ACEour guarantee of each other series of ACE subordinated debt securities issued to other ACE Trusts.Since
ACE iswe are a holding company,itsour rights and the rights ofitsour creditors,(including the holdersincluding you as a holder of the ACE INA debt securities whoare creditorswould be a creditor ofACEours by virtue ofthe ACE guarantee)our guarantee, and shareholders to participate in any distribution of the assets of any subsidiary uponsuchthe subsidiary's liquidation or reorganization or otherwise would be subject to prior claims of the subsidiary's creditors, except to the extent thatACEwe mayitselfbe a creditorwith recognized claims againstof the subsidiary. The right of our creditors,of ACE (including the holders of the ACE INA debt securities who are creditors of ACE by virtue of the ACE guarantee)including you, to participate in the distribution of the stock owned byACEus incertainsome ofitsour subsidiaries, includingACE'sour insurance subsidiaries, may also be subject to approval bycertaininsurance regulatory authorities having jurisdiction oversuchthe subsidiaries.Conversion and Exchange
The terms, if any, on which ACE INA debt securities are convertible into or exchangeable for, either mandatorily, at your option or at ACE INA's option, for ordinary shares of ACE, preferred shares of ACE or other securities, whether or not issued by ACE, property or cash, or a combination of any of these, will be set forth in the applicable prospectus supplement.
Payments of Additional Amounts
We will make all payments
of principal of and premium, if any, interest and any other amountsonor in respect of, theACE INA debt securitiesof any serieswithout withholdingor deduction at source for, or on accountof any present or future taxesfees, duties, assessmentsor governmental chargesof whatever nature imposed or levied by or on behalfof the Cayman Islands or Bermuda, each referred to in this prospectus as a taxing jurisdiction,or any political subdivision or taxing authority thereof or therein,unlesssuch taxes, fees, duties, assessments or governmental chargeswe are required tobe withhelddo so by applicable law ordeducted by (x) the laws (or any regulations or rulings promulgated thereunder) of a taxing jurisdiction or any political subdivision or taxing authority thereof or therein or (y) an official position regarding the application, administration, interpretation or enforcement of any such laws, regulations or rulings (including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivision thereof).regulation.If
a withholding or deduction at source iswe are requiredACEto withhold amounts, we will, subject tocertainthe limitationsand exceptionsdescribed below, pay tothe holder of any such ACE INA debt security suchyou additional amountsas may be necessaryso that40every net payment of principal, premium, if any, interest or any other amountmade tosuch holder,you, after the withholdingor deduction,will not beless thanthe same amount provided for insuchthe ACE INA debt security and the applicable ACE INAindenture to be then due and payable. ACEindenture.We will not be required to pay any additional amounts for
or on account of: 1.
- •
- any tax
fee, duty, assessmentor governmental chargeof whatever naturewhich would not have been imposed but for the fact thatsuch holder (a) wasyou:
- •
- were a resident
domiciliary or nationalof, or engaged in business or maintained a permanent establishment orwaswere physically present in, the relevant taxing jurisdictionor any political subdivision thereofor otherwise had some connection with the relevant taxing jurisdiction other thanby reason ofthe mere ownership of, or receipt of paymentunder, suchon, the ACE INA debt security,(b)- •
- presented
suchthe ACE INA debt security for payment in the relevant taxing jurisdiction,or any political subdivision thereof,unlesssuchthe ACEINAdebt security could not have been presented for payment elsewhere, or(c)- •
- presented
suchthe ACE INA debt security for payment more than 30 days after the date on which the paymentin respect of such ACE INA debt securitybecame dueand payable or provided for, whichever is later, except to the extent that the holderunless you would have been entitled tosuchthese additional amounts ifityou had presentedsuchthe ACEINAdebt security for paymenton any daywithinthatthe 30-day period;2.- •
- any estate, inheritance, gift, sale, transfer, personal property or similar tax
assessmentor other governmental charge;3.- •
- any tax
assessmentor other governmental charge that is imposed or withheldby reasonbecause oftheyour failureby the holder or the beneficial owner of such ACE INA debt securityto comply with any reasonable request byACE addressed to the holder within 90 days of such request (a)us:
- •
- to provide information concerning
theyour nationality, residence or identity or that of theholderbeneficial owner; orsuch beneficial owner or (b)- •
- to make any
declaration or other similarclaim or satisfy any information or reporting requirement, which in either case is requiredor imposedbystatute, treaty, regulation or administrative practice ofthe relevant taxing jurisdictionor any political subdivision thereofas a precondition to exemption from all or part ofsuchthe taxassessmentor other governmental charge; or4.- •
- any combination of
items (1), (2) and (3).the above items.In addition,
ACEwe will not pay additional amountswith respect to any payment of principal of, or premium,ifany, interest or any other amounts on, any such ACE INA debt security to any holder who isyou are a fiduciary or partnership or other than the sole beneficial owner ofsuchthe ACEINAdebt securitytoif theextent such payment would be required by the laws of the relevant taxing jurisdiction (or any political subdivision or relevant taxing authority thereof or therein) to be included in the income for tax purposes of abeneficiary or partner or settlorwith respect to such fiduciary or a member of such partnership or a beneficial owner whowould not have been entitled tosuchthe additional amounts had it been the holder of the ACEINAdebt security. (Section 10.4)Conversion and Exchange The terms, if any, on which ACE INA debt securities of any series are convertible into or exchangeable for other securities, whether or not issued by ACE INA, property or cash, or a combination of any of the foregoing, will be set forth in the related prospectus supplement. Such terms may include provisions for conversion or exchange, either mandatory, at the option of the holder, or at the option of ACE INA, in which the securities, property or cash to be received by the holders of the ACE INA debt securities would be calculated according to the factors and at such time as described in the related prospectus supplement.Global Securities
The ACE INA debt securities
of a seriesmay be issued, in whole or in part, in the form of one or more globalACE INA debtsecurities that will be deposited with, or on behalf of, a depositary identified in the applicable prospectus supplementrelating to such series. The specific termsand registered in the name of the depositaryarrangement with respect to a series ofor its nominee. Interests in any global ACE INA debtsecuritiessecurity will bedescribed in the prospectus supplement relating to such series. ACE INA anticipates that the following provisions will apply to all depositary arrangements. 41Upon the issuance of a global security, the depositary for such global security or its nominee will credit,shown on,its book-entry registrationandtransfer system, the respective principal amountstransfers of the ACE INA debt securitiesrepresented by such global security. Such accounts will be designated by the underwriters or agents with respect to such ACE INA debt securities or by ACE INA if such ACE INA debt securities are offered and sold directly by ACE INA. Ownership of beneficial interests in a global security will be limited to persons that may hold interests through participants. Ownership of beneficial interests in such global security will be shown on, and the transfer of that ownershipwill be effected only through, records maintained by the depositaryorand itsnominee (with respect to interestsparticipants as described below.The specific terms of
participants) and on the records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global security. So long asthe depositaryfor a global security, or its nominee, is the registered owner of such global security, such depositary or such nominee, as the case may be,arrangement will beconsidered the sole owner or holder of the ACE INA debt securities represented by such global security for all purposes underdescribed in the applicableACE INA indenture. Except as described below, owners of beneficial interests in a global security will not be entitled to have ACE INA debt securities of the series represented by such global security registered in their names and will not receive or be entitled to receive physical delivery of ACE INA debt securities of that series in definitive form. Principal of, any premium and interest on, and any additional amounts with respect to, ACE INA debt securities registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the global security representing such ACE INA debt securities. None of ACE INA, ACE, the trustee, any paying agent or the security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the global security for such ACE INA debt securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. ACE INA expects that the depositary for a series of ACE INA debt securities or its nominee, upon receipt of any payment with respect to such ACE INA debt securities, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interest in the principal amount of the global security for such ACE INA debt securities as shown on the records of such depositary or its nominee. ACE INA also expects that payments by participants to owners of beneficial interests in such global security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in street name, and will be the responsibility of such participants. The ACE INA indentures provide that if (1) the depositary for a series of ACE INA debt securities notifies ACE INA that it is unwilling or unable to continue as depositary or if such depositary ceases to be eligible under the applicable ACE INA Indenture and a successor depositary is not appointed by ACE INA within 90 days of written notice, (2) ACE INA determines that ACE INA debt securities of a particular series will no longer be represented by global securities and executes and delivers to the trustee a company order to such effect or (3) an Event of Default with respect to a series of ACE INA debt securities will have occurred and be continuing, the global securities will be exchanged for ACE INA debt securities of such series in definitive form of like tenor and of an equal aggregate principal amount, in authorized denominations. Such definitive ACE INA debt securities will be registered in such name or names as the depositary shall instruct the trustee. (Section 3.5) It is expected that such instructions may be based upon directions received by the depositary from participants with respect to ownership of beneficial interests in global securities.prospectus supplement.Option to Extend Interest Payment Date
If
providedand as set forth in therelatedapplicable prospectus supplement, ACE INA will have the right, at any time and from time to time during the term of any series of ACE INA subordinated debt securities issued to an ACE Trust, to defer payment of interest forsucha number of consecutive interest payment periods,as may be specifiedwhich we refer to inthe relatedthis prospectus supplementeach, referred toas anExtension Period, subject to the terms, conditions and covenants, 42if any, specified in such prospectus supplement, provided that such Extension Periodextension period. However, no extension period maynotextend beyond the stated maturity ofsuch series ofthe ACE INA subordinated debt securities.Certain United StatesU.S. Federal income tax consequences andspecialother considerations applicable tosuchthe ACE INA subordinated debt securities will be described in therelatedapplicable prospectus supplement. (Section 3.11 of the ACE INA subordinated indenture)Option to Extend Maturity Date If provided in the related prospectus supplement, ACE INA will have the right to (x) change the stated maturity of the principal of the ACE INA subordinated debt securities of any series issued to an ACE Trust upon the liquidation of that ACE Trust and the exchange of the ACE INA subordinated debt securities for the preferred securities of that ACE Trust or (y) extend the stated maturity of the principal of the ACE INA subordinated debt securities of any series, provided that (1) neither ACE INA nor ACE is in bankruptcy, otherwise insolvent or in liquidation; (2) neither ACE INA nor ACE has defaulted on any payment on such ACE INA subordinated debt securities or under ACE's guarantee in respect thereof, as the case may be, and no deferred interest payments have accrued, (3) the applicable ACE Trust is not in arrears on payments of distributions on its preferred securities and no deferred distributions have accumulated, (4) the ACE INA subordinated debt securities of such series are rated investment grade by Standard & Poor's Ratings Services, Moody's Investors Service, Inc. or another nationally recognized statistical rating organization and (5) the extended stated maturity is no later than the 49th anniversary of the initial issuance of the preferred securities of the applicable ACE Trust. If ACE INA exercises its right to liquidate the applicable ACE Trust and exchange the ACE INA subordinated debt securities for the preferred securities of the ACE Trust as described above, any changed stated maturity of the principal of the ACE INA subordinated debt securities shall be no earlier than the date that is five years after the initial issue date of the preferred securities and no later than the date 30 years (plus an extended term of up to an additional 19 years if the conditions described above are satisfied) after the initial issue date of the preferred securities of the applicable ACE Trust. (Section 3.14 of the ACE INA subordinated indenture) Redemption Except as otherwise provided in the related prospectus supplement, in the case of any series of ACE INA subordinated debt securities issued to an ACE Trust, if an Investment Company Event or a Tax Event, each, referred to as a Special Event, shall occur and be continuing, ACE INA may, at its option, redeem such series of ACE INA subordinated debt securities, in whole but not in part, at any time within 90 days of the occurrence of the Special Event, at a redemption price equal to 100% of the principal amount of such ACE INA subordinated debt securities then outstanding plus accrued and unpaid interest to the date fixed for redemption. (Section 11.8 of the ACE INA subordinated indenture) For purposes of the ACE INA subordinated indenture, "Investment Company Event" means, in respect of an ACE Trust, the receipt by such ACE Trust of an opinion of independent counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a change in the interpretation or application of law or regulation by any legislative body, court or governmental agency or regulatory authority, such ACE Trust is or will be considered an investment company that is required to be registered under the Investment Company Act, which change becomes effective on or after the date of original issuance of the preferred securities of such ACE Trust. (Section 1.1 of the ACE INA subordinated indenture) "Tax Event" means, in respect of an ACE Trust, the receipt by such ACE Trust or ACE INA of an opinion of independent counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulation thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of original issuance of the preferred securities of such ACE Trust, there is more than an insubstantial risk that (i) such ACE Trust is, or will be within 90 days of the date of such opinion, subject to United States Federal income tax with respect to income received or accrued on the corresponding series of ACE INA subordinated debt securities, (ii) interest payable by ACE INA on such ACE INA subordinated debt securities is not, or within 90 days of the date of such opinion will not be, deductible by ACE INA, in whole or in part, for United States Federal income tax purposes 43or (iii) such ACE Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. (Section 1.1 of the ACE INA subordinated indenture) Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of ACE INA subordinated debt securities to be redeemed at its registered address. Unless ACE INA and ACE, as guarantor, default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the ACE INA subordinated debt securities or portions thereof called for redemption.Covenants Applicable to ACE INA Senior Debt Securities
Limitation on Liens on Stock of Designated Subsidiaries
Under the ACE INA senior indenture, each of ACE INA and ACE will covenant that, so long as any ACE INA senior debt securities are outstanding, it will not, nor will it permit any
of its Subsidiariessubsidiary to create, incur, assume,incur,guarantee or otherwise permit to exist anyIndebtednessindebtedness secured by anymortgage, pledge, lien,security interestor other encumbrance uponon any shares of capital stock of anyDesignated Subsidiary (whether such shares are now owned or hereafter acquired) without effectively providingdesignated subsidiary, unless ACE INA and ACE concurrently provide that the ACE INA senior debt securities(and,and, if ACE INA and ACEsoelect, any otherIndebtednessindebtedness of ACE INA that is not subordinate to the ACE INA senior debt securities and with respect to which the governing instruments require, or pursuant to which the ACE INA is otherwise obligated, to provide suchsecurity)security, will be secured equallyand ratablywithsuch Indebtednessthe indebtedness for at least the time periodsuchthe otherIndebtednessindebtedness is so secured. (Section 10.5 of the ACE INA senior indenture)For purposes of the ACE INA senior indenture, "capital stock" of any PersonThe term "designated subsidiary" means any
and all shares, interests, rights to purchase, warrants, options, participationspresent orother equivalentsfuture consolidated subsidiary ofor interests in (however designated) equityACE, the consolidated net worth ofsuch Person, including preferred stock, but excluding any debt securities convertible into such equity.which constitutes at least 5% of ACE's consolidated net worth. (Section 1.1 of the ACE INA senior indenture)The term "Designated Subsidiary" means any present or future consolidated Subsidiary of ACE, the Consolidated Net Worth of which constitutes at least 5% of ACE's Consolidated Net Worth. (Section 1.1 of the ACE INA senior indenture) As of April 30, 2002, ACE's Designated Subsidiaries were ACE Bermuda, Tempest, ACE INA and ACE USA..For purposes of the ACE INA indentures, the term
"Indebtedness""indebtedness" means, with respect to anyPerson, (1)person:
- •
- the principal of and any premium and interest
on (a)on:
- •
- indebtedness
of such Personfor money borrowed and(b)- •
- indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which
such Personthe person is responsible or liable;(2)- •
- all
Capitalized Lease Obligations of such Person; (3)capitalized lease obligations;- •
- all obligations
of such Personissued or assumed as the deferred purchase price of property, all conditional sale obligations and all obligations under any title retention agreement,(butbut excluding trade accounts payable arising in the ordinary course ofbusiness); (4)business;- •
- all obligations
of such Personfor the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction,(othergenerally other than obligations with respect to letters of credit securing obligations,(otherother than obligationsdescribed in (1) through (3) above)of the type referred to above, entered into in the ordinary course of businessof such Personto the extentsuchthese letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the thirdBusiness Daybusiness day following receipt by suchPersonperson of a demand for reimbursement following payment on the letter ofcredit); (5)credit;- •
- all obligations of the type referred to
in clauses (1) through (4)above of otherPersonspersons and all dividends of otherPersonspersons for the payment of which, in either case,such Personthe person is responsible or liable as obligor, guarantor or otherwise;(6)- •
- all obligations of the type referred to
in clauses (1) through (5)above of otherPersonspersons secured by any mortgage, pledge, lien, security interest or other encumbrance on any property or asset ofsuch Person (whetherthe person, whether or notsuchthe obligation is assumed bysuch Person),theamount of such obligation being deemed to be the lesser of the value of such property or assets or the amount of the obligation so secured;person; and(7)- •
- any amendments, modifications, refundings, renewals or extensions of any indebtedness or obligation described
as Indebtedness in clauses (1) through (6)above. (Section 1.1)44Limitations on Disposition of Stock of Designated Subsidiaries
The ACE INA senior indenture also provides that, so long as any ACE INA senior debt securities are outstanding and except in a transaction otherwise governed by
such indenture,the ACE INA indentures, neither ACE INA nor ACE will issue, sell, assign, transfer or otherwise dispose of any shares of, securitiesconvertible into, or warrants, rights or options to subscribe for or purchase shares of, capital stock,
(otherother than preferred stock having no voting rights, of anykind) of any Designated Subsidiary, anddesignated subsidiary. Similarly, ACE INA will not permit anyDesignated Subsidiarydesignated subsidiary to issue,(otherother than to ACE INA orACE) any shares (other than director's qualifying shares)ACE, these types oforsecurities,convertible into, orwarrants, rights or options,to subscribe for or purchaseother than director's qualifying sharesof, capital stock (other thanand preferred stock having no voting rights, of anykind) of any Designated Subsidiary,designated subsidiary, if, after giving effect toany suchthe transaction and the issuance of the maximum number of shares issuable upon the conversion or exercise of allsuchthe convertible securities, warrants, rights or options, ACE would own, directly or indirectly, less than 80% of the shares of capital stock ofsuch Designated Subsidiary (otherthe designated subsidiary, other than preferred stock having no votingrights of any kind); provided, however, that (1) any issuance, sale, assignment,rights.However, ACE INA may issue, sell, assign, transfer or
