Exhibit 99.4
- --------------------------------------------------------------------------------
THE CHUBB CORPORATION
and
BANK ONE TRUST COMPANY, N.A.,
as Warrant Agent
WARRANT AGREEMENT
Dated as of December 2, 2002
- --------------------------------------------------------------------------------
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions..........................................................................1
SECTION 1.02. Compliance Certificates and Opinions................................................16
SECTION 1.03. Form of Documents Delivered to Warrant Agent........................................16
SECTION 1.04. Acts of Holders; Record Dates.......................................................17
SECTION 1.05. Notices.............................................................................18
SECTION 1.06. Notice to Holders; Waiver...........................................................19
SECTION 1.07. Effect of Headings and Table of Contents............................................20
SECTION 1.08. Successors and Assigns..............................................................20
SECTION 1.09. Separability Clause.................................................................20
SECTION 1.10. Benefits of Agreement...............................................................20
SECTION 1.11. Governing Law.......................................................................20
SECTION 1.12. Legal Holidays......................................................................20
SECTION 1.13. Counterparts........................................................................21
SECTION 1.14. Inspection of Agreement.............................................................21
SECTION 1.15. Appointment of Financial Institution as Agent for the Company.......................21
SECTION 1.16. No Waiver...........................................................................21
ARTICLE 2 CERTIFICATE FORMS
SECTION 2.01. Forms of Certificates Generally.....................................................21
SECTION 2.02. Form of Warrant Agent's Certificate of Authentication...............................22
ARTICLE 3 THE UNITS
SECTION 3.01. Amount; Form and Denominations......................................................23
SECTION 3.02. Rights and Obligations Evidenced by the Certificates................................23
SECTION 3.03. Execution, Authentication, Delivery and Dating......................................24
SECTION 3.04. Temporary Certificates..............................................................25
SECTION 3.05. Registration; Registration of Transfer and Exchange.................................25
SECTION 3.06. Book-Entry Interests................................................................27
SECTION 3.07. Notices to Holders..................................................................27
SECTION 3.08. Appointment of Successor Depositary.................................................27
SECTION 3.09. Definitive Certificates.............................................................28
SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates..................................28
SECTION 3.11. Persons Deemed Owners...............................................................30
SECTION 3.12. Cancellation........................................................................30
SECTION 3.13. Creation of Treasury Units by Substitution of Treasury Securities...................31
i
SECTION 3.14. Recreation of Corporate Units.......................................................32
SECTION 3.15. Transfer of Collateral upon Occurrence of Termination Event.........................34
SECTION 3.16. No Consent to Assumption............................................................35
ARTICLE 4 THE SENIOR NOTES AND APPLICABLE OWNERSHIP INTERESTS IN THE TREASURY
PORTFOLIO
SECTION 4.01. Interest Payments; Rights to Interest Payments Preserved............................35
SECTION 4.02. Notice and Voting...................................................................36
SECTION 4.03. Special Event Redemption............................................................37
ARTICLE 5 THE WARRANTS
SECTION 5.01. Purchase of Shares of Common Stock..................................................38
SECTION 5.02. Remarketing; Payment of Settlement Price............................................41
SECTION 5.03. Issuance of Shares of Common Stock..................................................51
SECTION 5.04. Adjustment of Settlement Rate.......................................................52
SECTION 5.05. Notice of Adjustments and Certain Other Events......................................61
SECTION 5.06. Termination Event; Notice...........................................................62
SECTION 5.07. Early Settlement....................................................................62
SECTION 5.08. Intentionally Omitted...............................................................65
SECTION 5.09. No Fractional Shares................................................................65
SECTION 5.10. Charges and Taxes...................................................................65
SECTION 5.11. Warrant Fees........................................................................66
SECTION 5.12. Deferral of Warrant Fees............................................................71
ARTICLE 6 REMEDIES
SECTION 6.01. Unconditional Right of Holders to Receive Warrant Fees and to Purchase Shares
of Common Stock.....................................................................72
SECTION 6.02. Restoration of Rights and Remedies..................................................72
SECTION 6.03. Rights and Remedies Cumulative......................................................72
