SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) May 7, 1999
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ACE Limited
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(Exact Name of Registrant as Specified in Charter)
Cayman Islands
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(State or Other Jurisdiction of Incorporation)
1-11778 98-0091805
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(Commission File Number) (IRS Employer Identification No.)
The ACE Building, 30 Woodbourne Avenue, Hamilton HM08, Bermuda
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(Address of Principal Executive Offices) (Zip Code)
(441) 295-5200
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 67 Pages
(Exhibit Index at Page 8)
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Item 5. Other Events
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On May 7, 1999, the Board of Directors of ACE Limited (the
"Company") declared a dividend distribution of one Right for each
outstanding Ordinary Share, par value $0.041666667 per share ("Ordinary
Share"), of the Company to shareholders of record at the close of business
on June 1, 1999 (the "Record Date"). Except as described below, each Right,
when exercisable, entitles the registered holder to purchase from the
Company one one-thousandth of a Series A Junior Participating Preference
Share, par value $1.00 per share ("Preference Share"), at a price of $150
per one one-thousandth share (the "Exercise Price").
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Bank of New
York, as Rights Agent.
Initially, the Rights will be attached to all Ordinary Share
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding
Ordinary Shares (the "Shares Acquisition Date") or (ii) 15 business days
(or such later date as may be determined by action of the Board of
Directors of the Company (the "Board of Directors") prior to the time that
any person becomes an Acquiring Person) following the commencement of (or a
public announcement of an intention to make) a tender or exchange offer if,
upon consummation thereof, such person or group would be the beneficial
owner of 15% or more of such outstanding Ordinary Shares (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced by the Ordinary Share certificates together with a copy of this
Summary of Shareholder Rights Plan and not by separate certificates.
The Rights Agreement also provides that, until the Distribution
Date, the Rights will be transferred with and only with the Ordinary
Shares. Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the transfer of any certificates for Ordinary
Shares, with or without a copy of this Summary of Shareholder Rights Plan,
will also constitute the transfer of the Rights associated with the
Ordinary Shares represented by such certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record of the
Ordinary Shares as of the close of business on the Distribution Date and,
thereafter, such separate Right Certificates alone will evidence the
Rights. Any Ordinary Shares issued after the Distribution Date will
generally be accompanied by Right Certificates only if such Ordinary Shares
are issued pursuant to the exercise of options or under any employee plan
or arrangement or upon the exercise, conversion or exchange of other
securities issued by the Company, or in other circumstances where the
issuance of accompanying Rights Certificates is deemed necessary or
appropriate by the Board of Directors.
The Rights are not exercisable until the Distribution Date and
will expire at the earlier of June 1, 2009 (the "Final Expiration Date")
and (ii) the redemption of the Rights by the Company as described below.
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If any person (other than the Company, its subsidiaries or any
person receiving newly-issued Ordinary Shares directly from the Company)
becomes the beneficial owner of 15% or more of the then outstanding
Ordinary Shares, each holder of a Right will thereafter have the right to
receive, upon exercise at the then current exercise price of the Right,
Ordinary Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the exercise
price of the Right. The Rights Agreement contains an exemption for any
issuance of Ordinary Shares by the Company directly to any person (for
example, in a private placement or an acquisition by the Company in which
Ordinary Shares are used as consideration), even if that person would
become the beneficial owner of 15% or more of the Ordinary Shares, provided
that such person does not acquire any additional Ordinary Shares.
If, at any time following the Shares Acquisition Date, the Company
is acquired in a merger, amalgamation or other business combination
transaction or 50% or more of the Company's assets or earning power are
sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon exercise at the then current
exercise price of the Right, common stock of the acquiring or surviving
company having a value equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of
the events set forth in the preceding two paragraphs (the "Triggering
Events"), any Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
immediately become null and void.
The Exercise Price payable, and the number of Preference Shares or
other securities or property issuable, upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution, among other
circumstances, in the event of a stock dividend on, or a subdivision,
split, combination, consolidation or reclassification of, the Preference
Shares or the Ordinary Shares, or a reverse split of the outstanding
Preference Shares or Ordinary Shares.