other disposition permitted by ACE INA or ACE may only be made forotherwise dispose of securities if the consideration is at least a fair market valueconsiderationas determined bytheACE INA's boardof directors of ACE INAorACE, as the case may be, pursuant to a resolution adopted in good faith and (2) the foregoing shall not prohibit any such issuance or disposition of securitiesif required byanylaw orany regulation or order of any governmental or insurance regulatory authority. Notwithstanding the foregoing, (1)regulation. ACE INA or ACE, as the case may be, may also merge or consolidate anyDesignated Subsidiarydesignated subsidiary into or with another direct or indirectSubsidiarysubsidiary of ACE, the shares of capital stock of which ACE owns at least 80%, and (2) ACE INAor,ACE, as the case may be, may,subject to the provisions described under"--Consolidation,"—Consolidation, Amalgamation, Merger and Sale of Assets" below, sell,assign,transfer or otherwise dispose of the entire capital stock of anyDesignated Subsidiarydesignated subsidiary at one timeforif the consideration is at leastafair market valueconsiderationas determined bythe board of directors ofACEINAINA's orACE, as the case may be, pursuant to a resolution adopted in good faith.ACE's board. (Section 10.6 of the ACE INA senior indenture)Covenants Applicable to ACE INA Subordinated Debt Securities Issued to an ACE Trust
Each of ACE INA and ACE will also covenant, as to each series of ACE INA subordinated debt securities issued to an ACE Trust in connection with the issuance of preferred securities and common securities by that ACE Trust, that it will not, and will not permit any of its
Subsidiaries to, (1)subsidiaries to:
- •
- declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the outstanding capital stock of ACE INA or ACE, as the case may be, or
(2)- •
- make any payment
of principal of, or interest or premium, if any,on or repay, repurchase or redeem any debt security of ACE INA or ACE that ranks junior in interest to the ACE INA subordinated debt securitiesof such seriesor the related ACE guarantee,in respect thereof,as the case may be, or make anyguaranteepayments with respect to any guarantee by ACE INA or ACE, as the case may be, of the debt securities of anySubsidiarysubsidiary of ACE INA or ACE, as the case may be, ifsuchthe guarantee ranks junior in interest to the ACE INA subordinated debt securitiesof such seriesor the related ACE guarantee,in respect thereof,as the case may be,(other than (a)other than:
- •
- dividends or distributions on the capital stock of ACE INA paid or made to ACE and dividends or distributions in common stock of ACE INA or ordinary shares of ACE, as the case may
be, (b)be;- •
- redemptions or purchases of any rights outstanding under a shareholder rights plan of ACE INA or ACE, as the case may be, or the declaration of a dividend of
suchthese rights or the issuance of stock undersuchthe plans in thefuture, (c)future;- •
- payments under any preferred securities
guaranteeguarantee; and(d)- •
- purchases of common stock or ordinary shares related to the issuance of common stock or ordinary shares under any of ACE INA's or ACE's benefit plans for its directors, officers or
employees)employeesif at
such time (i) there shall have occurredthat time:
- •
- any event of which ACE INA or ACE has actual knowledge that,
(A)with the giving of notice or lapse of time or both, would constitute anEventevent ofDefaultdefault and(B)in respect of which ACE INA or ACE, as the case may be, shall not have taken reasonable steps to cure(ii)shall have occurred,
- •
- ACE shall be in default with respect to its payment of any obligations under the preferred securities guarantee relating to
suchthe related preferred securities or(iii)- •
- ACE INA shall have given notice of its election to begin an
Extension Period as provided in the ACE INA subordinated indenture with respect to the ACE INA subordinated debt securities of such seriesextension period and shall not have rescindedsuchthe notice, orsuch Extension Period,the extension period, or any extensionthereof,of the extension period, shall be continuing. (Section 10.9 of the ACE INA subordinated indenture)45In the eventIf ACE INA subordinated debt securities are issued to an ACE Trust in connection with the issuance of preferred securities and common securities of
suchthe ACE Trust, for so long assuchthe ACE INA subordinated debt securities remain outstanding, ACE INA will alsocovenant (1)covenant:
- •
- to maintain, directly or indirectly, 100% ownership of the common securities of
suchthe ACE Trust;provided, however, that any permitted successor of ACE INA under the ACE INA subordinated indenture may succeed to ACE INA's ownership of such common securities, (2)- •
- not to voluntarily dissolve, wind-up or liquidate
suchthe ACE Trust, except in connection with the distribution of ACE INA subordinated debt securities to the holders of preferred securities and common securities in liquidation ofsuchthe ACE Trust, the redemption of all of the preferred securities and common securities ofsuchthe ACE Trust orcertainspecified mergers, consolidations or amalgamations, each as permitted by the restated trust agreement ofsuchthe ACE Trust, and(3)- •
- to use its reasonable efforts,
consistent with the terms of the related trust agreement,to causesuchthe ACE Trust to remain classified as a grantor trust forUnited StatesU.S. Federal income tax purposes. (Section 10.9 of the ACE INA subordinated indenture)Consolidation, Amalgamation, Merger and Sale of Assets
Each ACE INA indenture provides that ACE INA and ACE may
not (1)not:
- •
- consolidate or amalgamate with or merge into any
Personperson or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to anyPerson,person, or(2)- •
- permit any
Personperson to consolidate or amalgamate with or merge into ACE INA or ACE, respectively, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to ACE INAunless (a)or ACE, respectively,unless:
- •
- in the case of
(1) above, such PersonACE INA, the person is aCorporationcorporation organized and existing under the laws of the United States of America, anyState thereofstate of the United States or the District of Columbia;- •
- in the case of ACE, the person is a corporation organized and existing under the laws of the United States of America, any state of the U.S., the District of Columbia, Bermuda, the Cayman Islands or any other country that, on August 1, 1999, was a member of the Organization for Economic Cooperation and
willDevelopment;- •
- the surviving entity expressly
assume, by supplemental indenture satisfactory in form toassumes, thetrustee, the due and punctualpayment ofthe principal of, any premium and interestall amounts onand any additional amounts with respect toall of the ACE INA or ACE debt securitiesissued thereunder,and the performance of ACE INA's or ACE's obligations undersuchthe ACE INA indenture and the ACE INA debt securitiesissued thereunder,or ACE indenture and ACE debt securities; and- •
- the surviving entity provides for conversion or exchange rights in accordance with the provisions of the ACE
INAdebt securities of any series that are convertible or exchangeable into ordinary shares or other securities;(b)and- •
- immediately after giving effect to
suchthe transaction and treating any indebtedness which becomes an obligation of ACE INA or ACE or aSubsidiarysubsidiary as a result ofsuchthe transaction as having been incurred by ACE INA orsuch SubsidiaryACE or the subsidiary at the time ofsuchthe transaction, noEventevent ofDefault,default, and no event which after notice or lapse of time or both would become anEventevent ofDefault, shalldefault, will have happened and becontinuing;continuing. (Sections 8.1 and(c) certain other conditions are met. (Section 8.1) Each ACE INA indenture provides that ACE may not (1) consolidate or amalgamate with or merge into any Person or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any Person, or (2) permit any Person to consolidate or amalgamate with or merge into ACE, or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to ACE, unless (a) in the case of (1) above, such Person is a Corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, Bermuda or the Cayman Islands and will expressly assume, by supplemental indenture satisfactory in form to the trustee, the due and punctual payment of the principal of, any premium and interest on and any additional amounts with respect to all of the ACE INA debt securities issued thereunder, and the performance of ACE's obligations under such ACE INA indenture and the ACE INA debt securities issued thereunder; (b) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of ACE or a Subsidiary as a result of such transaction as having been incurred by ACE or such Subsidiary at the time of such transaction, no Event of Default, and no event which after notice or lapse of time or both would become an Event of Default, shall have happened and be continuing; and (c) certain other conditions are met. (Section8.3)
Events of Default
Each of the following events will constitute an
Eventevent ofDefaultdefault underthe applicableeach ACE INA indenture,with respect to any series of ACE INA debt securities issued thereunder (whatever the reason for such Event of 46Default andwhether itshallbe voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmentalbody): (1)body:
- •
- default in the payment of any interest on,
any ACE INA debt security of such series,or any additional amounts payable with respectthereto,to, any ACE INA debt security whensuchthe interestbecomesorsuchadditional amounts become due and payable, and continuance ofsuchthis default for a period of 30 days;(2)- •
- default in the payment of the principal of or any premium on,
any ACE INA debt security of such series,or any additional amounts payable with respectthereto,to, any ACE INA debt security whensuchthe principal,orpremiumbecomesorsuchadditional amounts become due and payable either at maturity, upon any redemption, by declaration of acceleration or otherwise;(3)- •
- default in the deposit of any sinking fund payment, when
and as due by the terms of any ACE INA debt security of such series; (4)due;- •
- default in the performance, or breach, of any covenant or warranty of ACE INA or ACE
contained in the applicable ACE INA indenturefor the benefit ofsuch series or inthe holders of the ACE INA debt securities,of such series,and the continuance ofsuchthis default or breach for a period of 60 days afterthereACE INA hasbeen givenreceived written noticeas provided in such ACE INA indenture; (5)from the holders;- •
- if any event of default
as defined in anyunder a mortgage, indenture or instrument under whichthereACE or ACE INA maybe issued,issue, or by whichthere may be securedACE orevidenced, any Indebtedness ofACE INA may secure orACE (includingevidence, any indebtedness, including anEventevent ofDefaultdefault under any other series of ACE INA debtsecurities),securities, whethersuch Indebtednessthe indebtedness now exists or ishereafterlater created or incurred, happens and consists of default in the payment of more than $50,000,000 in principal amount ofsuch Indebtednessindebtedness at the maturitythereof (afterof the indebtedness, after giving effect to any applicable graceperiod)period, or results insuch Indebtednessthe indebtedness in principal amount in excess of $50,000,000 becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, andsuchthis default is not cured orsuchthe acceleration is not rescinded or annulled within a period of 30 days afterthere has been given written notice as provided in the applicableACE INAindenture; (6)has received written notice;- •
- ACE INA or ACE shall fail within 60 days to pay, bond or otherwise discharge any uninsured judgment or court order for the payment of money in excess of $50,000,000, which is not stayed on appeal or is not otherwise being appropriately contested in good faith;
(7) certain- •
- events in bankruptcy, insolvency or reorganization of ACE INA or ACE; and
(8)- •
- any other
Eventevent ofDefault provideddefault, which will be described inor pursuant tothe applicableACE INA indenture with respect to ACE INA debt securities of such series.prospectus supplement. (Section 5.1)If an
Eventevent ofDefaultdefault with respect to the ACE INA debt securities of any series,(otherother thanan Eventevents ofDefault described in (7) of the preceding paragraph)bankruptcy, insolvency or reorganization, occurs and is continuing, either the trustee or the holders of not less than 25% in principal amount of the outstanding ACE INA debt securities ofsuchthe seriesby written notice as provided in the applicable ACE INA indenturemay declare the principal amount,(or suchor a lesser amount as may be provided for in the ACE INA debt securities, ofsuch series) ofall outstanding ACE INA debt securities ofsuchthe series to be immediately due and payableimmediately.by written notice. In the case of anEventevent ofDefaultdefault with respect to a series of ACE INA subordinated debt securities issued to an ACE Trust, if the trustee orsuchthe holders fail to declaresuchthe principal amount,(oror lesseramount)amount, to be due and payable immediately, the holders of at least 25% in liquidation amount of the outstanding preferred securities of the ACE Trust may do so by writtennotice as provided in the ACE INA subordinated indenture.notice. At any time after a declaration of acceleration has been made, but before a judgment or decree for payment of money has been obtained by the trustee,and subject to applicable law and certain other provisions of the applicable ACE INA indenture,generally, the holders of not less than a majority in principal amount of theoutstandingACE INA debt securities ofsuchthe series mayunder certain circumstances,rescind and annulsuchthe declaration of acceleration. In the case of a series of ACE INA subordinated debt securities issued to an ACE Trust, ifsuchthe holders fail to rescind and annulsuchthe declaration, the holders of a47majority in liquidation amount of the outstanding preferred securities of
suchthe ACE Trust may, subject to satisfaction ofcertainspecified conditions, rescind and annulsuchthe declaration by writtennotice as provided in the ACE INA subordinated indenture. An Eventnotice. Any event ofDefault described in (7) of the preceding paragraph shallbankruptcy, insolvency or reorganization will cause the principal amount and accrued interest,(or suchor the lesser amount as provided for in the ACE INA debt securities,of such series)to become immediately due and payable without any declaration or other act by the trustee or any holder. (Section 5.2)Each ACE INA indenture provides that, within 90 days after the occurrence of any event which is, or after notice or lapse of time or both would become, an
Eventevent ofDefault with respect to the ACE INA debt securities of any series, each referred to in this prospecuts as adefault the trustee must transmit,in the manner set forth in such ACE INA indenture,notice ofsuchthe default tothe holderseach holder of the ACE INA debt securitiesof such seriesunlesssuchthe default has been cured orwaived; provided, however, thatwaived. However, except in the case of a default in the payment of principal of, or premiumif any,or interest, if any, on or additional amounts or any sinking fund or purchase fund installment with respect to any ACE INA debt security,of such series,the trustee may withholdsuchthis notice if and so long as the board of directors,theexecutive committee oratrust committee of directors and/or responsible officers of the trustee determine in good faithdeterminethat the withholding ofsuchthe notice is in the best interest of theholders of ACE INA debt securities of such series; and provided, further, that in the case of any default of the character described in (5) of the second preceding paragraph, no such notice to holders will be given until at least 30 days after the default occurs.holders. (Section 6.2)If an
Eventevent ofDefaultdefault occurs and is continuing with respect to the ACE INA debt securities of any series, the trustee may, in its discretion, proceed to protect and enforce its rights and the rights of the holders of ACE INA debt securitiesof such seriesby all appropriate judicial proceedings. (Section 5.3) Each ACE INA indenture provides that, subject to the duty of the trustee during any default to act with the required standard of care, the trustee will be under no obligation to exercise any of its rights or powers undersuchthe ACE INA indenture at the request or direction of any of the holders,of ACE INA debt securities,unlesssuchthe holdersshallhave offeredtothe trustee reasonable indemnity. (Section 6.1) Subject tosuchthese indemnification provisions,for the indemnification of the trustee, and subject to applicable law and certain other provisions of the applicable ACE INA indenture,the holders of a majority in principal amount of the outstanding ACE INA debt securities of any series will generally have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the ACE INA debt securities ofsuchthe series. (Section 5.12)If an
Eventevent ofDefaultdefault with respect to a series of ACE INA subordinated debt securities issued to an ACE Trust has occurred and is continuing andsuchthis event is attributable to a default in the payment of principal of, any premium or interest on or additional amounts with respect to the related ACE INA subordinated debt securities on the datesuchthe principal, premium, interest or additional amounts are otherwise payable, a holder of preferred securities ofsuchthe ACE Trust may institute directly a legal proceeding against ACE INA or ACE,(pursuantpursuant to the ACEguarantee)guarantee, for enforcement of payment tosuchthe holder of the principal of, any premium and interest on and additional amounts with respect tosuchthe related ACE INA subordinated debt securities having a principal amount equal to the liquidation amount of the holder's related preferred securities,of such holder (a "Direct Action").referred to in this prospectus as a direct action. (Section 5.8 of the ACE INA subordinated indenture) ACE INA and ACE may not amend the ACE INA subordinated indenture to removethe foregoingthis right to bring aDirect Actiondirect action without the prior consent of the holders of all of the outstanding preferred securities ofsuchthe ACE Trust. (Section 9.2 of the ACE INA subordinated indenture) If the right to bring aDirect Actiondirect action is removed, the applicable ACE Trust may become subject to the reporting obligations under the Exchange Act. Each of ACE INA and ACE will have the right under the ACE INA subordinated indenture to set-off any payment made tosucha holder of preferred securities by ACE INA or ACE, as the case may be, in connection with aDirect Action.direct action. (Section 3.12 of the ACE INA subordinated indenture)The holders of the preferred securities will not be able to exercise directly any remedies other than those set forth in the preceding paragraph available to the holders of the related ACE INA subordinated debt securities.
48Modification and Waiver
ACE INA, ACE and the trustee may modify or amend either ACE INA indenture with the consent of the holders of not less than a majority in principal amount of the outstanding ACE INA debt securities of each series affected
thereby; provided, however, that no suchby the modification or amendment,may,so long as the modification or amendment does not, without the consent ofthe holder ofeachoutstanding ACE INA debt securityaffectedthereby, .holder:
- •
- change the stated maturity of the principal of, or any premium or installment of interest on or any additional amounts with respect to any ACE INA debt
security, .security;- •
- reduce the principal amount of, or the rate,
(oror modify the calculation ofsuch rate)the rate, of interest on, or any additional amounts with respect to, or any premium payable upon the redemption of, any ACE INA debtsecurity, .security;- •
- change the obligation of ACE INA or ACE to pay additional amounts with respect to any ACE INA debt
security, .security;- •
- reduce the amount of the principal of an original issue discount security that would be due and payable upon a declaration of acceleration of the maturity
thereofof the original issue discount security or the amountthereofprovable inbankruptcy, .bankruptcy;- •
- change the redemption provisions of any ACE INA debt security or adversely affect the right of repayment at the option of any holder of any ACE INA debt
security, .security;- •
- change the place of payment or the coin or currency in which the principal of, any premium or interest on or any additional amounts with respect to any ACE INA debt security is
payable, .payable;- •
- impair the right to institute suit for the enforcement of any payment on or after the stated maturity of any ACE INA debt security,
(or,or, in the case of redemption, on or after the redemption date or, in the case of repayment at the option of any holder, on or after the repaymentdate), .date;- •
- reduce the percentage in principal amount of the outstanding ACE INA debt securities, the consent of whose holders is required in order to take specific
actions, .actions;- •
- reduce the requirements for quorum or voting by holders of ACE INA debt
securities in Section 15.4 of each ACE INA indenture, .securities;- •
- modify any of the provisions
of the ACE subordinated indenturerelating to the subordination of the ACE INA debt securities or the ACE guarantee in a manner adverse to the holders of ACE INA subordinated debtsecurities, .securities;- •
- modify or effect in any manner adverse to the holders of ACE INA debt securities the terms and conditions of the obligations of ACE in respect of the due and punctual payment of principal of, or any premium or interest on, or any sinking fund requirements or additional amounts with respect to, the ACE INA debt
securities, .securities;- •
- modify any of the provisions
in the applicable ACE INA indentureregarding the waiver of past defaults and the waiver ofcertainspecified covenants by the holders of ACE INA debt securities, except to increase any percentage vote required or to provide that other provisions ofsuchthe ACE INA indenture cannot be modified or waived without the consent of the holder of each ACE INA debt security affectedthereby, .by the modification or waiver;- •
- make any change that adversely affects the right to convert or exchange any ACE INA debt security into or for other securities of ACE INA, ACE or other securities, cash or property in accordance with its
terms,terms; or.- •
- modify any of the above provisions. (Section 9.2)
49In addition, no supplemental indenture may, directly or indirectly, modify or eliminate the subordination provisions of the ACE INA subordinated indenture in any manner which might
terminate or impair the subordination of the ACE INA subordinated debt securities
of any seriestoSenior Indebtedness with respect to such seriessenior indebtedness or the subordination of the related ACE guaranteewith respect to the ACE INA subordinated debt securities of any seriesto ACESenior Indebtedness with respect to such series,senior indebtedness, without the prior written consent of the holders ofsuch Senior Indebtednessthe senior indebtedness orsuchthe ACESenior Indebtedness,senior indebtedness, respectively. (Section 9.7 of the ACE INA subordinated indenture)ACE INA, ACE and the trustee may modify or amend either ACE INA indenture and the ACE INA debt securities of any series without the consent of any holder in order to, among other things:
.