SECTION 6.04. Delay or Omission Not Waiver........................................................72
SECTION 6.05. Undertaking for Costs...............................................................73
SECTION 6.06. Waiver of Stay or Extension Laws....................................................73
ARTICLE 7 THE WARRANT AGENT
SECTION 7.01. Certain Duties and Responsibilities.................................................73
SECTION 7.02. Notice of Default...................................................................74
ii
SECTION 7.03. Certain Rights of Warrant Agent.....................................................75
SECTION 7.04. Not Responsible for Recitals or Issuance of Units...................................76
SECTION 7.05. May Hold Units......................................................................76
SECTION 7.06. Money Held in Custody...............................................................77
SECTION 7.07. Compensation and Reimbursement......................................................77
SECTION 7.08. Corporate Warrant Agent Required; Eligibility.....................................78
SECTION 7.09. Resignation and Removal; Appointment of Successor...................................78
SECTION 7.10. Acceptance of Appointment by Successor..............................................79
SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business.........................80
SECTION 7.12. Preservation of Information; Communications to Holders..............................80
SECTION 7.13. No Obligations of Warrant Agent.....................................................80
SECTION 7.14. Tax Compliance......................................................................81
ARTICLE 8 SUPPLEMENTAL AGREEMENTS
SECTION 8.01. Supplemental Agreements Without Consent of Holders..................................82
SECTION 8.02. Supplemental Agreements with Consent of Holders.....................................82
SECTION 8.03. Execution of Supplemental Agreements................................................83
SECTION 8.04. Effect of Supplemental Agreements...................................................84
SECTION 8.05. Reference to Supplemental Agreements................................................84
ARTICLE 9 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property Except
under Certain Conditions............................................................84
SECTION 9.02. Rights and Duties of Successor Corporation..........................................85
SECTION 9.03. Officers' Certificate and Opinion of Counsel Given to Warrant Agent.................85
ARTICLE 10 COVENANTS
SECTION 10.01. Performance under Warrants.........................................................86
SECTION 10.02. Maintenance of Office or Agency....................................................86
SECTION 10.03. Company to Reserve Common Stock....................................................86
SECTION 10.04. Covenants as to Common Stock.......................................................87
SECTION 10.05. Statements of Officers of the Company as to Default................................87
SECTION 10.06. Tax Treatment......................................................................87
iii
EXHIBITS
Exhibit A - Form of Corporate Units Certificate
Exhibit B - Form of Treasury Units Certificate
Exhibit C - Instruction to Warrant Agent
Exhibit D - Notice from Warrant Agent to Holders
Exhibit E - Notice to Settle by Separate Cash
Exhibit F - Notice from Warrant Agent to Collateral Agent
Exhibit G - Form of Remarketing Agreement
iv
WARRANT AGREEMENT, dated as of December 2, 2002, between THE CHUBB
CORPORATION, a New Jersey corporation (the "COMPANY"), and BANK ONE TRUST
COMPANY, N.A., a national banking association, acting as warrant agent for the
Holders of Units (as defined herein) from time to time (the "WARRANT AGENT").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Units.
All things necessary to make the Warrants (as defined herein), when the
Certificates (as defined herein) are executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Warrant Agent, as
provided in this Agreement, the valid obligations of the Company, and to
constitute these presents a valid agreement of the Company, in accordance with
its terms, have been done. For and in consideration of the premises and the
purchase of the Units by the Holders thereof, it is mutually agreed as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular, and nouns and
pronouns of the masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision; and
(d) the following terms have the meanings given to them in this Section
1.01(d):
"ACCOUNTING EVENT" means the receipt at any time prior to the earlier of
the date of any Successful Remarketing and the Warrant Settlement Date by the
audit committee of the Board of Directors of a written report in accordance with
Statement on Auditing Standards ("SAS") No.
97, "Amendment to SAS No. 50-Reports on the Application of Accounting
Principles," from the Company's independent auditors, provided at the request of
the management of the Company, to the effect that, as a result of a change in
accounting rules after the date of original issuance of the Senior Notes, the
Company must either (a) account for the Warrants as derivatives under SFAS 133
(or any successor accounting standard) or (b) account for the Units using the
if-converted method under SFAS 128 (or any successor accounting standard), and
that such accounting treatment will cease to apply upon redemption of the Senior
Notes.
"ACT" has the meaning, with respect to any Holder, set forth in Section
1.04.
"ADJUSTED APPLICABLE MARKET VALUE" has the meaning set forth in Section
5.01.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"APPLICABLE MARKET VALUE" has the meaning set forth in Section 5.01.