With certain exceptions, no adjustment in the Exercise Price will
be required until cumulative adjustments require an adjustment of at least
1% in the Exercise Price. The Company will not be required to issue
fractional Preference Shares or Ordinary Shares (other than fractions in
multiples of one-thousandths of a Preference Share) and, in lieu thereof,
an adjustment in cash may be made based on the market price of the
Preference Shares or Ordinary Shares on the last trading date prior to the
date of exercise.
The Preference Shares constitute a new series of "other shares" of
the Company that is nonredeemable and that ranks junior to other series of
preference or preferred shares of the Company that may be issued in the
future. Each Preference Share will be entitled to a minimum preferential
quarterly dividend of $1.00 per share but will be entitled to an aggregate
dividend equal to 1,000 times the dividend declared per Ordinary Share. In
the event of liquidation, each Preference Share will be entitled to a
minimum preferential liquidation payment of $.01 per share but will be
entitled to an aggregate payment of 1,000 times the payment made per
Ordinary Share. Each Preference Shares will have 1,000 votes, voting
together with the Ordinary Shares and other capital stock of the Company.
Finally, in the event of any merger, consolidation, amalgamation or other
transaction in which Ordinary Shares are exchanged, each Preference Share
will be entitled to receive 1,000 times the amount received per Ordinary
Share. These
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rights are protected by customary antidilution provisions. Because of the
nature of the Preference Shares' dividend, liquidation and voting rights,
the value of the one one-thousandth of a Preference Share purchasable upon
the exercise of each Right should approximate the value of one Ordinary
Share.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, Ordinary Shares or other consideration deemed appropriate by the
Board of Directors. Upon the effectiveness of any action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Board of Directors of the Company is generally responsible for
administering, interpreting and making all decisions and taking all actions
with respect to the Rights Agreement, including, without limitation, the
decision to redeem or exchange the Rights or to amend the Rights Agreement.
The provisions of the Rights Agreement may be amended by the
Company, except that any amendment adopted after the time that a person
becomes an Acquiring Person may not adversely affect the interests of
holders of Rights.
As of March 31, 1999, there were 193,864,482 Ordinary Shares
outstanding and 23,576,886 Ordinary Shares reserved for issuance under
employee benefit plans. Each outstanding Ordinary Share on June 1, 1999
will receive one Right. In addition, each Ordinary Share issued after the
Record Date but prior to the earliest of the Distribution Date, the
redemption of the Rights and the Final Expiration Date will receive one
Right, subject to adjustment as provided in the Rights Agreement. 500,000
Preference Shares will be reserved for issuance in the event of exercise of
the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed or
a substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group will
become void. The Rights should not interfere with any merger, amalgamation
or other business combination approved by the Board of Directors because,
if the Rights would become exercisable as a result of such merger,
amalgamation or business combination, the Board of Directors may, at its
option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights
at the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an exhibit to a Registration Statement on Form
8-A and to this Report
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on Form 8-K. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
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Item 7. Financial Statements and Exhibits.
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(c) Exhibits
Exhibit No. Exhibit
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99.1 Rights Agreement, dated as of May 7, 1999,
between ACE Limited and The Bank of New
York, as Rights Agent, which includes as
Exhibit A thereto the Form of Designation,
Preferences and Rights of the Series A Junior
Participating Preference Shares, as Exhibit B
thereto the Form of Right Certificate and as
Exhibit C thereto the Summary of Shareholder
Rights Plan.
99.2 Form of Letter to Shareholders of ACE Limited.
99.3 Press Release by ACE Limited, dated May 7, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ACE LIMITED
Date: May 7, 1999 By: /s/ Christopher Z. Marshall
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Name: Christopher Z. Marshall
Title: Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Exhibit Page
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99.1 Rights Agreement, dated as of May 7, 1999, between
ACE Limited and The Bank of New York, as Rights Agent,
which includes as Exhibit A thereto the Form of
Designation, Preferences and Rights of the Series A
Junior Participating Preference Shares, as Exhibit B
thereto the Form of Right Certificate and as Exhibit C
thereto the Summary of Shareholder Rights
Plan. 9
99.2 Form of Letter to Shareholders of ACE Limited. 65
99.3 Press Release by ACE Limited, dated May 7, 1999. 66
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