- •
- provide for a successor to ACE INA or ACE pursuant to a consolidation, amalgamation, merger or sale of assets;
.- •
- add to the covenants of ACE INA or ACE for the benefit of the holders of all or any series of ACE INA debt securities or to surrender any right or power conferred upon ACE INA or ACE by the applicable ACE INA indenture;
.- •
- provide for a successor trustee with respect to the ACE INA debt securities of all or any series;
.- •
- cure any ambiguity or correct or supplement any provision in either ACE INA indenture which may be defective or inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under either ACE INA indenture which will not adversely affect the interests of the holders of ACE INA debt securities of any series;
.- •
- change the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of ACE INA debt securities under either ACE INA indenture;
.- •
- add any additional
Eventsevents ofDefaultdefault with respect to all or any series of ACE INA debt securities;.- •
- secure the ACE INA debt securities;
.- •
- provide for conversion or exchange rights of the holders of any series of ACE INA debt securities; or
.- •
- make any other change that does not materially adversely affect the interests of the holders of any ACE INA debt securities then outstanding under the applicable ACE INA indenture. (Section 9.1)
The holders of at least a majority in principal amount of the outstanding ACE INA debt securities of any series may, on behalf of the holders of all ACE INA debt securities of that series, waive compliance by ACE INA and ACE with
certainspecified covenants of the applicable ACE INA indenture. (Section 10.8 of the ACE INA senior indenture; Section 10.6 of the ACE INA subordinated indenture) The holders of not less than a majority in principal amount of the outstanding ACE INA debt securitiesof any serieson behalf of the holders of all ACE INA debt securities of that series and, in the case of any ACE INA subordinated debt securities issued to an ACE Trust, the holders of not less than a majority in liquidation amount of the outstanding preferred securities of the ACE Trust, may waive any past default and its consequencesunder the applicable ACE INA indenturewith respect to the ACE INA debt securities of that series, except adefault (1)default:
- •
- in the payment of principal, any premium or interest on or any additional amounts with respect to ACE INA debt securities of
such seriesthe series; or(2)- •
- in respect of a covenant or provision of the applicable ACE INA indenture that cannot be modified or amended without the consent of the holder of each outstanding ACE INA debt security of any series affected. (Section 5.13)
Under each ACE INA indenture, each of ACE INA and ACE
is required tomust annually furnish the trusteeannuallya statementas toregarding its performance ofcertain of itsspecified obligationsunder that ACE INA indentureandas toany default insuch performance.its performance underthe applicable ACE INA indenture. Each of ACE INA and ACE is also required to deliver to the trustee, within five days after its occurrence,
thereof,written notice of anyEventevent ofDefault,default, or any event which after notice or lapse of time or both would constitute anEventevent ofDefault,default, resulting from the failure to perform or breach of any covenant or warranty contained in the applicable ACE INA indenture or the ACE INA debt securities of any series. (Sections 10.9 and 10.10 of the ACE INA senior indenture; Sections 10.7 and 10.8 of the ACE INA subordinated indenture)50Discharge, Defeasance and Covenant Defeasance
ACE INA or ACE may discharge
certaintheir payment obligationsto holders of any series of ACE INA debt securities that have not already been delivered to the trustee for cancellation and that either have become due and payable or will become due and payable within one year (or scheduled for redemption within one year) by depositing with the trustee, in trust, funds in U.S. dollars or in the Foreign Currency in which such ACE INA debt securities are payable in an amount sufficient to pay the entire indebtednessonsuch ACE INA debt securities with respect to principal and any premium, interest and additional amounts to the date of such deposit (if such ACE INA debt securities have become due and payable) or to the maturity thereof, as the case may be. (Section 4.1) Each ACE INA indenture provides that, unless the provisions of Section 4.2 thereof are made inapplicable tothe ACE INA debt securities,of or within any series pursuantwhich we refer toSection 3.1 thereof, ACE INA may elect either (1) to defease and discharge itself and ACE from any and all obligations with respect to such ACE INA debt securities (except for, among other things, the obligation of ACE to pay additional amounts upon the occurrence of certain events of taxation, assessment or governmental charge with respect to payments on such ACE INA debt securities and other obligations to register the transfer or exchange of such ACE INA debt securities, to replace temporary or mutilated, destroyed, lost or stolen ACE INA debt securities, to maintain an office or agency with respect to such ACE INA debt securities and to hold moneys for payment in trust), referred to in this prospectusas defeasance, or(2)elect torelease itself and ACEbe discharged fromtheir respective obligationscomplying withrespect to such ACE INA debt securities under certainthe covenantsas describedin therelated prospectus supplement, and any omission to comply with suchACE NA indentures, except for certain ministerial obligations,shall not constitute a defaultlike registering transfers oran Eventexchanges ofDefault with respect to such ACE INA debt securities, referred to in this prospectus as covenant defeasance,. Defeasance or covenant defeasance, asthecase may be, shall be conditioned upon the irrevocable deposit by ACE INA or ACE with the Trustee, in trust, of an amount in U.S. dollars or in the Foreign Currency in which such ACE INA debt securities are payable at stated maturity, or Government Obligations (as defined below), or both, applicable to suchACE INA debt securities, whichthrough the scheduled payment of principal and interest in accordance with their terms will provide money in an amount sufficientwe refer topay the principal of, any premium and interest on, and any additional amounts with respect to, suchas covenant defeasance.ACE INA
debt securities on the scheduled due dates. (Section 4.2) Such a trustor ACE may onlybe establisheddo this if, among other things,(1)
- •
- the
applicabledefeasance or covenant defeasance does not result in a breach or violation of, or constitute a default under, the applicable ACE INA indenture or any other material agreement or instrument to which ACE INA or ACE is a party or by which eitherofor them is bound,(2)- •
- no
Eventevent ofDefaultdefault or event which with notice or lapse of time or both would become anEventevent ofDefaultdefault with respect to the ACE INA debt securities to be defeasedshallwill have occurred and be continuing on the date of establishment ofsuch athe trust and, with respect to defeasance only, at any time during the period ending on the 123rd day aftersuchthat date and(3)- •
- ACE INA or ACE has delivered to the trustee an opinion of counsel
(as specified in the ACE INA indenture)to the effect that theholders of such ACE INA debt securitiesyou will not recognize income, gain or loss forUnited StatesU.S. Federal income tax purposes as a result ofsuchthe defeasance or covenant defeasance and will be subject toUnited StatesU.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case ifsuchthe defeasance or covenant defeasance had notoccurred, and suchoccurred. The opinion of counsel, in the case of defeasance, must refer to and be based upon a letter ruling of theInternal Revenue ServiceI.R.S. received byACE INA orACE, a Revenue Ruling published by theInternal Revenue ServiceI.R.S. or a change in applicableUnited StatesU.S. Federal income tax law occurring after the date of the applicable ACEINAindenture. (Section 4.2)"Foreign Currency" means any currency, currency unit or composite currency, including, without limitation, the euro, issued by the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments. (Section 1.1) "Government Obligations" means debt securities which are (1) direct obligations of the United States of America or the government or the governments which issued the Foreign Currency in which the ACE INA debt securities of a particular series are payable, for the payment of which its full faith and credit is pledged or (2) 51obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such government or governments which issued the Foreign Currency in which the ACE INA debt securities of such series are payable, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government or governments, and which, in the case of clauses (1) and (2), are not callable or redeemable at the option of the issuer or issuers thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or any other amount with respect to any such Government Obligation held by such custodian for the account of the holder of such depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian with respect to the Government Obligation or the specific payment of interest on or principal of or any other amount with respect to the Government Obligation evidenced by such depository receipt. (Section 1.1) If after ACE INA or ACE has deposited funds and/or Government Obligations to effect defeasance or covenant defeasance with respect to ACE INA debt securities of any series, (1) the holder of an ACE INA debt security of that series is entitled to, and does, elect pursuant to Section 3.1 of the applicable ACE INA indenture or the terms of such ACE INA debt security to receive payment in a currency other than that in which such deposit has been made in respect of such debt security, or (2) a Conversion Event occurs in respect of the Foreign Currency in which such deposit has been made, the indebtedness represented by such ACE INA debt security shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of, any premium and interest on, and any additional amounts with respect to, such ACE INA debt security as such ACE INA debt security becomes due out of the proceeds yielded by converting the amount or other properties so deposited in respect of such ACE INA debt security into the currency in which such ACE INA debt security becomes payable as a result of such election or such Conversion Event based on (a) in the case of payments made pursuant to clause (1) above, the applicable market exchange rate for such currency in effect on the second business day prior to such payment date, or (b) with respect to a Conversion Event, the applicable market exchange rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event. (Section 4.2) "Conversion Event" means the cessation of use of (1) a Foreign Currency both by the government of the country or countries which issued such Foreign Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community or (2) any currency unit or composite currency for the purposes for which it was established. All payments of principal of, any premium and interest on, and any additional amounts with respect to, any ACE INA debt security that are payable in a Foreign Currency that ceases to be used by the government or governments of issuance shall be made in U.S. dollars. (Section 1.1) In the event ACE INA effects covenant defeasance with respect to any ACE INA debt securities and such ACE INA debt securities are declared due and payable because of the occurrence of any Event of Default other than an Event of Default with respect to any covenant as to which there has been covenant defeasance, the amount in such Foreign Currency in which such ACE INA debt securities are payable, and Government Obligations on deposit with the trustee, will be sufficient to pay amounts due on such ACE INA debt securities at the time of the stated maturity but may not be sufficient to pay amounts due on such ACE INA debt securities at the time of the acceleration resulting from such Event of Default. However, ACE INA and ACE would remain liable to make payment of such amounts due at the time of acceleration.Subordination of ACE INA Subordinated Debt Securities
The ACE INA subordinated debt securities
of each serieswillto the extent set forth in the ACE INA subordinated indenture,generally be subordinate in right of payment to the prior payment in full of allSenior Indebtedness with respect to such series.senior indebtedness. (Section 16.1 of the ACE INA subordinated indenture) Upon any payment or distribution of assets of ACE INA of any kind or character, whether in cash, property or securities, to creditors52upon any dissolution, winding-up, liquidation or reorganization of ACE INA, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior Indebtedness with respect to the ACE INA subordinated debt securities of any seriessenior indebtedness will first be paid in full, or paymentthereofprovided for in money in accordance with its terms, before the holders of ACE INA subordinated debt securities ofsuchthat series are entitled to receive or retain any payment on account of principal of, or any premium or interest on, or any additional amounts with respect to, the ACE INA subordinated debtsecurities of such series, and tosecurities. This means thatendthe holders ofsuch Senior Indebtedness shallthe senior indebtedness will be entitled to receivefor application to the payment thereof,anypayment or distribution of any kind or character, whether in cash, property or securities, including any suchpayment or distribution, which may be payable or deliverable by reason of the payment of any otherIndebtednessindebtedness of ACE INA being subordinated to the payment of ACE INA subordinated debt securities,of such series,which may be payable or deliverable in respect of the ACE INA subordinated debt securitiesof such seriesupon anysuchdissolution, winding-up, liquidation or reorganization or in anysuchbankruptcy, insolvency, receivership or other proceeding. (Section 16.3 of the ACE INA subordinated indenture)By reason of
suchthis subordination, in the event of liquidation or insolvency of ACE INA, holders ofSenior Indebtedness with respect to the ACE INA subordinated debt securities of any seriessenior indebtedness and holders of other obligations of ACE INA that are not subordinated tosuch Senior Indebtednessthesenior indebtedness may recover more, ratably, than the holders of the ACE INA subordinated debt
securities of such series.securities.Subject to the payment in full of all
Senior Indebtedness with respect to the ACE INA subordinated debt securities of any series,senior indebtedness, the rights of the holders of the ACE INA subordinated debt securitiesof such serieswill be subrogated to the rights of the holders ofsuch Senior Indebtednessthe senior indebtedness to receive payments or distributions of cash, property or securities of ACE INA applicable tosuch Senior Indebtednessthe senior indebtedness until the principal of, any premium and interest on, and any additional amounts with respect to, the ACE INA subordinated debt securitiesof such serieshave been paid in full. (Section 16.4 of the ACE INA subordinated indenture)No payment of principal
(includingof, including redemption and sinking fundpayments) ofpayments, or any premium or interest on or any additional amounts with respect to the ACE INA subordinated debt securitiesof any seriesmay be made by ACE INA(1) ifif:
- •
- any
Senior Indebtedness with respect to such seriessenior indebtedness is not paid when due,andany applicable grace period with respect tosuchthe default has ended andsuchthe default has not been cured or waived or ceased to exist, or(2) if- •
- the maturity of any
Senior Indebtedness with respect to such seriessenior indebtedness has been accelerated because of a default. (Section 16.2 of the ACE INA subordinated indenture)The ACE INA subordinated indenture does not limit or prohibit ACE INA from incurring additional
Senior Indebtedness,senior indebtedness, which may includeIndebtednessindebtedness that is senior to the ACE INA subordinated debt securities,of any series,but subordinate to other obligations of ACE INA. The ACE INA senior debt securities will constituteSenior Indebtednesssenior indebtedness with respect to the ACE INA subordinated debtsecurities of each series under the ACE INA subordinated indenture.securities.The term
"Senior Indebtedness""senior indebtedness" means, with respect to the ACE INA subordinated debt securities of any particular series, allIndebtednessindebtedness of ACE INA outstanding at any time,except (1)except:
- •
- the ACE INA subordinated debt securities of
such series, (2) Indebtednessthat series;- •
- indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that
such Indebtednessthe indebtedness is subordinated to or ranks equally with the ACE INA subordinated debtsecurities of such series, (3) Indebtednesssecurities;- •
- indebtedness of ACE INA to an
Affiliateaffiliate of ACEINA, (4)INA;- •
- interest accruing after the filing of a petition initiating any bankruptcy, insolvency or other similar proceeding unless
suchthe interest is an allowed claim enforceable against ACE INA in a proceeding under federal or state bankruptcylaws, (5)laws;- •
- trade accounts
payablepayable; and(6)- •
- any
Indebtedness,indebtedness, including all other debt securities and guarantees in respect of those debt securities, initially issuedto (x)to:
- •
- any ACE Trust or
(y)- •
- any trust, partnership or other entity affiliated with ACE which is a financing vehicle of ACE or any
Affiliateaffiliate of ACE in connection with an issuance bysuchthe entity of preferred securities or other securities which are similar to the preferred securities described under "Description of Preferred Securities" below that are guaranteed by ACE pursuant to an instrument that ranks equally with or junior in right of payment to the preferred securities guarantees described under53"Description of the Preferred Securities Guarantees" below. Senior
Indebtednessindebtedness with respect to the ACE INA subordinated debt securitiesof any particular seriesshall continue tobe Senior Indebtedness with respect to the ACE INA subordinated debt securities of such series andbe entitled to the benefits of the subordination provisions irrespective of any amendment, modification orwaiver of any term of
such Senior Indebtedness.the senior indebtedness. (Sections 1.1 and 16.8 of the ACE INA subordinated indenture)The ACE INA subordinated indenture provides that the
foregoingsubordination provisions, insofar as they relate to any particular series of ACE INA subordinated debt securities, may be changed prior tosuch issuance. Any suchissuance of the applicable ACE INA subordinated debt securities, which change would be described in therelatedapplicable prospectus supplement.Subordination of ACE Guarantee of ACE INA Subordinated Debt Securities
The ACE guarantee of ACE INA subordinated debt securities
of each serieswillto the extent set forth in the ACE INA subordinated indenture,generally be subordinate in right of payment to the prior payment in full of all ACESenior Indebtedness with respect to such series.senior indebtedness. (Section 18.1 of the ACE INA subordinated indenture) Upon any payment or distribution of assets of ACE of any kind or character, whether in cash, property or securities, to creditors upon any dissolution, winding-up, liquidation or reorganization of ACE, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all ACESenior Indebtedness with respect to the ACE INA subordinated debt securities of any seriessenior indebtedness will first be paid in full, or paymentthereofof the ACE senior indebtedness provided for in money in accordance with its terms, before the holders of ACE INA subordinated debt securitiesof such seriesare entitled to receive or retain any payment from ACE on account of principal of, or any premium or interest on, or any additional amounts with respect to, the ACE INA subordinated debtsecurities of such series, and tosecurities. This means thatendthe holders ofsuchACESenior Indebtednesssenior indebtedness shall be entitled to receivefor application to the payment thereof,any payment or distribution by ACE of any kind or character,whether in cash, property or securities,including anysuchpayment or distribution which may be payable or deliverable by ACE by reason of the payment of any otherIndebtednessindebtedness of ACE being subordinated to the payment of ACE INA subordinated debt securities,of such series,which may be payable or deliverable by ACE in respect of the ACE INA subordinated debt securitiesof such seriesupon anysuchdissolution, winding-up, liquidation or reorganization or in anysuchbankruptcy, insolvency, receivership or other proceeding. (Section 18.3 of the ACE INA subordinated indenture)By reason of
suchthis subordination, in the event of liquidation or insolvency of ACE, holders of ACESenior Indebtedness with respect to the ACE INA subordinated debt securities of any seriessenior indebtedness and holders of other obligations of ACE that are not subordinated tosuchthe ACESenior Indebtednesssenior indebtedness may recover more, ratably, than the holders of the ACE INA subordinated debtsecurities of such series.securities.Subject to the payment in full of all ACE
Senior Indebtedness with respect to the ACE INA subordinated debt securities of any series,senior indebtedness, the rights of the holders of the ACE INA subordinated debt securitiesof such seriesunder the ACE guarantee will be subrogated to the rights of the holders ofsuchthe ACESenior Indebtednesssenior indebtedness to receive payments or distributions of cash, property or securities of ACE applicable tosuchthe ACESenior Indebtednesssenior indebtedness until the principal of, any premium and interest on, and any additional amounts with respect to, the ACE INAsubordinatedsenior debt securitiesof such serieshave been paid in full. (Section 18.4 of the ACE INA subordinated indenture)No payment of principal
(includingof, including redemption and sinking fundpayments) ofpayments, or any premium or interest on or any additional amounts with respect to the ACE INA subordinated debt securities of any series may be made by ACE(i) ifif:
- •
- any ACE
Senior Indebtedness with respect to such seriessenior indebtedness is not paid when due,andany applicable grace period with respect tosuchthe default has ended andsuchthe default has not been cured or waived or ceased to exist, or(ii) if- •
- the maturity of any ACE
Senior Indebtedness with respect to such seriessenior indebtedness has been accelerated because of a default. (Section 18.2 of the ACE INA subordinated indenture)The ACE INA subordinated indenture does not limit or prohibit ACE from incurring additional ACE
Senior Indebtedness,senior indebtedness, which may includeIndebtednessindebtedness that is senior to the ACE guarantee of the ACE INA subordinated54debt securities, of any series,but subordinate to other obligations of ACE. The ACE senior debt securities will constitute ACESenior Indebtednesssenior indebtedness with respect to the ACE INA subordinated debtsecurities of each series under the ACE INA subordinated indenture.securities.The term "ACE
Senior Indebtedness"senior indebtedness" means, with respect to the ACE INA subordinated debt securities of any particular series, allIndebtednessindebtedness of ACE outstanding at any time,except (1)except:
- •
- ACE's obligations under the ACE guarantee in respect of the ACE INA subordinated debt securities of
such series, (2) Indebtednessthat series;- •
- indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that
such Indebtednessthe indebtedness is subordinated to or ranks equally with ACE's obligations under the ACE guarantee in respect of the ACE subordinated debtsecurities of such series, (3) Indebtednesssecurities;- •
- indebtedness of ACE to an
Affiliateaffiliate ofACE, (4)ACE;- •
- interest accruing after the filing of a petition initiating any bankruptcy, insolvency or other similar proceeding unless
suchthe interest is an allowed claim enforceable against ACE in a proceeding under federal or state bankruptcylaws, (5)laws;- •
- trade accounts
payable, (6)payable;- •
- ACE's obligations under the ACE guarantee in respect of the ACE INA subordinated debt securities
of any seriesinitially issuedto (x)to:
- •
- any ACE Trust or
(y)- •
- any trust, partnership or other entity affiliated with ACE which is a financing vehicle of ACE or any
Affiliateaffiliate of ACE in connection with an issuance bysuchthe entity of preferred securities or other securities which are similar to the preferred securities described under "Description of Preferred Securities" below that are guaranteed by ACE pursuant to an instrument that ranks equally with a junior in right of payment to the preferred securities guarantees described under "Description of Preferred Securities Guarantees"belowbelow; and(7)- •
- all preferred securities guarantees and all similar guarantees issued by ACE on behalf of holders of preferred securities of an ACE Trust or other similar preferred securities issued by any trust, partnership or other entity affiliated with ACE which is a financing vehicle for ACE or any affiliate of ACE.
The ACE INA subordinated indenture provides that the
foregoingsubordination provisions, insofar as they relate to any particular series of ACE INA subordinated debt securities, may be changed prior tosuch issuance. Any suchthe issuance of that series of ACE INA subordinated debt securities, which change would be described in the applicable prospectus supplement.New York Law to Govern
The ACE INA indentures, the ACE INA debt securities and the ACE guarantee will be governed by, and construed in accordance with, the laws of the
Statestate of NewYork applicable to agreements made or instruments entered into and, in each case, performed in that state.York. (Section 1.13)55
DESCRIPTION OF THE WARRANTS TO PURCHASE
ORDINARY SHARES OR PREFERRED SHARESThe following
statements with respect tosummary sets forth the material terms and provisions of the ordinary share warrants and preferred share warrants,are summaries of, and subjectwhich would be issued pursuant tothe detailed provisions ofa stock warrant agreementto be entered into bybetween ACE and a stock warrant agent to be selected at the time of issue. The stock warrant agreement may include or incorporate by reference standard warrant provisions substantially in the form of theStandard Stock Warrant Provisionsstandard stock warrant provisions, which is filed as an exhibit to the registration statement of which this prospectus forms a part.General
The stock warrants
evidenced by stock warrant certificates,may be issued under the stock warrant agreement independently or together with any other securities offered byanya prospectussupplement and may be attached to or separate from such other offered securities.supplement. If stock warrants are offered, therelatedapplicable prospectus supplement will describe the designation and terms of the stock warrants, including, without limitation, the following:.