"APPLICABLE OWNERSHIP INTEREST" shall mean, with respect to a Corporate
Unit and the Treasury Portfolio represented by such Corporate Unit, (i) a 2.5%
undivided beneficial ownership interest in $1,000 face amount of U.S. treasury
securities (or principal or interest strips thereof) included in such Treasury
Portfolio that mature on or prior to November 15, 2005, and (ii) (x) for the
scheduled Payment Date on the Senior Notes that occurs on the Warrant Settlement
Date, in the case of a Successful Remarketing prior to the Final Remarketing
Date, or (y) for each scheduled Payment Date on the Senior Notes that occurs
after the Special Event Redemption Date to and including the Warrant Settlement
Date, in the case of a Special Event Redemption, a 0.025% undivided beneficial
ownership interest in $1,000 face amount of U.S. treasury securities (or
principal or interest strips thereof) included in such Treasury Portfolio that
mature on or prior to the business day immediately preceding such scheduled
Payment Date.
"APPLICABLE PRINCIPAL AMOUNT" means the aggregate principal amount of the
Senior Notes that are represented by Corporate Units.
"APPLICANTS" has the meaning set forth in Section 7.12(b).
"BANKRUPTCY CODE" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
2
"BENEFICIAL OWNER" means, with respect to a Book-Entry Interest, a Person
who is the beneficial owner of such Book-Entry Interest as reflected on the
books of the Depositary or on the books of a Person maintaining an account with
such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).
"BOARD OF DIRECTORS" means the board of directors of the Company or a duly
authorized committee of that board.
"BOARD RESOLUTION" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Warrant Agent.
"BOOK-ENTRY INTEREST" means a beneficial interest in a Global Certificate,
registered in the name of a Depositary or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Depositary as described in Section 3.06.
"BUSINESS DAY" or "BUSINESS DAY" means any day other than a Saturday or
Sunday or any other day on which banking institutions and trust companies in New
York City, New York are permitted or required by applicable law to remain closed
or a day on which the Indenture Trustee or the Collateral Agent is closed for
business; provided that for purposes of the second paragraph of Section 1.12
only, the term "Business Day" shall also be deemed to exclude any day on which
DTC is closed.
"CASH MERGER" has the meaning set forth in Section 5.04(b)(2).
"CASH MERGER EARLY SETTLEMENT" has the meaning set forth in Section
5.04(b)(2).
"CASH MERGER EARLY SETTLEMENT DATE" has the meaning set forth in Section
5.04(b)(2).
"CASH SETTLEMENT" has the meaning set forth in Section 5.02(c)(i).
"CERTIFICATE" means a Corporate Units Certificate or a Treasury Units
Certificate.
"CLOSING PRICE" has the meaning set forth in Section 5.01(a).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning set forth in Section 1.01(d) of the Pledge
Agreement.
"COLLATERAL ACCOUNT" has the meaning set forth in Section 1.01(d) of
the Pledge Agreement.
3
"COLLATERAL AGENT" means BNY Midwest Trust Company, an Illinois trust
company, as Collateral Agent under the Pledge Agreement until a successor
Collateral Agent shall have become such pursuant to the applicable provisions of
the Pledge Agreement, and thereafter "Collateral Agent" shall mean the Person
who is then the Collateral Agent thereunder.
"COLLATERAL SUBSTITUTION" means (i) with respect to a Corporate Unit in
connection with the creation of a Treasury Unit from such Corporate Unit, (x)
the substitution for the Pledged Senior Note represented by such Corporate Unit
by Treasury Securities in accordance with Section 3.13, or (y) the substitution
for the Pledged Applicable Ownership Interest in the Treasury Portfolio
represented by such Corporate Unit by Treasury Securities in accordance with
Section 3.13, or (ii) with respect to a Treasury Unit in connection with the
recreation of a Corporate Unit from such Treasury Unit, (x) the substitution for
the Pledged Treasury Securities represented by such Treasury Unit (if the
Applicable Ownership Interest in the Treasury Portfolio has not replaced the
Senior Note represented by the Corporate Unit) by Senior Notes in accordance
with Section 3.14, or (y) the substitution for the Pledged Treasury Securities
represented by such Treasury Unit (if the Applicable Ownership Interest in the
Treasury Portfolio has replaced the Senior Note represented by the Corporate
Unit) by the appropriate Applicable Ownership Interest in the Treasury Portfolio
in accordance with Section 3.14.
"COMMON STOCK" means the common stock, par value $1.00 per share, of the
Company.
"COMPANY" means the Person named as the "COMPANY" in the first paragraph
of this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "COMPANY" shall mean such
successor.
"CONSTITUENT PERSON" has the meaning set forth in Section 5.04(b).