- •
- the offering price, if any;
.- •
- the designation and terms of the ordinary shares or preferred shares purchasable upon exercise of the stock warrants;
.- •
- if applicable, the date on and after which the stock warrants and the related offered securities will be separately transferable;
.- •
- the number of ordinary shares or preferred shares purchasable upon exercise of one stock warrant and the initial price at which
suchshares may be purchased uponexercise; .exercise of the stock warrant;- •
- the date on which the right to exercise the stock warrants shall commence and the date on which
such rightshallthese rights shall expire;.- •
- a discussion of
certain United Statesthe material U.S. Federal income tax considerations;. the- •
- any call
provisions, if any; .provisions;- •
- the currency
currencies or currency unitsin which the offering price, if any, and exercise price are payable;.- •
- the antidilution provisions of the stock warrants; and
.- •
- any other terms of the stock warrants.
The ordinary shares or preferred shares issuable upon exercise of the stock warrants will, when issued in accordance with the stock warrant agreement, be fully paid and nonassessable. This means that the shares will be paid for in full at the time they are issued, and, once they are paid for in full, there will be no further liability for further assessments or taxation.
Exercise of Stock Warrants
StockYou may exercise your stock warrants
may be exercisedby surrendering to the stock warrant agenttheyour stock warrant certificate with the form of election to purchase on the reversethereof dulyof the certificate properly completed andsignedexecuted bythe warrantholder,you, orits dulyyour authorized agent,(suchwhich signaturetomust be guaranteed by a bank or trust company, by a broker or dealer which is a member of the National Association of Securities Dealers, Inc., which we refer to in this prospectus as the NASD, or by a member of a national securitiesexchange), indicatingexchange. You must indicate on thewarrantholder'sform of election whether you are electing to exercise all or a portion of the stock warrants evidenced by the certificate.Surrendered stock warrant certificates shall be accompanied byYou must also submit a payment of the aggregate exercise price of the stock warrants to be exercisedas set forth in the related prospectus supplement,in lawful money of the United States along with your stock warrant certificates, unless otherwiseprovidedset forth in therelatedapplicableprospectus supplement. Upon receipt
thereofof the stock warrant certificate, form of election and aggregate payment, if applicable, by the stock warrant agent, the stock warrant agent will requisition from the transfer agent for the ordinary shares or the preferred shares, as the case may be,for issuance and delivery to or upon the written order of the exercising 56warrantholder,a certificate representing the number of ordinary shares or preferred sharespurchased.purchased for issuance and delivery to you or upon your written order. If you exercise less than all of the stock warrants evidenced by any stock warrant certificate,are exercised,the stock warrant agent shall deliver tothe exercising warrantholderyou a new stock warrant certificate representingtheyour unexercised stock warrants.Antidilution and Other Provisions
The exercise price payable,
andthe number of ordinary shares or preferred shares purchasable upon the exercise of each stock warrant, and the number of stock warrants outstandingwill beare subject to adjustmentin certainif specified eventsincludingoccur. These events include:
- •
- the issuance of a stock dividend to holders of ordinary shares or preferred
shares, respectively, orshares; and- •
- a combination, subdivision or reclassification of ordinary shares or preferred
shares, respectively.shares.In lieu of adjusting the number of ordinary shares or preferred shares purchasable upon exercise of each stock warrant, ACE may elect to adjust the number of stock warrants. No adjustment in the number of shares purchasable upon exercise of the stock warrants will be required until cumulative adjustments require an adjustment of at least 1%
thereof. ACEin the number of shares purchasable. We may also, at its option, reduce the exercise price at any time. No fractional shares will be issued upon exercise of stock warrants, butACEwe will pay the cash value of any fractional shares otherwise issuable. Notwithstanding theforegoing,preceding sentences, in case of any consolidation, merger, or sale or conveyance oftheour propertyof ACEwe as an entirety or substantially as an entirety,the holder of each outstandingyou, as a stock warrant holder, shall have the right to the kind and amount of shares of stock and other securities and property,(including cash)including cash, receivable by a holder of the number of ordinary shares or preferred shares into whichsuchyour stock warrants were exercisable immediately priorthereto.to this event.No Rights as Shareholders
Holders of stock warrantsYou will not be entitled, by virtue of being
such holders,a stock warrant holder, to vote, to consent, to receive dividends, to receive notice as shareholders with respect to any meeting of shareholders for the election of our directorsof ACEor any other matter, or to exercise any rights whatsoever as shareholders ofACE. 57our's.
DESCRIPTION OF THE WARRANTS TO PURCHASE DEBT SECURITIESThe following
statements with respect tosummary sets forth the material terms and provisions of the debt warrants,are summaries of, and subjectwhich would be issued pursuant tothe detailed provisions ofa debt warrant agreementto be entered into bybetween ACE and a debt warrant agent to be selected at the time of issue. The debt warrant agreement may include or incorporate by reference standard warrant provisions substantially in the form of theStandard Debt Securities Warrant Provisionsstandard debt warrant provisions, which is filed as an exhibit to the registration statement of which this prospectus forms a part.General
The debt warrants
evidenced by debt warrant certificates,may be issued under the debt warrant agreement independently or together with any other securities offered byanya prospectussupplement and may be attached to or separate from such other offered securities.supplement. If debt warrants are offered, therelatedapplicable prospectus supplement will describe the designation and terms of the debt warrants, including, without limitation, the following:.
- •
- the offering price, if any;
.- •
- the designation, aggregate principal amount and terms of the ACE debt securities purchasable upon exercise of the debt warrants;
.- •
- if applicable, the date on and after which the debt warrants and the related offered securities will be separately transferable;
.- •
- the principal amount of ACE debt securities purchasable upon exercise of one debt warrant and the price at which
suchthe principal amount of ACE debt securities may be purchased uponexercise; .exercise of the debt warrant;- •
- the date on which the right to exercise the debt warrants shall commence and the date on which
suchthis right shall expire;.- •
- a discussion of
certain United Statesthe material U.S. Federal income tax considerations;.- •
- whether the warrants represented by the debt warrant certificates will be issued in registered or bearer form;
.- •
- the currency, currencies or currency units in which the offering price, if any, and exercise price are payable;
.- •
- the antidilution provisions of the debt warrants; and
.- •
- any other terms of the debt warrants.
WarrantholdersYou, as a debt warrant holder, will generally not have any of the rights of holders of ACE debt securities, including the right to receive the payment of principal of, any premium or interest on, or any additional amounts with respect to, the ACE debt securities or to enforce any of the covenants of the ACE debt securities or the applicable ACE
indenture, except as otherwise provided in the applicable ACEindenture.Exercise of Debt Warrants
DebtYou may exercise your debt warrants
may be exercisedby surrenderingthe debt warrant certificateat the office of the debt warrant agent your debt warrant certificate with the form of election to purchase on the reverse side of thedebt warrantcertificate properly completed andexecuted (with signature(s)signed by you, which signature must be guaranteed by a bank or trust company, by a broker or dealer which is a member of theNational Association of Securities Dealers, Inc.NASD or by a member of a national securitiesexchange), and byexchange. You must also submit a payment in full of the exercise price, as set forth in therelatedapplicable prospectus supplement. Upon the exercise of debt warrants, ACE will issue the ACE debt securities in authorized denominations in accordance withthe instructions of the exercising warrantholder.your instructions. If you exercise less than all of the debt warrants evidenced bytheyour debt warrant certificate,are exercised,a new debt warrant certificate will be issued for the remaining number of debt warrants.58
DESCRIPTION OF PREFERRED SECURITIESEach ACE Trust will be governed by
the terms of the applicable restated trust agreement. Under thean amended and restated trust agreement, which refer to in this prospectus as a trust agreement, a form of which is anACE Trust,exhibit to the registration statement of which this prospectus forms a part. Under each trust agreement, the ACE Trust may issue, from time to time, only one series of preferredsecurities. The preferredsecuritieswill havewith the terms set forth in therestatedtrust agreement or made a part of therestatedtrust agreement by the Trust Indenture Act,and describedwhich terms we will set forth in therelatedapplicable prospectus supplement.TheseThe terms of the ACE Trust preferred securities will generally mirror the terms of the ACE INA subordinated debt securities,purchased bywhich the ACE Trustusingwill purchase with the proceeds from the sale of its preferred securities and its common securities. The ACE INA subordinated debt securities issued to an ACE Trust will be guaranteed by ACE on a subordinated basis and are referred to in this prospectus as the"correspondingcorresponding ACE INA subordinated debtsecurities"securities relating to that ACE Trust.See "Use of Proceeds."The following is a summary
sets forthof the material terms and provisions of eachrestatedtrust agreement and the preferredsecurities to which any prospectus supplement relates. Because this summary is not complete, yousecurities. You should refer to the form of amended and restated trust agreement and to the Trust Indenture Act for complete information regarding the terms and provisions ofthatthe trust agreement and of the preferredsecurities, including the definitions of some of the terms used below. The form of restated trust agreement filed as an exhibit to the registration statement of which this prospectus forms a part is incorporated by reference in this summary. Whenever particular sections or defined terms of a restated trust agreement are referred to, such sections or defined terms are incorporated herein by reference, and the statements in connection with which such reference is made is qualified in its entirety by such reference.securities.Issuance, Status and Guarantee of Preferred Securities
Under the terms of the restated trust agreement for each ACE Trust, the Administrative Trustees will issue the preferred securities on behalf of that ACE Trust.The preferred securities will represent preferred beneficial interests in
thean ACE Trust andtheyou, as holders of the preferred securities, will be entitled to a preference incertainspecified circumstances, including as regards distributions and amounts payable on redemption or liquidation over the common securities ofsuchthe applicable ACETrust, as well as other benefits under the corresponding restated trust agreement.Trust. The preferred securities ofaneach ACE Trust will rank equally, and payments will be made on the preferred securitiespro rata, with the common securities of that ACE Trust, except as described under"--Subordination"—Subordination of CommonSecurities."Securities" below. TheProperty Trusteeproperty trustee will hold legal title to the corresponding ACE INA subordinated debt securities in trust for your benefit and for the benefit of theholdersholder of therelated preferred securities andACE Trust's common securities.TheIn this prospectus, we refer to the common securities and the preferred securities of an ACE Trustarecollectivelyreferred toas the "trust securities" of that ACE Trust.ACE will
issue aguarantee,agreement forwhich we refer to in this prospectus as thebenefit of the holders of each ACE Trust'spreferred securities(the "preferred securities guarantee" for thoseguarantee, the preferredsecurities).securities. Under each preferred securities guarantee, ACE will guarantee, on a subordinated basis, payment of distributions on the related preferred securities and amounts payable on redemption or liquidation ofsuchthe related preferred securities, but only to the extent that the related ACE Trust has fundson handto makesuchthese payments. See "Description of Preferred Securities Guarantees."Distributions
Distributions on the preferred securities
will be cumulative,will accumulate from the original issue date and will be payable on the datesasspecified in therelatedapplicable prospectus supplement.In the event thatIf any date on which these distributions are payableon the preferred securitiesis not aBusiness Day,business day, payment of the distribution payable onsuchthat date will be made on the next succeeding business daythat is a Business Day (andwithout any additional distributions or other payment in respect ofany such delay), except that,the delay. However, ifsuch Business Daythe next succeeding business day is in the next succeeding calendar year, payment ofsuchthe distributionshallwill be made on the immediately precedingBusiness Day,business day, in each casewith the same force and effectas if made on the datesuchthe payment was originallypayable (eachpayable. We refer to each date on which distributions are payable inaccordance with the foregoing,this prospectus as a"distribution date").distribution date. (Section594.1) .A"Business Day""business day" is any day other than a Saturday or a Sunday, or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the corporate trust office of theProperty Trusteeproperty trustee or the trustee for the corresponding ACE INA subordinated debt securities is closed for business. (Section 1.1).Distributions on each preferred security will be payable at
athe rate specified in therelatedapplicable prospectussupplement. Thesupplement and the amount of distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months unless otherwise specified in therelatedapplicable prospectus supplement. Distributions to whichholders of preferred securitiesyou are entitled will accumulate additional distributions at the rate per annum if and as specified in therelatedapplicable prospectus supplement. References to "distributions" include any accumulated or additional distributions unless otherwise stated. (Section 4.1).If
providedset forth in the applicable prospectus supplement, ACE INAhaswill have the right under the ACE INA subordinated indenture to defer the payment of interestat any time or from time to timeon any series of corresponding ACE INA subordinated debt securities foran Extension Period which will bethe period specified in therelatedapplicable prospectus supplement.No Extension PeriodHowever, no extension period may extend beyond the stated maturity of the corresponding ACE INA subordinated debt securities. See "Description of ACE INA Debt Securities and ACEGuarantee--OptionGuarantee—Option to Extend Interest Payment Date." As a consequence of anysuchextension, distributions on the corresponding preferred securities would be deferred(butbut would continue to accumulate additional distributions at the rateper annumset forth in the applicable prospectus supplement,for such preferred securities,which rate will match the interest rate payable on the corresponding ACE INA subordinated debt securities during theExtension Period)extension period, by the ACE Trust which issuedsuchthe preferred securities during anysuch Extension Period.extension period. (Section 4.1)The funds of each ACE Trust available for distribution to
holders of its preferred securitiesyou will be limited to payments under the corresponding ACE INA subordinated debt securities in which the ACE Trust will invest the proceeds from the issuance and sale of its trust securities. If ACE INA or ACE, as the case may be, does not make interest payments on those corresponding ACE INA subordinated debt securities, theProperty Trusteeproperty trustee will not have funds available to pay distributions on the related preferred securities. The payment of distributions,(ifif and to the extent the ACE Trust has funds legally available for the payment ofsuchthe distributions and cash sufficient to makesuch payments)the payments, is guaranteed by ACEon a limited basisas set forthhereinunder "Description of Preferred Securities Guarantees."Distributions on the preferred securities will be payable to the holders
thereofof the preferred securities as they appear on the register ofsuchthe applicable ACE Trust on the relevant record dates. As long as the preferred securities remain in book-entry form, the record dates will be oneBusiness Daybusiness day prior to the relevant distribution dates.Subject to any applicable laws and regulations and the provisions of the applicable restated trust agreement,Generally, each distribution payment will be made as described under "Global Preferred Securities."In the eventIf any preferred securities are not in book-entry form, the relevant record datefor such preferred securitieswill be the date at least 15 days prior to the relevant distribution date, as specified in therelatedapplicable prospectus supplement. (Section 4.1)Redemption or Exchange
Mandatory Redemption. Upon any repayment or redemption, in whole or in part, of any corresponding ACE INA subordinated debt securities held by an ACE Trust,
whether at stated maturity, upon earlier redemption or otherwise,the property trustee will simultaneously apply the proceeds fromsuchthe repayment or redemption,shall simultaneously be applied by the Property Trustee,upon not less than 30 nor more than 60 days notice to holders of trust securities, to redeem, on apro rata basis,preferred securities and commontrust securities having an aggregate stated liquidation amount equal to the aggregate principal amount of the corresponding ACE INA subordinated debt securitiessorepaid or redeemed. The redemption price per trust security will be equal totheits stated liquidation amount,thereofplus any accumulated and unpaid distributionsthereonon the trust security to the redemption date,of redemption,plus the related amount of premium, if any, and any additional amounts paid by ACE INA or ACE upon the concurrent repayment or redemption of the corresponding ACE INA subordinated debtsecurities,securities. The amount described in the preceding sentence is referred to in this prospectus as the redemption price. (Section 4.2) If less than all ofany series ofthe corresponding ACE INA subordinated debt securities are to be repaid or redeemed on a redemption date, then the property trustee shall allocate the proceeds fromsuchthe repayment or redemptionshall be allocatedto the redemptionpro rata of the relatedpreferred securities and the commontrust securities. (Section 4.2)60Generally, ACE INA will have the right to redeem any series of corresponding ACE INA subordinated debt securities
(1)at any time, in whole but not in part, upon the occurrence of aSpecial Event (as defined in the ACE indentures)special event and subject to thefurtherconditions described under "Description of ACE INA Debt Securities and ACEGuarantee--Redemption,Guarantee—Redemption."or (2) as may be otherwise specified in the applicable prospectus supplement.Special Event Redemption or Distribution of Corresponding ACE INA Subordinated Debt Securities. If a
Special Eventspecial event relating to thepreferred securities and commontrust securities of an ACE Trustshall occuroccurs andbeis continuing, within 90 days following the occurrence of the special event, ACE INA has the right to redeem the corresponding ACE INA subordinated debt securities, in whole but not in part, and,therebyin doing so, cause a mandatory redemption ofsuch preferred securities and commonthe related trust securities, in whole but not in part, at the redemptionprice within 90 days following the occurrence of the Special Event.price. At any time, ACE INA has the right to dissolve therelatedACE Trust and, after satisfaction of the liabilities of creditors ofsuchthe ACE Trust,as provided by applicable law,causesuchthe corresponding ACE INA subordinated debt securities to be distributed to the holders ofsuch preferred securities and commonthe trust securities in liquidation of the ACE Trust. If ACE INA does not elect to redeem the corresponding ACE INA subordinated debt securities upon the occurrence of aSpecial Event,special event, the applicablepreferredtrust securities will remainoutstanding, and in theoutstanding. If a tax eventa Tax Eventhas occurred and is continuing,Additional Sumsadditional sums may be payable on the corresponding ACE INA subordinated debt securities."Additional Sums"For purposes of this section, "additional sums" means the additional amounts as may be necessary in order that the amount of distributions then due and payable by an ACE Trust ontheits outstandingpreferredtrust securitiesand common securities of the ACE Trustshall not be reduced as a result of any additional taxes, duties and other governmental charges to whichsuch ACE Trustit has become subject as a result of aTax Event.tax event. (Section 1.1)On and from the date fixed for any distribution of corresponding ACE INA subordinated debt securities upon dissolution of an ACE
Trust (1)Trust:
- •
- the trust securities will no longer be deemed to be
outstanding, (2)outstanding;- •
- the depositary or its nominee, as the record holder of the
applicablerelated preferred securities, will receive a registered global certificate or certificates representing the corresponding ACE INA subordinated debt securities to be delivered uponsuchthe distribution, upon surrender of the related preferred securities certificates forexchangeexchange; and(3)- •
- any certificates representing
suchthe preferred securities, which is notsosurrendered for exchange will be deemed to represent beneficial interests in the corresponding ACE INA subordinated debt securities having an aggregate principal amount equal to the aggregate stated liquidation amount ofsuchthe preferred securities and accruing interest at the rate provided for insuchthe debt securities,(whichwhich rate will equal the distribution rate on the preferredsecurities)securities, untilsuchthe certificates are presented to theAdministrative Trusteesadministrative trustees or their agent for exchange. (Section 9.4)There can be no assurance as to the market prices for the preferred securities or the corresponding ACE INA subordinated debt securities that may be distributed in exchange for preferred securities if a dissolution and liquidation of an ACE Trust were to occur. Accordingly, the preferred securities that you may purchase,
orand the corresponding ACE INA subordinated debt securities that you may receive on dissolution and liquidation of an ACE Trust, may trade at a discount to the price that you paid to purchase the preferred securities.Redemption Procedures
PreferredThe property trustee shall redeem the preferred securities
redeemedon each redemption dateshall be redeemedat the redemption price with the applicable proceeds from the contemporaneous redemption of the corresponding ACE INA subordinated debt securities.Redemptions ofThe property trustee will redeem the preferred securities, and shallbe made andpay the redemption price,shall be payableon each redemption date only to the extent that therelatedapplicable ACE Trust has funds on hand available for the payment ofsuchthe redemption price. See also"--Subordination"—Subordination of Common Securities."If an ACE Trust gives a notice of redemption,
(whichwhich notice will beirrevocable)irrevocable, in respect of its preferred securities, then, by 12:00 noon, New York City time, on the redemption date, to the extent funds are available, theProperty Trusteeproperty trustee will deposit irrevocably with the depositary for the preferred securities funds sufficient to pay the applicable redemptionprice andprice. The property trustee will also give the depositary irrevocable instructions and authority to pay the redemption price tothe holdersyou, as a holder ofsuchthe preferred securities. Ifsuchthe preferred securities are no longer in book-entry form, theProperty Trustee,property trustee, to the extent funds are available, will irrevocably deposit with the paying agent61for suchthe preferred securities funds sufficient to pay the applicable redemption price and will givesuchthe paying agent irrevocable instructions and authority to pay the redemption price tothe holders thereofyou upon surrender oftheiryour certificates evidencingsuchthe preferred securities. Notwithstanding theforegoing,preceding sentences, distributions payable on or prior to the redemption date for any preferred securities called for redemption shall be payable tothe holders of such preferred securitiesyou on the relevant recorddatesdate for the related distribution dates. If notice of redemption shall have been given and funds deposited as required, then, immediately prior to the close of business on the date ofsuchthe deposit, all of your rights, as a holder ofthe holders of suchpreferred securities so called for redemption, will cease, excepttheyour rightof the holders of such preferred securitiesto receive the redemption price, but without interest, andsuchyour preferred securities will cease to be outstanding.In the event thatIf any date on which any redemption price is payable is not aBusiness Day,business day, then payment of the redemption price payable onsuchthat date will be made on the next succeeding business daywhich is a Business Day (andwithout any interest or other payment in respect ofany such delay), except that,the delay. However, ifsuch Business Daythe next succeeding business day falls in the next calendar year,suchthe payment will be made on the immediately precedingBusiness Day,business day, in each case with the same force and effect as if made onsuchthe proper payment date.In the eventIf that payment of the redemption pricein respect of preferred securities called for redemptionis improperly withheld or refused and not paid either by the ACE Trust or by ACE pursuant to the preferred securities guarantee as described under "Description of Preferred Securities Guarantees," distributions onsuchthe preferred securities will continue to accumulate interest at the then applicable rate, from the redemption date originally established by the ACE Trust forsuchthe preferred securities to the datesuchthe redemption price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the redemption price.Subject to applicable law (including, without limitation, United States Federal securities law),Generally, ACE or its subsidiaries, including ACE INA, may
at any time and from time to timepurchase outstanding preferredsecurities by tender, in the open market or by private agreement.securities.Payment of the redemption price on the preferred securities
shallwill be made to theapplicable recordholdersrecord holders as they appear on the register forsuchthe preferred securities on the relevant record date, whichshallwill be oneBusiness Daybusiness day prior to the relevant redemptiondate; provided, however, that in the event thatdate. If any preferred securities are not in book-entry form, the relevant record date forsuchthe preferred securitiesshallwill be a date at least 15 days prior to the redemption date, as specified in the applicable prospectus supplement.IfThe property trustee will allocate the aggregate liquidation amountpro rata to the trust securities based upon the relative liquidation amounts of the classes if less than all of the
preferred securities and commontrust securities issued by an ACE Trust are to be redeemed on a redemptiondate, then the aggregate liquidation amount of such preferred securities and common securities to be redeemed shall be allocateddate. The property trustee will select on apro ratato the preferred securities and the common securities based upon the relative liquidation amounts of such classes. The particular preferred securities to be redeemed shall be selected on a pro ratabasis not more than 60 days prior to the redemption dateby the Property Trusteefrom the outstanding preferred securities not previously called for redemption the particular preferred securities to be redeemed bysuchany method,(includingincluding without limitation bylot)lot, asthe Property Trusteeit shall deem fair and appropriate. TheProperty Trustee shallproperty trustee will promptly notify the trust registrar in writing of the preferred securities selected for redemption and, in the case of any preferred securities selected for partial redemption, the liquidation amountthereofof the preferred securities to be redeemed.For allGenerally, for purposes of eachrestatedtrust agreement,unless the context otherwise requires,all provisions relating to the redemption of preferred securitiesshallwill relate, in the case of any preferred securities redeemed or to be redeemed only in part, to the portion of the liquidation amount of preferred securities which has been or is to be redeemed.Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of trust securities to be redeemed at its registered address. Unless each of ACE INA and ACE defaults in payment of the redemption price on the corresponding ACE INA
subordinated debt securities, on and after the redemption date interest will cease to accrue on
suchthe ACE INA subordinated debt securities or portionsthereof (andof the ACE INA subordinated debt securities, and distributions will cease to accrue on the related preferred securities or portionsthereof)of the related preferred securities, called for redemption. (Section 4.2)Subordination of Common Securities
Payment
of distributionsonand the redemption price of,each ACE Trust'spreferredtrust securitiesand common securities, as applicable, shallwill be madepro rata based on the liquidation amount ofsuch preferred 62securities and common securities; provided, however, thatthe trust securities. However, ifon any distribution date or redemption datean event of default under the corresponding ACE INA subordinated debt securitiesshall have occurredoccurs andbeis continuing on any distribution date or redemption date, no payment of any distribution on, or redemption price of, any of the ACE Trust's common securities, and no other payment on account of the redemption, liquidation or other acquisition ofsuchthe common securities,shallwill be made unless payment in full in cash of all accumulated and unpaid distributions on all of the ACE Trust's outstanding preferred securities for all distribution periods terminating on or priorthereto,to that date, or in the case of payment of the redemption price the full amount ofsuchthe redemption price on all of the ACE Trust's outstanding preferred securities then called for redemption,shallhave been made or provided for, and all funds available to theProperty Trustee shallproperty trustee will first be applied to the payment in full in cash of all distributions on, or redemption price of, the ACE Trust's preferred securities then due and payable.In the caseIf any event of
any Event of Defaultdefault under therestatedtrust agreement resulting from a event of default under the corresponding ACE INA subordinated debt securities occurs, the holder ofsuchthe ACE Trust's common securities will be deemed to have waived any right to act with respect toany such Eventthat event ofDefault under the applicable restated trust agreementdefault until the effect of allsuch EventsofDefaultthe events of default with respect tosuchthe preferred securities have been cured, waived or otherwise eliminated. Untilany such Eventsthese events ofDefault under the applicable restated trust agreement with respect to the preferred securitiesdefault have been so cured, waived or otherwise eliminated, theProperty Trusteeproperty trustee shall act solely on behalf of the holders ofsuchthe preferred securities and not on behalf of the holder of the ACE Trust's common securities, and only the holders ofsuchthe preferred securities will have the right to direct theProperty Trusteeproperty trustee to act on their behalf. (Section 4.3)Liquidation Distribution Upon Dissolution of ACE Trust
Pursuant to each
restatedtrust agreement, each ACE Trustshallwill automatically dissolve upon expiration of its term andshallwill dissolve on the first to occur of:1. certain events of
- •
- bankruptcy, dissolution or liquidation of ACE INA or ACE;
2.- •
- the written direction to the
Property Trusteeproperty trustee from ACE INA, asDepositor,depositor, at any time,(whichwhich direction is optional and wholly within the discretion of ACE INA,as Depositor)to dissolve the ACE Trust and distribute corresponding ACE INA subordinated debt securities having an aggregate principal amount equal to the aggregate stated liquidation amount of the trust securities to the holders of the trust securities in exchange for the trust securities;3.- •
- the redemption of all of the ACE Trust's trust securities following a
Special Event; 4.special event;- •
- the redemption of all of the ACE Trust's preferred securities as described under "Description of Preferred
Securities--RedemptionSecurities—Redemption orExchange--MandatoryExchange—Mandatory Redemption"; and5.- •
- the entry of an order for the dissolution of the ACE Trust by a court of competent jurisdiction. (Section 9.2)
If an early dissolution occurs as described in
clause (1), (2) or (5)the first, second and fifth bullets above or upon the date designated for automatic dissolution of the ACE Trust, the ACE Trustshallwill be liquidated by the ACETrusteestrustees as expeditiously as the ACETrusteestrustees determine to be possible by distributing to the holders of the trust securities, after satisfaction of liabilities tocreditors of suchthe ACETrust as provided by applicable law, to the holders of such trust securitiesTrust's creditors, corresponding ACE INA subordinated debt securities having an aggregate principal amount equal to the aggregatestated liquidation amount of the trust securities. However, if
suchthe property trustee determines that this distribution isdetermined bynot practical, theProperty Trustee not to be practical, suchholders will be entitled to receive out of theassets of theACETrustTrust's assets available for distribution,to holders,after satisfaction of liabilities tocreditors of suchthe ACETrust as provided by applicable law,Trust's creditors, an amount equal to, in the case of holders of preferred securities, the aggregate of the liquidation amount plus accumulated and unpaid distributionsthereonon the trust securities to the date of payment, this amount being referred to in this prospectus as theLiquidation Distribution.liquidation distribution. Ifsuch Liquidation Distributionthe liquidation distribution can be paid only in part becausesuchthe ACE Trust has insufficient assets available to pay in full the aggregateLiquidation Distribution,liquidation distribution, then the amounts payable directly bysuch 63the ACE Trust on its preferred securities pro rata basis. Theshallwill be paid on aHolderholder ofsuchthe ACE Trust's common securities will be entitled to receive distributions upon anysuchliquidationpro rata with the holders of its preferred securities, except that if an event of default under the corresponding ACE INA subordinated debt securities has occurred and is continuing, the preferred securities shall have a priority over the common securities. (Section 9.4)Events of Default; Notice
Any oneThe following constitute an event of
the following events constitutes an "Event of Default"default under eachrestatedtrust agreement with respect to the applicable preferredsecurities (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1)securities:
- •
- the occurrence of an event of default
in respect ofon the corresponding ACE INA subordinated debt securities (see "Description of ACE INA Debt Securities and ACEGuarantee--EventsGuarantee—Events of Default");or (2)- •
- default by the
Property Trusteeproperty trustee in the payment of any distribution when it becomes due and payable, and continuation ofsuchthis default for a period of 30 days;or (3)- •
- default by the
Property Trusteeproperty trustee in the payment of any redemption price of any trust security when it becomes due and payable;or (4)- •
- default in the performance, or breach, in any material respect, of any covenant or warranty of the ACE
Trusteestrustees insuch restatedthe trust agreement,(otherother than a covenant or warranty a default in the performanceof whichor breach those covenants in thebreach of which is dealt with in clause (2) or (3) above),preceding two bullets, and continuation ofsuchthe default or breach for a period of 60 days afterthere has been given, by registered or certified mail, to the defaulting ACE Trustee or Trustees bythe holders of at least 25% in aggregate liquidation preference of the outstanding preferred securities of the applicable ACE Trustahave given written notice specifyingsuchthe default or breach,andrequiring it to be remedied and stating thatsuchthe notice is a "Notice of Default" undersuch restatedthe trustagreement;agreement, by registered or(5)certified mail to the defaulting ACE trustee(s); and- •
- the occurrence of
certainspecified events of bankruptcy or insolvency with respect to theProperty Trusteeproperty trustee and the failure by ACE INA, asDepositor,depositor, to appoint a successorProperty Trusteeproperty trustee within 60 daysthereof.of the occurrence. (Section 1.1)Within five
Business Daysbusiness days after the occurrence of anyEventevent ofDefaultdefault actually known to theProperty Trustee,property trustee, theProperty Trustee shallproperty trustee will transmit notice ofsuch Eventthe event ofDefaultdefault to the holders ofsuch ACE Trust'sthe applicable preferred securities, theAdministrative Trusteesadministrative trustees and ACE INA, asDepositor,depositor, unlesssuch Eventthe event ofDefault shall havedefault has been cured or waived. (Section 8.2) ACE INA, asDepositor,depositor, and theAdministrative Trusteesadministrative trustees are required to file annually with theProperty Trusteeproperty trustee a certificate as to whether or not they are in compliance with all the conditions and covenants applicable to them under eachrestatedtrust agreement. (Sections 8.15 and 8.16)If an event of default under the corresponding ACE INA subordinated debt securities has occurred and is continuing, the preferred securities shall have a preference over the common securities upon dissolution of each ACE Trust as described above. See
"--Liquidation"—Liquidation Distribution Upon Dissolution of ACE Trust." The existence of anEventevent ofDefaultdefault under therestatedtrust agreement does not entitle the holders of preferred securities to accelerate the maturitythereof.of the preferred securities.Removal of ACE Trustees
Unless an event of default under the corresponding ACE INA subordinated debt securities
shall havehas occurred andbeis continuing, any ACETrusteetrustee may be removed at any time by the holder of the ACE Trust's common securities. If an event of default under the corresponding ACE INA subordinated debt securities has occurred and is continuing, theProperty Trusteeproperty trustee and the DelawareTrusteetrustee may be removedat such timeby the holders of a64majority in liquidation amount of the outstanding preferred securities. In no event will the holders of the preferred securities have the right to vote to appoint, remove or replace the Administrative Trustees,administrative trustees, which voting rights are vested exclusively in the holder of the ACE Trust's common securities. No resignation or removal of an ACETrusteetrustee and no appointment of a successor trustee shall be effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the applicablerestatedtrust agreement. (Section 8.10)Co-Trustees and Separate Property Trustee
Unless an
Eventevent ofDefaultdefault shall have occurred and be continuing,at any time or times,for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the property of any ACE Trust may at the time be located, ACE INA, asDepositor,depositor, and theAdministrative Trusteesadministrative trustees shall have power, at any time or times, to appoint one or more persons either to act as a co-trustee jointly with theProperty Trustee,property trustee of all or any part of the property ofsuchthe ACE Trust or to act as separate trustee of anysuchproperty, in either case withsuchthe powers as may be provided in the instrument ofappointment,appointment. ACE INA, as depositor, and the administrative trustees shall generally also have the power to vest insuchthat person or persons insuchthat capacity any property, title, right or power deemed necessary ordesirable, subject to the provisions of the applicable restated trust agreement. In casedesirable. If an event of default under the corresponding ACE INA subordinated debt securities has occurred and is continuing, theProperty Trusteeproperty trustee alone shall have power to makesuchthis appointment. (Section 8.9)Merger or Consolidation of ACE Trustees
Any corporation into which the
Property Trustee,property trustee, the DelawareTrusteetrustee or anyAdministrative Trusteeadministrative trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to whichsuchthe ACETrusteetrustee shall be a party, shall be the successor ofsuchthe ACETrusteetrustee under eachrestatedtrust agreement,provided suchso long as the corporationshall beis otherwise qualified and eligible. (Section 8.12)Mergers, Consolidations, Amalgamations or Replacements of the ACE Trusts
An ACE Trust may not merge with or into, convert into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other entity, except as described below or as described in "Liquidation Distribution Upon Dissolution of ACE Trust." An ACE Trust may, at the request of ACE INA, with the consent of only the
Administrative Trusteesadministrative trustees and without the consent of the holders of the preferred securities, merge with or into, convert into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of anyState, provided, that 1. suchstate so long as the following conditions are met:
- •
- The successor entity
either (a)either:
- •
- expressly assumes all of the obligations of
suchthe ACE Trust with respect to the preferred securities or(b)- •
- substitutes for the preferred securities other securities having substantially the same terms as the preferred securities, referred to in this prospectus as the
Successor Securities,successor securities, so long
as the
Successor Securitiessuccessor securities rank the same as the preferred securities rank in priority with respect to distributions and payments upon liquidation, redemption andotherwise, 2.otherwise;
- •
- ACE expressly appoints a trustee of
suchthe successor entity possessing the same powers and duties as theProperty Trusteeproperty trustee as the holder of the corresponding ACE INA subordinated debt securities;- •
- The successor securities
3. the Successor Securitiesare listed or traded, or anySuccessor Securitiessuccessor securities will be listed upon notification of issuance, on any national securities exchange or other organization on which the preferred securities are then listed or traded, ifany, 4. suchany;- •
- The merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the preferred securities,
(includingincluding anySuccessor Securities)successor securities, to be downgraded by any nationally recognized statistical ratingorganization, 655. suchorganization;- •
- The merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the preferred securities,
(includingincluding anySuccessor Securities)successor securities, in any materialrespect, 6. suchrespect;- •
- The successor entity has a purpose substantially identical to that of the ACE
Trust, 7. priorTrust;- •
- Prior to
suchthe merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease, ACE INA has received an opinion from independent counsel to the ACE Trustexperienced in such mattersto the effectthat (a) suchthat:
- •
- the merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the preferred securities,
(includingincluding anySuccessor Securities)successor securities, in any material respect, and(b)- •
- following
suchthe merger, conversion, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the ACE Trust nor any successor entity will be required to register as an "investment company" under the Investment CompanyAct,Act; and8.- •
- ACE INA or any permitted successor or assignee owns all of the common securities of
suchthe successor entity and guarantees the obligations ofsuchthe successor entity under theSuccessor Securitiessuccessor securities at least to the extent provided by the preferred securities guarantee.Notwithstanding the
foregoing,preceding description, an ACE Trust shall not, except with the consent of holders of 100% in liquidation amount of the preferred securities, consolidate, amalgamate, merge with or into, convert into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, convert into, or replace it ifsuchthe consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the ACE Trust or the successor entity to be classified as other than a grantor trust forUnited StatesU.S. Federal income tax purposes. (Section 9.5)Voting and Preemptive Rights
Except as provided below and under
"--Removal"—Removal of ACE Trustees," "Description of ACE INA Debt Securities and ACEGuarantee--EventsGuarantee—Events of Default," "Description of Preferred SecuritiesGuarantees--AmendmentsGuarantees—Amendments and Assignment"and as otherwise required by law and the applicable restated trust agreement,, the holders of the preferred securities will generally not havenoany voting rights. Holders of the preferred securities have no preemptive or similar rights. (Sections 5.14 and 6.1)Amendment of Restated Trust Agreements
Each
restatedtrust agreement may be amendedfrom time to timeby ACE INA and the ACETrustees,trustees, without the consent of the holders of the trust securities:1.
- •
- to cure any ambiguity, correct or supplement any provisions in
such restatedthe trust agreement that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising undersuch restatedthe trust agreement, which shall not be inconsistent with the other provisions ofsuch restatedthe trust agreement, or2.- •
- to modify, eliminate or add to any provisions of
such restatedthe trust agreement tosuchthe extent as shall be necessary to ensure that the ACE Trust will be classified forUnited StatesU.S. Federal income tax purposes as a grantor trust at all times that any trust securities are outstanding or to ensure that the ACE Trust will not be required to register as an "investment company" under the Investment Company Act;provided, however, thatHowever, in the case of
clause (1), suchthe first bullet above, that actionshallwill not adversely affect in any material respect the interests of any holder of trust securities. Anysuchamendments of arestatedtrust agreementshalladopted in accordance with the two bullet points above will become effective when noticethereofof the amendment is given to the holders of trust securities of the applicable ACE Trust.66Each
restatedtrust agreement may be amended by the ACE Trustees and ACE INA with the consent of holders representing not less than a majority,(basedbased upon liquidationamounts)amounts, of the outstanding trust securities and receipt by the ACETrusteestrustees of an opinion of counsel to the effect thatsuchthe amendment or the exercise of any power granted to the ACETrusteestrustees in accordance withsuchthe amendment will not affect the ACE Trust's status as a grantor trust forUnited StatesU.S. Federal income tax purposes or the ACE Trust's exemption from status as an "investment company" under the Investment Company Act. However, without the consent of each holder of trust securities,such restatedthe trust agreement may not be amended to:1.
- •
- change the amount or timing of any distribution on the trust securities or otherwise adversely affect the amount of any distribution required to be made in respect of the trust securities as of a specified
date,date; or2.- •
- restrict the right of a holder of trust securities to institute suit for the enforcement of any
suchpayment on or aftersuchthe date. (Section 10.2)So long as any corresponding ACE INA subordinated debt securities are held by the
Property Trustee,property trustee, the ACETrusteestrustees shall not:1.