"CORPORATE TRUST OFFICE" means the office of the Warrant Agent at which,
at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 153 West 51st
Street, New York, New York, 10019 (Fax: (212) 373- 1383).
"CORPORATE UNIT" means the collective rights and obligations of a Holder
of a Corporate Units Certificate in respect of (i) the Warrants represented
thereby and (ii) the Senior Notes (or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be) (subject in each case
(except for the appropriate Applicable Ownership Interest specified in clause
(ii) of the definition of such term) to the Pledge thereof) represented thereby.
"CORPORATE UNITS CERTIFICATE" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Corporate Units
specified on such certificate.
"COUPON RATE" means the percentage rate per annum at which each Senior
Note will bear interest initially.
"CURRENT MARKET PRICE" has the meaning set forth in Section 5.04(a)(8).
4
"CUSTODIAL AGENT" means BNY Midwest Trust Company, an Illinois trust
company, as Custodial Agent under the Pledge Agreement until a successor
Custodial Agent shall have become such pursuant to the applicable provisions of
the Pledge Agreement, and thereafter "CUSTODIAL AGENT" shall mean the Person who
is then the Custodial Agent thereunder.
"DEFERRED WARRANT FEES" has the meaning provided in Section 5.12.
"DEPOSITARY" means a clearing agency registered under Section 17A of the
Exchange Act that is designated to act as Depositary for the Units as
contemplated by Sections 3.06 and 3.08.
"DEPOSITARY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book entry transfers and pledges of securities deposited with the Depositary.
"DTC" means The Depository Trust Company.
"EARLY SETTLEMENT" has the meaning set forth in Section 5.07.
"EARLY SETTLEMENT AMOUNT" has the meaning set forth in Section 5.07.
"EARLY SETTLEMENT DATE" has the meaning set forth in Section 5.07.
"EARLY SETTLEMENT RATE" has the meaning set forth in Section 5.07.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"EXCHANGE PROPERTY" has the meaning set forth in Section 5.04(b).
"EXPIRATION DATE" has the meaning set forth in Section 1.04(e).
"EXPIRATION TIME" has the meaning set forth in Section 5.04(a)(6).
"FAILED FINAL REMARKETING" has the meaning set forth in Section 5.02(d).
"FAILED INITIAL REMARKETING" has the meaning set forth in Section 5.02(a).
"FAILED REMARKETING" shall mean any of (i) a Failed Initial Remarketing,
(ii) a Failed Second Remarketing, (iii) a Failed Third Remarketing or (iv) a
Failed Final Remarketing.
"FAILED SECOND REMARKETING" has the meaning set forth in Section 5.02(b).
"FAILED THIRD REMARKETING" has the meaning set forth in Section 5.02(b).
5
"FINAL REMARKETING" has the meaning set forth in Section 5.02(d).
"FINAL REMARKETING DATE" means the third Business Day immediately
preceding the Warrant Settlement Date.
"FINAL REMARKETING FEE" has the meaning set forth in Section 5.02(d).
"GLOBAL CERTIFICATE" means a Certificate that evidences all or part of the
Units and is registered in the name of the Depositary or a nominee thereof.
"HOLDER" means, with respect to a Unit, the Person in whose name the Unit
evidenced by a Certificate is registered in the Security Register; provided,
however, that solely for the purpose of determining whether the Holders of the
requisite number of Units have voted on any matter (and not for any other
purpose hereunder), if the Unit remains in the form of one or more Global
Certificates and if the Depositary that is the registered holder of such Global
Certificate has sent an omnibus proxy assigning voting rights to the Depositary
Participants to whose accounts the Units are credited on the record date, the
term "HOLDER" shall mean each such Depositary Participant acting at the
direction of the Beneficial Owners holding through such Depositary Participant.
"INDEBTEDNESS" means indebtedness of any kind of the Company.
"INDENTURE" means the Indenture, dated as of October 25, 1989, between the
Company and the Indenture Trustee (including any provisions of the TIA that are
deemed incorporated therein), pursuant to which the Senior Notes will be issued.
"INDENTURE TRUSTEE" means Bank One Trust Company, N.A. (successor in
interest to The First National Bank of Chicago), as trustee under the Indenture,
or any successor thereto.
"INITIAL REMARKETING" has the meaning set forth in Section 5.02(a).
"INITIAL REMARKETING DATE" means the third Business Day immediately
preceding August 16, 2005.