- •
- direct the time, method and place of conducting any proceeding for any remedy available to the trustee under the ACE INA subordinated indenture, or executing any trust or power conferred on that trustee with respect to
suchthe corresponding ACE INA subordinated debtsecurities, 2.securities;- •
- waive any past default that is waivable under
Section 5.13 ofthe ACE INA subordinated indenture,(asas described in "Description of the ACE INA Debt Securities and ACEGuarantee--Guarantee—Modification and Waiver"), 3.;- •
- exercise any right to rescind or annul a declaration that the principal of all the ACE INA subordinated debt securities shall be due and
payable,payable; or4.- •
- consent to any amendment, modification or termination of the ACE INA subordinated indenture or
suchthe corresponding ACE INA subordinated debt securities, wheresuchthe consent shall be required,without, in each case, obtaining the prior approval of the holders of a majority in aggregate liquidation amount of all outstanding preferred securities.
However, where a consent under the ACE INA subordinated indenture would require the consent of each holder of the affected corresponding ACE INA subordinated debt securities,
affected thereby,nosuchconsent shall be given by theProperty Trusteeproperty trustee without the prior consent of each holder of the corresponding preferred securities. The ACETrusteestrustees shall not revoke any action previously authorized or approved by a vote of the holders of the preferred securities except by subsequent vote of the holders of the preferred securities. TheProperty Trusteeproperty trustee shall notify each holder of preferred securities of any notice of default with respect to the corresponding ACE INA subordinated debt securities. In addition to obtainingthe foregoingthese approvals of the holders of the preferred securities, prior to taking any ofthe foregoingthese actions, the ACETrusteestrustees shall obtain an opinion of counselexperienced in such mattersto the effect that the ACE Trust will not be classified as an association taxable as a corporation forUnited StatesU.S. Federal income tax purposes on account ofsuchthat action. (Section 6.1)Any required approval or action of holders of preferred securities may be given or taken at a meeting of holders of preferred securities convened for
suchthat purpose or pursuant to written consent. TheProperty Trusteeproperty trustee will cause a notice of any meeting at which holders of preferred securities are entitled to vote to be given to each holder of record of preferredsecurities in the manner set forth in each restated trust agreement.securities. (Sections 6.2, 6.3 and 6.6)No vote or consent of the holders of preferred securities will be required for an ACE Trust to redeem and cancel its preferred securities in accordance with the applicable
restatedtrust agreement.67Notwithstanding thatEven though the holders of preferred securities are entitled to vote or consent under any of the circumstances described above, any of the preferred securities that are owned by ACE INA, the ACE
Trusteestrustees or any affiliate of ACE INA or any ACETrustees,trustees shall, for purposes ofsuchthe vote or consent, be treated as if they were not outstanding.Global Preferred Securities
The preferred securities of an ACE Trust may be issued, in whole or in part, in the form of one or more global preferred securities that will be deposited with, or on behalf of, the depositary. The depositary
identified inand theprospectus supplement. Thespecific terms of the depositary arrangement with respect to the preferred securities of an ACE Trust will be described in therelatedapplicable prospectus supplement.ACE INA anticipates that the following provisions will generally apply to depositary arrangements. Upon the issuance of a global preferred security, and the deposit of such global preferred security with or on behalf of the depositary, the depositary for such global preferred security or its nominee will credit, on its book-entry registration and transfer system, the respective aggregate liquidation amounts of the individual preferred securities represented by such global preferred securities to the accounts of participants. Such accounts shall be designated by the underwriters or agents with respect to such preferred securities or by ACE INA if such preferred securities are offered and sold directly by ACE INA. Ownership of beneficial interests in a global preferred security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in such global preferred security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the depositary or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons who hold through participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a global preferred security. So long as the depositary for a global preferred security, or its nominee, is the registered owner of such global preferred security, such depositary or such nominee, as the case may be, will be considered the sole owner or holder of the preferred securities represented by such global preferred security for all purposes under the restated trust agreement governing such preferred securities. Except as provided below, owners of beneficial interests in a global preferred security will not be entitled to have any of the individual preferred securities represented by such global preferred security registered in their names, will not receive or be entitled to receive physical delivery of any such preferred securities in definitive form and will not be considered the owners or holders thereof under the restated trust agreement. Payments of any liquidation amount, premium or distributions in respect of individual preferred securities registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case may be, as the registered owner of the global preferred security representing such preferred securities. None of ACE, ACE INA, the Property Trustee, any paying agent, or the securities registrar for such preferred securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the global preferred security representing such preferred securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. ACE INA expects that the depositary or its nominee, upon receipt of any payment in respect of a global preferred security representing any ACE Trust's preferred securities, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interest in the aggregate liquidation amount of such global preferred security for such preferred securities as shown on the records of such depositary or its nominee. ACE INA also expects that payments by participants to owners of beneficial interests in such global preferred security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in street name and will be the responsibility of such participants. 68Unless otherwise specified in the applicable prospectus supplement, the restated trust agreement of each ACE Trust will provide that (1) if ACE INA advises the ACE Trustees in writing that the depositary is no longer willing or able to act as depositary and ACE fails to appoint a qualified successor within 90 days, (2) ACE INA at its option advises the ACE Trustees in writing that it elects to terminate the book-entry system through the depositary or (3) after the occurrence of an event of default under the corresponding ACE INA subordinated debt securities, owners of preferred securities representing at least a majority of liquidation amount of such preferred securities advise the Property Trustee in writing that the continuation of a book-entry system through the depositary is no longer in their best interests, then the global preferred securities will be exchanged for preferred securities in definitive form in accordance with the instructions of the depositary. It is expected that such instructions may be based upon directions received by the depositary from participants with respect to ownership of beneficial interests in global preferred securities. Individual preferred securities so issued will be issued in authorized denominations.Payment and Paying Agency
Payments of distributions in respect of the preferred securities shall be made to the depositary, which shall credit the relevant accounts at the depositary on the applicable distribution dates,
or,However, if any ACE Trust's preferred securities are not held by the depositary,suchthese payments shall be made by check mailed to the address of the holder entitledtheretoto the payments assuch addressit shall appear on the registerthatof the ACE Trust. (Section 4.4)Unless otherwise
specifiedset forth in the applicable prospectus supplement, the paying agent shall initially beBank OneJ.P. Morgan Trust Company,N.A.National Association and any co-paying agent chosen byBank OneJ.P. Morgan Trust Company,N.A.National Association and acceptable to theAdministrative Trusteesadministrative trustees and ACE. The paying agent shall be permitted to resign as paying agent upon 30 days' written notice to theAdministrative Trustees,administrative trustees, theProperty Trusteeproperty trustee and ACE INA.In the event Bank OneIf J.P. Morgan Trust Company,N.A.National Association shall no longer be the paying agent, theAdministrative Trusteesadministrative trustees shall appoint a successor,(whichwhich shall be a bank or trust company acceptable to theAdministrative Trusteesadministrative trustees and ACEINA)INA, to act as paying agent. (Section 5.9)Registrar and Transfer Agent
Unless otherwise
specifiedset forth in the applicable prospectus supplement,Bank OneJ.P. Morgan Trust Company,N.A.National Association will act as registrar and transfer agent for the preferred securities.Registration of transfers and exchanges of preferred securities will be effected without charge by or on behalf of each ACE
Trust, but upon payment ofTrust. However, the holders must pay any tax or other governmental charges that may be imposed in connection with any transfer or exchange. The ACE Trusts will not be required to register or cause to be registered the transfer of their preferred securities aftersuchthe preferred securities have been called for redemption. (Section 5.4)Information Concerning the Property Trustee
The
Property Trusteeproperty trustee undertakes to perform only those duties specifically set forth in eachrestatedtrustagreement, provided that itagreement. However, the property trustee must exercise the same degree of care as a prudent person would exercise in the conduct of his or her own affairs. Subject tothis provision,theProperty Trusteepreceding sentence, the property trustee is under no obligation to exercise any of the powers vested in it by the applicablerestatedtrust agreement at the request of any holder of preferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that it mightbe incurred thereby.incur. If, in performing its duties under therestatedtrust agreement, theProperty Trusteeproperty trustee is required to decide between alternative causes of action, construe ambiguous provisions in the applicablerestatedtrust agreement or is unsure of the application of any provision of the applicablerestatedtrust agreement, and the matter is not one on which holders of preferred securities are entitled undersuch restatedthe trust agreement to vote, then theProperty Trusteeproperty trustee shall takesuchthe action as is directed by ACE INA.If it is not so directed,Otherwise, theProperty Trusteeproperty trustee shall takesuchthe action as it deems advisable and in the best interests of the holders of the trust securities and will have no liability except for its own bad faith, negligence or willful misconduct. (Sections 8.1 and 8.3)69Administrative Trustees
The
Administrative Trusteesadministrative trustees are authorized and directed to conduct the affairs of and to operate the ACE Trusts in such a waythatthat:
- •
- no ACE Trust will be deemed to be an "investment company" required to be registered under the Investment Company Act or classified as an association taxable as a corporation for
United StatesU.S. Federal income taxpurposespurposes; andso that- •
- the corresponding ACE INA subordinated debt securities will be treated as indebtedness of ACE INA for
United StatesU.S. Federal income tax purposes.In this
connection,regard, ACE INA and theAdministrative Trusteesadministrative trustees are authorized to take any action not inconsistent with applicable law, the certificate of trust of each ACE Trust or eachrestatedtrust agreement, that ACE INA and theAdministrative Trusteesadministrative trustees determine, in their discretion, to be necessary or desirable forsuchthese purposes, as long assuchthe action does not materially adversely affect the interests of the holders of the related preferred securities.70
DESCRIPTION OF PREFERRED SECURITIES GUARANTEESConcurrently with the issuance by each ACE Trust of its preferred securities,
ACEwe will execute and deliver a preferred securities guarantee for the benefit of the holdersfrom time to timeofsuchthe preferred securities.The Bank OneJ.P. Morgan Trust Company,N.A.National Association will act asindenturethe guarantee trusteereferred to as the Guarantee Trustee,under each preferred securities guarantee for the purposes of compliance with the Trust Indenture Act, and each preferred securities guarantee will be qualified as an indenture under the Trust Indenture Act.Because theThe following is a summary of
certainthe material provisions of the preferred securitiesguarantees is not complete, youguarantees. You should refer to the form of preferred securities guarantee and the Trust Indenture Act for more complete information regarding the provisions of each preferred securitiesguarantee, including the definitions of some of the terms used below.guarantee. The form of the preferred securities guarantee has been filed as an exhibit to the registration statement of which this prospectusformsis a part. Reference in this summary to preferred securities meansthatthe ACE Trust's preferred securities to whichathe preferred securities guarantee relates. TheGuarantee Trusteeguarantee trustee will hold each preferred securities guarantee for the benefit of the holders of the related ACE Trust's preferred securities.General
ACEWe will irrevocably agree to pay in full on a subordinated basis, to the extent described
herein,below, theGuarantee Payments (as defined below) (withoutguarantee payments, without duplication of amountstheretoforepreviously paid by or on behalf of the ACETrust)Trust, to the holders of the preferred securities as and when due, regardless of any defense, right of setoff or counterclaim thatsuchthe ACE Trust may have or assert other than the defense of payment. The following payments with respect to the preferred securities, to the extent not paid by or on behalf of the related ACE Trust, are referred to in this prospectus as theGuarantee Payments, will be subject to the preferred securities guarantee: 1.guarantee payments:
- •
- any accrued and unpaid distributions required to be paid on
suchthe preferred securities, to the extent that the ACE Trust has fundson handavailable for payment atsuch time, 2.that time;- •
- the redemption price, including all accrued and unpaid distributions to the redemption date, with respect to any preferred securities called for redemption, to the extent that the ACE Trust has funds
on handavailable for payment atsuch time,that time; and3.- •
- upon a voluntary or involuntary dissolution, winding up or liquidation of the ACE Trust,
(unlessunless the corresponding ACE INA subordinated debt securities are distributed to holders ofsuchthe preferredsecurities),securities, the lesserof (a)of:
- •
- the
Liquidation Distribution,liquidation distribution, to the extentsuchthe ACE Trust has funds available for payment atsuch timethat time; and(b)- •
- the amount of assets of
suchthe ACE Trust remaining available for distribution to holders of preferred securities.ACE'sOur obligation to make a
Guarantee Paymentguarantee payment may be satisfied by direct payment of the required amounts byACEus to the holders of theapplicablepreferred securities or by causing the ACE Trust to paysuchthese amounts tosuchthe holders. (Section 5.1)Each preferred securities guarantee will be an irrevocable guarantee on a subordinated basis of the related ACE Trust's payment obligations under the preferred securities, but will apply only to the extent that
such relatedthe applicable ACE Trust has funds sufficient to makesuchthe payments. Each preferred securities guarantee is, to that extent, a guarantee of payment and not a guarantee of collection. See"--Status"—Status of the Preferred Securities Guarantees."If ACE INA or
ACEwe does not make interest payments on the corresponding ACE INA subordinated debt securities held by an ACE Trust, the ACE Trust will not be able to pay distributions on the preferred securities and will not have funds legally available for payment. Each preferred securities guarantee will rank subordinate and junior in right of payment toall Senior Indebtedness of ACE,our senior indebtedness, including allACE debt securities and ACE's obligations as guarantor under the ACE INA subordinated indenture, as described below under
"--Status"—Status of the Preferred SecuritiesGuarantees" and in the related prospectus supplement.Guarantees."Because
ACE iswe are a holding company,itsour rights and the rights ofitsour creditors, including the holders of preferred securities who are our creditorsof ACEby71virtue of a preferred securities guarantee, and shareholders to participate in any distribution of assets of any subsidiary upon suchthe subsidiary's liquidation,orreorganization or otherwise would be subject to the prior claims of the subsidiary's creditors, except to the extent that ACE may itself be a creditor with recognized claims against the subsidiary. The right of our creditors,of ACE (includingincluding the holders of preferred securities who are our creditorsof ACEby virtue of a preferred securitiesguarantee)guarantee, to participate in the distribution of stock owned byACEus incertain of itsour subsidiaries, includingACE'sour insurance subsidiaries, may also be subject to approval bycertaininsurance regulatory authorities having jurisdiction oversuchthe subsidiaries.Except as otherwise provided in the applicable prospectus supplement,Generally, the preferred securities guarantees do not limittheour abilityof ACE or ACE INAto incur or issue other secured or unsecured debt, whether under an indenture or otherwise.ACE'sOur obligations
described herein and in any accompanying prospectus supplement, through the applicableunder preferred securities guarantee, the ACE INA subordinated indenture,(including the ACEincluding our guarantee of the ACE INA subordinated debtsecurities) and any supplemental indentures theretosecurities, and the expense agreement described below, taken together, constitute a full, irrevocable and unconditional guarantee byACEus of payments due on the preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documentsconstitutes suchconstitute this guarantee. It is only the combined operation of these documents that has the effect of providing a full, irrevocable and unconditional guarantee of the ACE Trust's obligations under the preferred securities. See "The ACE Trusts," "Description of Preferred Securities," and "Description of ACE INA Debt Securities and ACE Guarantee."ACEWe will also agree to guarantee the obligations of each ACE Trust with respect to the common securities issued by the ACE Trust to the same extent as under the preferred securities
guarantee, except thatguarantee. However, if anEventevent ofDefaultdefault under the ACE INA subordinated indenture has occurred and is continuing, the holders of preferred securities under the preferred securities guarantee will have priority over the holders of the common securities under the common securities guarantee with respect to distributions and payments on liquidation, redemption or otherwise.Status of the Preferred Securities Guarantees
Each preferred securities guarantee will constitute
anour unsecured obligationof ACEand will rank subordinate and junior in right of payment toall Senior Indebtedness of ACE (including all ACEour senior indebtedness, including our debt securities andACE'sobligations as guarantor under the ACE INA subordinateindenture).indenture. (Section 6.2) For purposes of any preferred securities guarantee,"Senior Indebtedness""senior indebtedness" meansall Indebtedness of ACE (including itsour indebtedness, including our obligations as guarantor under the ACE INA subordinatedindenture)indenture, outstanding at any time,except (a)except:
- •
- the
Indebtednessindebtedness under the preferred securitiesguarantee, (b) Indebtednessguarantee;- •
- indebtedness as to which, by the terms of the instrument creating or evidencing the same, it is provided that
such Indebtednessthe indebtedness is subordinated to or ranks equally with the preferred securities guarantee or to otherIndebtedness of ACEindebtedness which is subordinated to or ranks equally with the preferred securitiesguarantee, (c) Indebtedness of ACEguarantee;- •
- indebtedness to an
affiliate of ACE, (d)affiliate;- •
- interest accruing after the filing of a petition initiating any bankruptcy, insolvency or other similar proceeding unless
suchthe interest is an allowed claim enforceable againstACEus in a proceeding under federal or state bankruptcylaws, (e)laws;- •
- trade accounts
payablepayable; and(f)- •
- similar preferred securities guarantees issued by
ACEus on behalf of holders of preferred securities of any other ACE Trust or any trust, partnership or other entity affiliated withACEus which is a
financing vehicle of
ACEours or anyaffiliateofACEour affiliates in connection with the issuance bysuchthe entity of preferred securities or other similar securities that are guaranteed byACEus pursuant to an instrument that ranks equally with or junior in right of payment to the preferred securities guarantee. "Indebtedness" has the same meaning given to that term under the ACE indentures. (Section 1.1).Each preferred securities guarantee will rank equally with all other similar preferred securities guarantees issued by
ACEus on behalf of holders of preferred securities of any other ACE Trust or any trust, partnership or other entity affiliated withACEus which is a financing vehicle ofACEours or any affiliate ofACEours in connection with the issuance bysuchthe entity of preferred securities or other similar securities that are guaranteed byACEus pursuant to an instrument that ranks equally with or junior in right of payment to the preferred securities guarantee.72(Section 6.3). Each preferred securities guarantee will constitute a guarantee of payment and not of collection. Thiscollection, which means that the guaranteed party mayto the extent permitted by law,generally institute a legal proceeding directly againstACEus to enforce its rights under the preferred securities guarantee without first instituting a legal proceeding against any other person or entity,(includingincluding the applicable ACETrust)Trust. (Section 5.4). EachNo preferred securities guarantee will
notbe discharged except by payment of theGuarantee Paymentsguarantee payments in full to the extent not paid by the ACE Trust or upon distribution to the holders of the preferred securities of the corresponding ACE INA subordinated debt securities. None of the preferred securities guarantees places a limitation on the amount of additionalIndebtednessindebtedness that may be incurred byACE or ACE INA. ACE expectsus. We expect from time to time to incur additionalIndebtednessindebtedness that will rank senior to the preferred securities guarantees.Payment of Additional Amounts
ACE will make all
Guarantee Payments pursuant to the preferred securitiesguarantee payments without withholding or deduction at source for, or on account of, any present or future taxes, fees, duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of the Cayman Islands or Bermuda, each, referred to in this prospectus as a taxing jurisdiction, or any political subdivision or taxing authoritythereof or therein,of the taxing jurisdiction, unlesssuchthe taxes, fees, duties, assessments or governmental charges are required to be withheld or deductedby (x)by:
- •
- the laws
(oror any regulations or rulings promulgatedthereunder)under the laws of a taxing jurisdiction or any political subdivision or taxing authoritythereofof the taxing jurisdiction; ortherein or (y)- •
- an official position regarding the application, administration, interpretation or enforcement of any
suchlaws, regulations or rulings, including, without limitation, a holding by a court of competent jurisdiction or by a taxing authority in a taxing jurisdiction or any political subdivisionthereof.of the taxing jurisdiction.If a withholding or deduction at source is required, ACE will, subject to
certainlimitations and exceptions described below, pay to the holder of any related preferred securitiessuchthe additional amounts as may be necessary so that everyGuarantee Payment pursuantguarantee payment made to thepreferred securities guarantee made to suchholder, aftersuchthis withholding or deduction, will not be less than the amount provided for insuchthe preferred securities guarantee to be then due and payable.ACE will not be required to pay any additional amounts for or on account of:
1.
- •
- any tax, fee, duty, assessment or governmental charge of whatever nature which would not have been imposed but for the fact that
such holder (a) wasyou:- •
- were a resident, domiciliary or national of, or engaged in business or maintained a permanent establishment or
waswere physically present in, the relevant taxing jurisdiction or any political subdivisionthereofof the taxing jurisdiction or otherwise had some connection with the relevant taxing
jurisdiction other than by reason of the mere ownership of preferred securities, or receipt of payment under
suchthe preferredsecurities, (b)securities;
- •
- presented
suchthe preferred security for payment in the relevant taxing jurisdiction or any political subdivisionthereof,of the taxing jurisdiction, unlesssuchthe preferred security could not have been presented for paymentelsewhere,elsewhere; or(c)- •
- presented
suchthe preferred security for payment more than 30 days after the date on which the payment in respect ofsuchthe preferred security first became due and payable or provided for, whichever is later, except to the extent thatthe holderyou would have been entitled tosuchthe additional amounts ifityou had presentedsuchthe preferred security for payment on any day within that 30-day period;2.- •
- any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge;
3.- •
- any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by
the holderyou or the beneficial owner ofsuchthe preferred security to comply with any reasonable request by ACE or the applicable ACE Trust addressed tothe holderyou within 90 days ofsuchthe request(a) toto:
- •
- provide information concerning
theyour nationality, residence or identity or of theholderbeneficial owner; orsuch beneficial owner or (b) to- •
- make any declaration or other similar claim or satisfy any information or reporting requirement, which in either case is required or imposed by statute, treaty, regulation or administrative practice of the relevant taxing jurisdiction or any political subdivision
thereofof the taxing jurisdiction as a precondition to exemption from all or part ofsuchthe tax, assessment or other governmental charge; or4.- •
- any combination of
items (1), (2) and (3). 73the above items. In addition, ACE will not pay you any additional amounts with respect to any
Guarantee Payment to any holder who isguarantee payment if you are a fiduciary or partnership or other than the sole beneficial owner of the related preferred security, to the extentsuchthe payment would be required by the laws of the relevant taxing jurisdiction,(oror any political subdivision or relevant taxing authoritythereofof ortherein)in the taxing jurisdiction, to be included in the income for tax purposes of a beneficiary or partner or settlor with respect tosuchthe fiduciary or a member ofsuchthe partnership or a beneficial owner who would not have been entitled tosuchthe additional amounts had it been the holder ofsuchthe preferred security. (Section 5.8)Amendments and Assignment
Except with respect to any changes which do not materially adversely affect the rights of holders of the related preferred securities (in which case no consent will be required), noNo preferred securities guarantee may be amended without the prior approval of the holders of not less than a majority of the aggregate liquidation amount of
suchthe outstanding preferredsecurities.securities, except with respect to any changes which do not materially adversely affect the rights of holders of the related preferred securities, in which case no consent will be required. (Section 8.2).All guarantees and agreements contained in each preferred securities guaranteeshallwill bindtheour successors and assignsreceivers, trusteesandrepresentatives of ACE and shallwill inure to the benefit of the holders of the related preferredsecurities then outstanding.securities. (Section 8.1)ExceptWe may not assign our obligations under the preferred securities guarantee except in connection with a consolidation, amalgamation or merger or conveyance, transfer or leaseinvolving ACEthat is permitted under the ACE INA subordinated indenture and under which the person formed bysuchthe consolidation or amalgamation or into whichACE iswe are merged or which acquires or leasestheour properties and assetsof ACEagrees in writing to performACE'sour obligations under the preferred securitiesguarantee, ACE may not assign its obligations thereunder.guarantee.Events of Default
An event of default under each preferred securities guarantee will occur upon
theour failureof ACEto perform any ofitsour payment or other obligationsthereunder.under the preferred securities guarantee. The holdersof not less than a majority in aggregate liquidation amount of the related preferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of such preferred securitiesguarantee trustee or to direct the exercise of any trust or power conferred upon theGuarantee Trustee under such preferred securities guarantee.guarantee trustee. (Section 5.4)Any holder of the preferred securities may institute a legal proceeding directly against
ACEus to enforce its rights undersuchthe preferred securities guarantee without first instituting a legal proceeding against the ACE Trust, theGuarantee Trusteeguarantee trustee or any other person or entity. (Section 5.4)ACE,We, as guarantor,
isare required to file annually with theGuarantee Trusteeguarantee trustee a certificate as to whether or not ACE is in compliance with all the conditions and covenants applicable to it under the preferred securities guarantee. (Section 2.4)Information Concerning the Guarantee Trustee
The
Guarantee Trustee,guarantee trustee, other than during the occurrence and continuance of a default byACEus in performance of any preferred securities guarantee, undertakes to perform onlysuchthe dutiesas arespecifically set forth in each preferred securitiesguarantee and, afterguarantee. After default with respect to any preferred securities guarantee, the guarantee trustee must exercise the same degree of care and skill as a prudent person would exercise or use in the conduct of his or her own affairs. (Section 3.1).Subject tothis provision,theGuarantee Trusteepreceding sentence, the guarantee trustee is under no obligation to exercise any of the powers vested in it by any preferred securities guarantee at the request of any holder of any preferred securities unless it is offered reasonable indemnity against the costs, expenses, and liabilities that it mightbe incurred thereby.incur. (Section 3.2)74Termination of the Preferred Securities Guarantees
Each preferred securities guarantee will terminate
and be of no further force and effect upon (1)upon:
- •
- full payment of the redemption price of the related preferred
securities, (2)securities;- •
- the distribution of the corresponding ACE INA subordinated debt securities to the holders of the related preferred
securitiessecurities; or(3)- •
- upon full payment of the amounts payable upon liquidation of the related ACE Trust.
Each preferred securities guarantee will continue to be effective or will be reinstated
as the case may be,if, at any time, any holder of the related preferred securities must restore payment of any sums paid with respect tosuchthe preferred securities orsuchthe preferred securities guarantee. (Section 7.1)New York Law to Govern
Each preferred securities guarantee will be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and performed in that state.York. (Section 8.5)The Expense Agreement
Pursuant to the expense agreement entered into by
ACEus underthe restatedeach trust agreement,ACEwe will irrevocably and unconditionally guarantee to each person or entity to whom an ACE Trust becomes indebted or liable, the full payment of any costs, expenses or liabilities of the ACE Trust, other than obligations of the ACE Trust to pay to the holders of the preferred securities or other similar interests in the ACE Trust of the amounts duesuch holdersthem pursuant to the terms of the preferred securities orsuchother similar interests, as the case may be.75
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITSACEWe may issue stock purchase contracts, representing contracts obligating
holdersyou to purchase fromACE,us, and obligatingACEus to sell tothe holders,you, a specified number of ordinary shares at a future date or dates. The price per ordinary share may be fixed at the time the stock purchase contracts are issued or may be determined by reference to a specific formula set forth in the stock purchase contracts.The stock purchase contracts may be issued separately or as a part of stock purchase units consisting of a stock purchase contract and, as security for
the holder'syour obligations to purchase the ordinary shares under the stock purchase contracts,either (1)either:
- •
- senior debt securities or subordinated debt securities of ACE INA, fully and unconditionally guaranteed by
ACE, (2)ACE;- •
- debt obligations of third parties, including U.S. Treasury
securitiessecurities; or(3)- •
- preferred securities of an ACE Trust.
The stock purchase contracts may require us to make periodic payments to
the holders of the stock purchase unitsyou or vice versa, andsuchthese payments may be unsecured or prefunded on some basis. The stock purchase contracts may requireholdersyou to securetheiryour obligations in a specified manner, and, incertainsome circumstances, we may deliver newly issued prepaid stock purchase contracts upon release toa holderyou of any collateral securingsuch holder'syour obligations under the original stock purchase contract.The applicable prospectus supplement will describe the specific terms of any stock purchase contracts or stock purchase units and, if applicable, prepaid stock purchase contracts.
TheHowever, that descriptionin the prospectus supplementwill not purport to be complete and will be qualified in its entirety by referenceto (1)to:
- •
- the stock purchase
contracts, (2)contracts;- •
- the collateral arrangements and depositary arrangements, if applicable, relating to
suchthe stock purchase contracts or stock purchaseunitsunits; and(3)- •
- if applicable, the prepaid stock purchase contracts and the document pursuant to which
suchthe prepaid stock purchase contracts will be issued.76
ACE, ACE INA and/or any ACE Trust may sell offered securities in any one or more of the following ways from time to time:
(1)
- •
- through agents;
(2)- •
- to or through underwriters;
(3)- •
- through dealers; or
(4)- •
- directly to purchasers.
The applicable prospectus supplement
with respect to the offered securitieswill set forth the specific terms of the offering of the offered securities,includingincluding:
- •
- the name or names of any underwriters, dealers or agents;
- •
- the purchase price of the offered securities and the proceeds to ACE, ACE INA and/or an ACE Trust from
suchthe sale;- •
- any underwriting discounts and commissions or agency fees and other items constituting underwriters' or agents' compensation; and
- •
- any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers and any securities exchange on which
suchthe offered securities may belisted. Anylisted, any of which initial public offering price, discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.The distribution of the offered securities may be effected from time to
timetime:in one or more transactions at a fixed price or prices, which may be
changed,changed;
- •
- at market prices prevailing at the time of
sale,sale;- •
- at prices related to
suchthe prevailing marketpricesprices; or- •
- at negotiated prices.
Offers to purchase offered securities may be solicited by agents designated by ACE from time to time. Any
suchagent involved in the offer or sale of the offered securities in respect of which this prospectus is delivered will be named, and any commissions payable by ACE, ACE INA and/or the applicable ACE Trust tosuchthe agent will be set forth, in the applicable prospectus supplement. Unless otherwiseindicatedset forth insuchthe applicable prospectus supplement, anysuchagent will be acting on a reasonable best efforts basis for the period of its appointment. Anysuchagent may be deemed to be an underwriter, as that term is defined in the Securities Act, of the offered securities so offered and sold.If offered securities are sold to the public by means of an underwritten offering, either through underwriting syndicates represented by managing underwriters or directly by the managing underwriters ACE, ACE INA and/or the applicable ACE Trust will execute an underwriting agreement with an underwriter or underwriters, and the names of the specific managing underwriter or underwriters, as well as any other underwriters,
andwhich will be set forth in the applicable prospectus supplement. In addition, the terms of the transaction, including commissions, discounts and any other compensation of the underwriters and dealers, if any, will be set forth in the applicable prospectus supplement, which prospectus supplement will be used by the underwriters to make resales of the offered securities. If underwriters are utilized in the sale of the offered securities, the offered securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions,includingincluding:
- •
- negotiated
transactions,transactions;
- •
- at fixed public offering
pricesprices; or- •
- at varying prices determined by the underwriters at the time of sale.
Offered securities may be offered to the public either through underwriting syndicates represented by managing underwriters or directly by the managing underwriters. If any underwriter or underwriters are utilized in the sale of the offered securities,In addition, unless otherwise indicated in the prospectus supplement, the underwriting agreement will provide that the obligations of the underwriters are subject to
certainspecified conditions precedent and that the underwriters with respect to a sale of offered securities will be obligated to purchase allsuchof the offered securities of a series if any are purchased.ACE, ACE INA and/or the applicable ACE Trust may grant to the underwriters options to purchase additional offered securities, to cover over-allotments, if any, at the public offering price
(withwith additional underwriting discounts orcommissions),commissions, as may be set forth in the applicable prospectussupplement relating thereto.supplement. If ACE, ACE INA and/or the applicable ACE Trust grants any over-allotment option, the terms ofsuchthe over-allotment option will be set forth in the applicable prospectussupplement relating to such offered securities.supplement.If a dealer is utilized in the sales of offered securities,
in respect of which this prospectus is delivered,ACE, ACE INA and/or the applicable ACE Trust will sellsuchthe offered securities to the dealer as principal. The dealer may then resellsuchthe offered securities to the public at varying prices to be determined bysuchthe dealer at the time of resale. Anysuchdealer may be deemed to be an underwriteras such term is defined in the Securities Act,of the offered securities so offered and sold. The name of the dealer and the terms of the transaction will be set forth in therelatedapplicable prospectus supplement.Offers to purchase offered securities may be solicited directly by ACE, ACE INA and/or the applicable ACE Trust and the sale
thereofof the offered securities may be made by ACE, ACE INA and/or the applicable ACE Trust directly to77institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Actwith respect to any resalethereof.of the offered securities. The terms of anysuchof these sales will be described in therelatedapplicable prospectus supplement.Offered securities may also be offered and sold
if so indicated in the applicable prospectus supplement,in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise by one or more remarketing firms acting as principals for their own accounts or as agents for ACE, ACE INA and/or the applicable ACE Trust. Any remarketing firm will be identified and the terms of its agreements, if any, with ACE, ACE INA and/or an ACE Trust and its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwritersas such term is defined in the Securities Act,in connection with the offered securities remarketedthereby.by them.Agents, underwriters, dealers and remarketing firms may be entitled, under
relevantagreements entered into with ACE, ACE INA and/or the applicable ACE Trust, to indemnification by ACE, ACE INA and/or the applicable ACE Trust against some civil liabilities, including liabilities under the Securities Act that may arise from any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact in this prospectus, any supplement or amendment hereto, or in the registration statement of which this prospectus forms a part, or to contribution with respect to payments which the agents, underwriters or dealers may be required to make.If so indicated in the prospectus supplement,ACE, ACE INA and/or the applicable ACE Trust
willmay authorize underwriters or other persons acting as ACE's, ACE INA's and/or the applicable ACE Trust's agents to solicit offers bycertainspecified institutions to purchase offered securities from ACE, ACE INA and/or the applicable ACE Trust, pursuant to contracts providing for payments and delivery on a futuredate.date, which will be set forth in the applicable prospectus supplement. Institutions with whichsuchthese contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions andothers, butothers. However, in all cases,suchthese institutions must be approved by ACE, ACE INA and/or the applicable ACE Trust. The obligations of any purchaser under anysuchcontract will be subject to the condition that the purchase of the offered securities shall not, at the time of delivery, be prohibited under the laws of the jurisdiction to whichsuchthe purchaser is subject. The underwriters andsuchother agents will not have any responsibility in respect of the validity or performance ofsuchthese contracts.Each series of offered securities will be a new issue and, other than the ordinary shares, which are listed on the NYSE, will have no established trading market. ACE, ACE INA and/or the applicable ACE Trust may elect to list any series of offered securities on an exchange and, in the case of the ordinary shares, on any additional
exchange, but,exchange. However, unless otherwise specified in the applicable prospectus supplement, none of ACE, ACE INA or any ACE Trust shall be obligated to do so. No assurance can be given as to the liquidity of the trading market for any of the offered securities.Underwriters, dealers, agents and remarketing firms may be customers of, engage in transactions with, or perform services for, ACE and its subsidiaries in the ordinary course of business.
Legal matters with respect to United States and New York law will be passed upon for ACE, ACE INA and the ACE Trusts by Mayer, Brown, Rowe & Maw LLP, Chicago, Illinois. The validity of the preferred securities under Delaware law will be passed upon on behalf of ACE, ACE INA and the ACE Trusts by Richards, Layton & Finger, P.A., Wilmington, Delaware. Legal matters with respect to Cayman Islands law will be passed upon for ACE by Maples and Calder, George Town, Grand Cayman, Cayman Islands, British West Indies. Legal matters with respect to Bermuda law will be passed upon for ACE by Conyers Dill & Pearman, Hamilton, Bermuda.
Legal matters will be passed upon for the underwriters, dealers or agents, if any, by Sidley, Austin, Brown & Wood LLP, New York, New York.Mayer, Brown, Rowe & Mawand Sidley, Austin, Brown & WoodLLP will rely on the opinion of Maples and Calder with respect to Cayman Islands law and the opinion of Conyers Dill & Pearman with respect to Bermuda law.78The consolidated financial statements and financial statement schedules incorporated in this prospectus by reference to ACE's Annual Report on Form 10-K for the year ended December 31,
20012003 have been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP, an independentaccountants,registered public accounting firm, given on the authority of said firm as experts in accounting and auditing. Any audited financial statements and schedules that are incorporated or that are deemed to be incorporated by reference into this prospectus that are the subject of a report by independent registered public accountants will be so incorporated by reference in reliance upon such reports and upon the authority of suchfirmsfirm as experts in accounting and auditing to the extent covered by consents of these accountants filed with the SEC.
ENFORCEMENT OF CIVIL LIABILITIES UNDER
UNITED STATES FEDERAL SECURITIES LAWSACE is a Cayman Islands company. In addition, some of its officers and directors, as well as some of the experts named in this prospectus, reside outside the United States, and all or much of
itsACE's assets andtheirsome of the officers' and directors' assets are or may be located in jurisdictions outside the United States. Therefore, investors may have difficulty effecting service of process within the United States upon those persons or recovering against ACE or them on judgments of U.S. courts, including judgments based upon the civil liability provisions of the U.S. Federal securities laws. However, investors may serve ACE with process in the United States with respect to actions against it arising out of or in connection with violations of U.S. Federal securities laws relating to offers and sales of the securities covered by this prospectus by serving ACE INA Holdings, its United States agent irrevocably appointed for that purpose.ACE has been advised by Maples and Calder, its Cayman Islands counsel, that there is doubt as to whether the courts of the Cayman Islands would
enforce (i)enforce:
- •
- judgments of U.S. courts based upon the civil liability provisions of the U.S. Federal securities laws obtained in actions against it or its directors and officers, as well as experts named in this prospectus, who reside outside the United
StatesStates; or(ii)- •
- original actions brought in the Cayman Islands against
suchthese persons or ACE predicated solely upon U.S. Federal securities laws.ACE has also been advised by Maples and Calder that there is no treaty in effect between the United States and the Cayman Islands providing for
suchthis enforcement, and there are grounds upon which Cayman Islands courts may not enforce judgments of United States courts. Some remedies available under the laws of United States jurisdictions, includingcertainsome remedies available under the U.S. Federal securities laws, would not be allowed in Cayman Islands courts as contrary to that nation's public policy.
WHERE YOU CAN FIND MORE INFORMATIONACE
ACE files annual, quarterly and special reports, proxy statements and other information with the SEC. ACE's SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may read and copy any document ACE files in the SEC's Public Reference Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the SEC's Public Reference Room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. ACE's SEC filings are also available at the office of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. For further information on obtaining copies of ACE's public filings at the NYSE, you should call (212) 656-5060.
The SEC also maintains an Internet web site that contains reports, proxy statements and other information about issuers, like
Everest Group and Everest Holdings,ACE, that file electronically with the SEC. The address of that site is http://www.sec.gov. The SEC file number for documents filed by ACE Limited under the Exchange Act is 1-11778.79Incorporation by Reference
ACE is allowed to "incorporate by reference" the information it files with the SEC, which means that ACE can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that ACE files subsequently with the SEC will automatically update and supersede the information included and/or incorporated by reference in this prospectus. ACE incorporates by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the initial filing of the registration statement that contains this prospectus and prior to the time that ACE, ACE INA and the ACE Trusts sell all of the securities offered by this prospectus:
.
- •
- ACE's Annual Report on Form 10-K for the fiscal year ended December 31,
2001;2003 (as amended by Form 10-K/A filed on April 5, 2004) (File No. 1-11778);- •
- ACE's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004 and
.June 30, 2004 (File No. 1-11788); and- •
- ACE's Current Reports on Form 8-K filed
January 9, 2002 and MarchApril 28, 2004, June 2, 2004, June 10, 2004 (as amended by Form 8-K/A filed on June 22,2002.2004) (File No. 1-11778).You may request a copy of these filings,
(otherother than exhibits unless that exhibit is specifically incorporated by reference into thatfiling)filing, at no cost, by writing or telephoning ACE at the following address:
Investor Relations
ACE Limited
ACE Global Headquarters
17 Woodbourne Avenue
Hamilton, HM 08, Bermuda
Telephone: (441) 299-9283ACE INA
ACE INA has no direct operations. ACE INA is directly and
indirectlywholly owned by ACE. The obligations of ACE INA under its debt securities will be fully and unconditionally guaranteed by ACE.See "Description of ACE INA Debt Securities and ACE Guarantee." ACE INA is not currently subject to the information reporting requirements under the Exchange Act. ACE INA will become subject to the reporting requirements upon the effectiveness of the registration statement that contains this prospectus, although ACE INA intends to seek and expects to receive an exemption from those requirements. So long as any guaranteed debt securities of ACE INA are outstanding, ACE will include in the footnotes to its audited consolidated financial statements summarized consolidated financial information concerning ACE INA.
The ACE Trusts
There are no separate financial statements of the ACE Trusts in this prospectus. ACE does not believe the financial statements would be helpful to the holders of the preferred securities of the ACE Trusts because:
.
- •
- ACE, a reporting company under the Exchange Act, will directly or indirectly own all of the voting securities of each ACE Trust;
. Neither- •
- neither of the ACE Trusts has any independent operations or proposes to engage in any activity other than issuing securities representing undivided beneficial interests in the assets of the ACE Trust and investing the proceeds in subordinated debt securities issued by ACE INA and fully and unconditionally guaranteed by ACE; and
. The- •
- the obligations of each ACE Trust under the preferred securities will be fully and unconditionally guaranteed by ACE. See "Description of ACE INA Debt Securities and ACE Guarantee" and "Description of Preferred Securities Guarantees."
Neither of the ACE Trusts is currently subject to the information reporting requirements of the Exchange Act. Each ACE Trust will
become subject to thebe exempt from these requirementsuponfollowing the effectiveness of the registration statement that contains thisprospectus, although each ACE Trust intends to seek and expects to receive an exemption from those requirements. If the ACE Trusts did not receive such an exemption, the expenses of operating the ACE Trusts would increase, as would the likelihood that ACE would exercise its option to dissolve and liquidate the ACE Trusts early. 80prospectus.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUSItem 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities registered hereby, other than underwriting discounts and commissions:
Securities and Exchange Commission registration fee $ 138,000 Trustee's fees and expenses........................ 15,000 Printing and engraving expenses.................... 150,000 Rating agency fees................................. 412,500 Accounting fees and expenses....................... 150,000 Legal fees and expenses............................ 250,000 Blue Sky fees and expenses......................... 10,000 Miscellaneous...................................... 124,500 ---------- Total........................................... $1,250,000 ==========
Securities and Exchange Commission registration fee $ 136,203 Trustee's fees and expenses 15,000 Printing and engraving expenses 100,000 Rating agency fees 312,500 Accounting fees and expenses 100,000 Legal fees and expenses 150,000 Blue Sky fees and expenses 10,000 Miscellaneous 176,297 Total $ 1,000,000
Item 15. Indemnification of Officers and Directors.ACE
Section 100 of ACE's Articles of Association
filed as Exhibit 4.2 to its registration statement (File No. 333-78841),contains provisions with respect to indemnification of ACE's officers and directors. This provision provides that ACE shall indemnify, in accordance with and to the full extent now or hereafter permitted by law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of ACE), by reason of his acting as a director, officer, employee or agent of, or his acting in any other capacity for or on behalf of, ACE against any liability or expense actually and reasonably incurred by such person in respect thereof. ACE may also advance the expenses of defending any such act, suit or proceeding in accordance with and to the full extent now or hereafter permitted by law. This indemnification and advancement of expenses are not exclusive of any other right to indemnification or advancement of expenses provided by law or otherwise.The Companies Law (Revised) of the Cayman Islands does not set out any specific restrictions on the ability of a company to indemnify officers or directors. However, the application of basic principles and certain Commonwealth case law which is likely to be persuasive in the Cayman Islands would indicate that indemnification is generally permissible except
in the event thatif there had been fraud or willful default on the part of the officer or director or reckless disregard of his duties and obligations to the company.Directors and officers of ACE are also provided with indemnification against certain liabilities pursuant to a
directorsdirectors' andofficersofficers' liability insurance policy. Coverage is afforded for any loss that the insureds become legally obligated to pay by reason of any claim or claims first made against the insureds or any of them during the policy period from any wrongful acts that are actually or allegedly caused, committed or attempted by the insureds prior to the end of the policy period. Wrongful acts are defined as any actual or alleged error, misstatement, misleading statement or act, omission, neglect or breach of duty by the insureds while acting in their individual or collective capacities as directors or officers of ACE, or any other matter claimed against them by reason of their being directors or officers of ACE. Certain of ACE's directors are provided by their employer with indemnification against certain liabilities incurred as directors of ACE.II-1Reference is made to the forms of Underwriting Agreement filed as Exhibits 1.1 though 1.5 of ACE's registration statement (File No. 333-78841).The Underwriting Agreements which will be entered into in connection with offerings of securities registered hereunder will provide, among other things, that the underwriters are obligated, under some
II-1
circumstances, to indemnify directors, specified officers and controlling persons of ACE against specified liabilities, including liabilities under the Securities Act of 1933, as amended.
ACE INA
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for payments of unlawful dividends or unlawful stock repurchases or redemptions or (iv) for any transaction from which the director derived an improper personal benefit. ACE INA's Certificate of Incorporation contains such a provision.
Under Article VI of ACE INA's By-laws as currently in effect, as well as under Section 10 of ACE INA's Certificate of Incorporation, each person who is or was a director or officer of ACE INA, or who serves or served any other enterprise or organization at the request of ACE INA, shall be indemnified by ACE INA to the full extent permitted by the Delaware General Corporation Law.
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify any person who, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, is made (or threatened to be made) a party to an action other than one brought by or on behalf of the corporation, against reasonable expenses (including attorneys' fees), judgments, fines and settlement payments, if the person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of such corporation and, with respect to any criminal actions, also had no reasonable cause to believe his conduct was unlawful. In the case of actions on behalf of the corporation, indemnification may extend only to reasonable expenses (including attorneys' fees) and only if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, provided that no such indemnification is permitted in respect of any claim as to which such person is adjudged liable to the corporation for negligence or misconduct in the performance of his duty to the corporation unless and only to the extent that a court otherwise provides. To the extent that a person has been successful in defending any action (even one on behalf of the corporation), he is entitled to indemnification for reasonable expenses (including attorneys' fees).
The indemnification provided for by the Delaware General Corporation Law is not exclusive of any other rights of indemnification, and a corporation may maintain insurance against liabilities for which indemnification is not expressly provided by the Delaware General Corporation Law. ACE INA maintains a liability insurance policy providing coverage for its directors and officers.
Item 16. Exhibits and Financial Statement Schedules.See Exhibit Index included herewith which is incorporated herein by reference.
II-2
The undersigned registrants hereby undertake:
- (a)
- To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
- (i)
- To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
- (ii)
- To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered
II-2(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;
- (iii)
- To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrants pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
- (b)
- That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
- (c)
- To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of ACE's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
The undersigned registrants hereby undertake that:
- (a)
- For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and
- (b)
- For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new
II-3
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the provisions set forth or described in Item 15 of this registration statement, or otherwise, the registrants have been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event thatIf a claim for indemnification against such liabilities (other than the payment by a registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.II-3II-4
Pursuant to the requirements of the Securities Act of 1933, ACE Limited certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Hamilton, Bermuda, on the
15th31st day ofMay, 2002. ACE LIMITED By: /S/ PHILIP V. BANCROFT ----------------------------- Name: Philip V. BancroftAugust, 2004.
ACE LIMITED
By:
/s/ PHILIP V. BANCROFT
Name: Philip V. Bancroft
Title: Chief Financial OfficerPursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the
15th31st day ofMay, 2002. Signature Title --------- ----------------------------- /S/ BRIAN DUPERREAULT Chairman and Chief Executive - ----------------------------- Officer; Director Brian Duperreault /S/ PHILIP V. BANCROFT Chief Financial Officer - ----------------------------- (Principal Financial Philip V. Bancroft Officer) /S/ ROBERT A. BLEE Chief Accounting Officer - ----------------------------- (Principal Accounting Robert A. Blee Officer) * Vice Chairman; Director - ----------------------------- Donald Kramer * President and Chief Operating - ----------------------------- Officer; Director Dominic J. Frederico * Director - ----------------------------- Michael G. Atieh * Director - ----------------------------- Bruce L. Crockett - ----------------------------- Director Robert G. Mendoza * Director - ----------------------------- Robert M. HernandezSignature Title --------- ----------------------------- * Director - ----------------------------- Peter Menikoff * Director - ----------------------------- Thomas J. Neff * Director - ----------------------------- John A. Krol * Director - ----------------------------- Robert Ripp * Director - ----------------------------- Walter A. Scott * Director - ----------------------------- Dermot F. Smurfit * Director - ----------------------------- Robert W. Staley * Director - ----------------------------- Gary M. Stuart * Director - ----------------------------- Sidney F. Wentz BY: /S/ PETER N. MEAR - ----------------------------- Attorney-in-FactAugust, 2004.
Signature Title /s/ EVAN G. GREENBERG
Evan G. GreenbergPresident and Chief Executive Officer;
Director
/s/ PHILIP V. BANCROFT
Philip V. Bancroft
Chief Financial Officer
(Principal Financial Officer)
/s/ PAUL MEDINI
Paul Medini
Chief Accounting Officer
(Principal Accounting Officer)
*
Michael G. Atieh
Director
*
Bruce L. Crockett
Director
*
Brian Duperreault
Director
*
Dominic J. Frederico
Director
*
Robert M. Hernandez
Director
*
Peter Menikoff
Director
*
Thomas J. Neff
DirectorII-5
*
John A. Krol
Director
*
Robert Ripp
Director
*
Walter A. Scott
Director
*
Dermot F. Smurfit
Director
*
Robert W. Staley
Director
*
Gary M. Stuart
Director
By:
/s/ PETER MEAR
Peter Mear
Attorney-in-FactII-6
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the undersigned as the duly authorized representative of ACE Limited in the United States.
/S/ BRIAN DUPERREAULT -------------------------------------- Brian Duperreault
/s/ EVAN G. GREENBERG
Evan G. GreenbergAugust 31, 2004
II-7
Pursuant to the requirements of the Securities Act of 1933, ACE INA Holdings Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
Hamilton, Bermuda,Philadelphia, Pennsylvania, on the15th31st day ofMay, 2002. ACE INA HOLDINGS INC. By: /S/ ROBERT B. JEFFERSON ----------------------------- Robert B. Jefferson Treasurer andAugust, 2004.
ACE INA HOLDINGS INC.
By:
/s/ FRANCIS W. MCDONNELL
Name: Francis W. McDonnell
Title: Chief Financial OfficerPursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on the
15th31st day ofMay, 2002. Signature Title --------- ----------------------------- /S/ BRIAN DUPERREAULT Director - ----------------------------- Brian Duperreault /S/ DOMINIC J. FREDERICO - ----------------------------- Dominic J. Frederico Chairman and Director /S/ PHILIP V. BANCROFT - ----------------------------- Philip V. Bancroft Director /S/ SUSAN RIVERA - ----------------------------- President and Director Susan Rivera (Principal Executive Officer) Treasurer and Chief Financial /S/ ROBERT B. JEFFERSON Officer - ----------------------------- (Principal Financial and Robert B. Jefferson Accounting Officer) /S/ DONALD KRAMER - ----------------------------- Donald Kramer Director /S/ TIMOTHY A. BOROUGHS - ----------------------------- Timothy A. Boroughs DirectorAugust, 2004.
Name Title /s/ SUSAN RIVERA
Susan RiveraPresident and Director
(Principal Executive Officer)
/s/ FRANCIS W. MCDONNELL
Francis W. McDonnell
Chief Financial Officer
(Principal Financial and Accounting Officer)
*
Philip V. Bancroft
Director
*
Timothy A. Boroughs
Director
*
Brian E. Dowd
Director
*
Evan G. Greenberg
Director
*
Donald Kramer
Director
*
Gary Schmalzriedt
Director
*By:
/s/ PETER MEAR
Peter Mear
Attorney-in-FactII-8
Pursuant to the requirements of the Securities Act of 1933, ACE Capital Trust III certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
Hamilton, Bermuda,Philadelphia, Pennsylvania, on the15th31st day ofMay, 2002. ACE CAPITAL TRUST III By: ACE INA Holdings Inc., as Depositor By: /S/ ROBERT B. JEFFERSON ----------------------------- Treasurer and Chief Financial OfficerAugust, 2004.
ACE CAPITAL TRUST III
By:
ACE INA Holdings Inc., as Depositor
By:
/s/ FRANCIS W. MCDONNELL
Francis W. McDonnellII-9
Pursuant to the requirements of the Securities Act of 1933, ACE Capital Trust IV certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in
Hamilton, Bermuda,Philadelphia, Pennsylvania, on the15th31st day ofMay, 2002. ACE CAPITAL TRUST IV BY: ACE INA Holdings Inc., as Depositor By: /S/ ROBERT B. JEFFERSON ----------------------------- Treasurer and Chief Financial OfficerAugust, 2004.
ACE CAPITAL TRUST IV
By:
ACE INA Holdings Inc., as Depositor
By:
/s/ FRANCIS W. MCDONNELL
Francis W. McDonnellII-10
*1.1 Form of Underwriting Agreement relating to ordinary shares, preferred shares, depositary shares, debt securities and warrants of ACE Limited. 1.2 Form of Underwriting Agreement relating to debt securities of ACE INA Holdings Inc., fully and unconditionally guaranteed by ACE Limited (incorporated by reference to Exhibit 1.2 to Amendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No. 333-78841)filed August 12, 1999)).*1.3 Form of Underwriting Agreement relating to preferred securities issued of ACE Capital Trust III and ACE Capital Trust IV and preferred securities guarantees of ACE Limited. *1.4 Form of Underwriting Agreement relating to stock purchase contracts of ACE Limited. *1.5 Form of Underwriting Agreement relating to stock purchase units of ACE Limited. 4.1 Memorandum of Association of ACE Limited (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of ACE Limited (No. 33-57206)). 4.2 Articles of Association of the ACE Limited (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 of ACE Limited (No. 33-57206)). 4.3 Special Resolutions adopted January 22, 2002 increasing the number of authorized Ordinary Sharesordinary shares andOther Sharesother shares (incorporated by reference to Exhibit 3.3 to Form 10-K of ACE Limited for the year ended December 31, 2001).4.4 Resolutions Establishing the Terms of ACE's 7.80% Cumulative Redeemable Preferred Shares (incorporated by reference to Exhibit 4.2 to the Form 8-K of ACE Limited filed May 30, 2003). 4.5 Senior Indenture between ACE Limited and Bank OneJ.P. Morgan Trust Company,N.A.National Association (as successor to The First National Bank of Chicago), as trustee, dated March 15, 2002 (incorporated by reference to Exhibit 4.1 to the Form 8-K of ACE Limited filed March 19, 2002).4.54.6 Form of Subordinated Indenture between ACE Limited and Bank OneJ.P. Morgan Trust Company,N.A. (formerly,National Association, as trustee (incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-3 of ACE Limited (No. 333-78841)).4.7 Form of Senior Indenture between ACE INA Holdings Inc., ACE Limited and J.P. Morgan Trust Company, National Association (as successor to The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit 4.44.5 toAmendment No. 2 tothe Registration Statement on Form S-3(No. 333-78841) filed August 12, 1999). 4.6 FormofSenior Indenture between ACE INA Holdings Inc.,ACE Limitedand Bank One Trust Company, N.A., as trustee, dated August 1, 1999 (incorporated by reference to Exhibit 4.5 to Amendment No. 2 to Registration Statement on Form S-3(No. 333-78841)filed August 12, 1999)).4.74.8 Form of Subordinated Indenture between ACE INA Holdings Inc., ACE Limited and Bank OneJ.P. Morgan Trust Company,N.A. (formerly,National Association (as successor to The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit 4.6 toAmendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No.333- 78841) filed August 12, 1999)333-78841)).(Yen)4.8*4.9 Form of Standard Stock Warrant Provisions. (Yen)4.9*4.10 Form of Standard Debt Warrant Provisions. 4.104.11 Certificate of Trust of ACE Capital Trust III (incorporated by reference to Exhibit 4.11 to Amendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No. 333-78841)filed August 12, 1999)).* *4.114.12 Certificate of Trust of ACE Capital Trust IV. 4.12IV (incorporated by reference to Exhibit 4.11 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).4.13 Trust Agreement of ACE Capital Trust III (incorporated by reference to Exhibit 4.14 to Amendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No. 333-78841)filed August 12, 1999)).* *4.134.14 Assignment and Assumption Agreement and First Amendment to the Trust Agreement of ACE Capital Trust III. * *4.14III (incorporated by reference to Exhibit 4.13 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).
4.15 Amendment No. 2 to the Trust Agreement of ACE Capital Trust III.
**4.15III (incorporated by reference to Exhibit 4.14 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).4.16 Trust Agreement of ACE Capital Trust IV. 4.16IV (incorporated by reference to Exhibit 4.15 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).4.17 Form of Amended and Restated Trust Agreement of ACE Capital Trust III (incorporated by reference to Exhibit 4.17 to Amendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No. 333-78841)filed August 12, 1999)).**4.174.18 Form of Amended and Restated Trust Agreement of ACE Capital Trust IV. 4.18IV (incorporated by reference to Exhibit 4.17 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).4.19 Form of Preferred Securities Guarantee Agreement with respect to the preferred securities issued by ACE Capital Trust III (incorporated by reference to Exhibit 4.20 to Amendment No. 2 tothe Registration Statement on Form S-3 of ACE Limited (No. 333-78841)filed August 12, 1999)).**4.194.20 Form of Preferred Securities Guarantee Agreement with respect to the preferred securities issued by ACE Capital Trust IV. *IV (incorporated by reference to Exhibit 4.19 to the Registration Statement on Form S-3 of ACE Limited (No. 333-884482)).5.1 Opinion of Maples and Calder as to the legality of the ordinary shares of ACE Limited and preferred shares. *shares of ACE Limited.5.2 Opinion of Mayer, Brown, Rowe & Maw LLP as to the legality of the debt securities, stock warrants, debt warrants, depositary shares, preferred securities, preferred securities guarantees, stock purchase contracts and stock purchase units. 5.3A5.3 Opinion of Richards, Layton & Finger, P.A. relating to ACE Capital Trust III (incorporated by reference to Exhibit 5.3C to Amendment No. 2 to Registration Statement on Form S-3 (No. 333- 78841) filed August 12, 1999). * 5.3BIII.5.4 Opinion of Richards, Layton & Finger, P.A. relating to ACE Capital Trust IV. *12.1 Statement regarding the computation of ratio of combined fixed charges and preference dividends to earnings. *23.1 Consent of Maples and Calder (included in Exhibit 5.1). *23.2 Consent of Mayer, Brown, Rowe & Maw LLP (included in Exhibit 5.2). 23.3 Consent of Richards, Layton & Finger, P.A. (incorporated by reference to(included in Exhibit 5.3).23.4 to Amendment No. 2 to Registration Statement on Form S-3 (No. 333-78841) filed August 12, 1999). **23.4Consent of PricewaterhouseCoopers LLP. **24.1 Powers of Attorney. **Attorney with respect to ACE Limited.24.2 Powers of Attorney with respect to ACE INA Holdings Inc. 25.1 Statement of Eligibility of Bank OneJ.P. Morgan Trust Company,N.A.)National Association on Form T-1, as trustee for the ACE LimitedDebt Securitiesdebt securities and as preferred securities guarantee trustee under the Preferred Securities Guarantee Agreement of ACE Limited for the benefit of the holders ofPreferred Securitiespreferred securities of ACE Capital Trust III and ACE Capital TrustIV **IV.25.2 Statement of Eligibility of Bank OneJ.P. Morgan Trust Company,N.A.National Association on Form T-1, as trustee for the ACE INADebt Securities. **debt securities.25.3 Statement of Eligibility of Bank OneJ.P. Morgan Trust Company,N.A.National Association on Form T-1, as property trustee for thePreferred Securitiespreferred securities of ACE Capital TrustIII. **25.4 Statement of Eligibility of Bank One Trust Company, N.A. on Form T-1, as property trustee for the Preferred Securities of ACE Capital TrustIII and IV.- --------
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To be filed by amendment. ** Filed herewith. (Yen)- To be filed, if necessary, subsequent to the effectiveness of this registration statement by an amendment to this registration statement or incorporated by reference pursuant to a Current Report on Form 8-K in connection with an offering of securities.