"ISSUER ORDER" or "ISSUER REQUEST" means a written order or request signed
in the name of the Company by (i) either its Chief Executive Officer, its
President or one of its Vice Presidents, and (ii) either its Corporate Secretary
or one of its Assistant Corporate Secretaries or its Treasurer or one of its
Assistant Treasurers, and delivered to the Warrant Agent.
"NON-ELECTING SHARE" has the meaning set forth in Section 5.04(b).
"NYSE" has the meaning set forth in Section 5.01.
"OFFICERS' CERTIFICATE" means a certificate signed by (i) either the
Company's Chief Executive Officer, its President or one of its Vice Presidents,
and (ii) either the Company's
6
Corporate Secretary or one of its Assistant Corporate Secretaries or its
Treasurer or one of its Assistant Treasurers, and delivered to the Warrant
Agent. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Agreement (other than the Officers'
Certificate provided for in Section 10.05) shall include:
(i) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(iii) a statement that, in the opinion of each such officer, each
such officer has made such examination or investigation as is necessary to
enable such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel to the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Warrant Agent. An opinion of counsel may
rely on certificates as to matters of fact.
"OUTSTANDING UNITS" means, with respect to any Unit and as of the date of
determination, all Units evidenced by Certificates theretofore authenticated,
executed and delivered under this Agreement, except:
(i) if a Termination Event has occurred, (x) Corporate Units
representing Senior Notes or Applicable Ownership Interests in the
Treasury Portfolio that have been theretofore deposited with the Warrant
Agent in trust for the Holders of such Corporate Units and (y) Treasury
Units;
(ii) Units evidenced by Certificates theretofore cancelled by the
Warrant Agent or delivered to the Warrant Agent for cancellation or deemed
cancelled pursuant to the provisions of this Agreement; and
(iii) Units evidenced by Certificates in exchange for or in lieu of
which other Certificates have been authenticated, executed on behalf of
the Holder and delivered pursuant to this Agreement, other than any such
Certificate in respect of which there shall have been presented to the
Warrant Agent proof satisfactory to it that such Certificate is held by a
protected purchaser in whose hands the Units evidenced by such Certificate
are valid obligations of the Company;
7
provided, however, that in determining whether the Holders of the requisite
number of the Units have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Units owned by the Company or any Affiliate
of the Company shall be disregarded and deemed not to be Outstanding Units,
except that, in determining whether the Warrant Agent shall be authorized and
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Units that a Responsible Officer of the Warrant
Agent actually knows to be so owned shall be so disregarded. Units so owned that
have been pledged in good faith may be regarded as Outstanding Units if the
pledgee establishes to the satisfaction of the Warrant Agent the pledgee's right
so to act with respect to such Units and that the pledgee is not the Company or
any Affiliate of the Company.
"PAYMENT DATE" means each February 16, May 16, August 16 and November 16
of each year, commencing February 16, 2003.
"PERMITTED INVESTMENTS" has the meaning set forth in Section 1.01(d) of
the Pledge Agreement.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity of whatever nature.
"PLAN" means an employee benefit plan that is subject to ERISA, a plan or
individual retirement account that is subject to Section 4975 of the Code or any
entity whose assets are considered assets of any such plan.
"PLEDGE" means the pledge under the Pledge Agreement of the Senior Notes,
the Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, as the case may be, in each case represented by the Units (it being
understood that the appropriate Applicable Ownership Interest (as specified in
clause (ii) of the definition of such term) in the Treasury Portfolio shall not
be subject to the Pledge).
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of December 2,
2002, among the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Warrant Agent, on its own behalf and as
attorney-in-fact for the Holders from time to time of the Units, as amended from
time to time.
"PLEDGED APPLICABLE OWNERSHIP INTERESTS" has the meaning set forth in
Section 1.01(d) of the Pledge Agreement.
"PLEDGED SENIOR NOTES" has the meaning set forth in Section 1.01(d) of the
Pledge Agreement.
8
"PLEDGED TREASURY SECURITIES" has the meaning set forth in Section 1.01(d)
of the Pledge Agreement.
"PREDECESSOR CERTIFICATE" means a Predecessor Corporate Units Certificate
or a Predecessor Treasury Units Certificate.
"PREDECESSOR CORPORATE UNITS CERTIFICATE" of any particular Corporate
Units Certificate means every previous Corporate Units Certificate evidencing
all or a portion of the rights and obligations of the Company and the Holder
under the Corporate Units evidenced thereby; and, for the purposes of this
definition, any Corporate Units Certificate authenticated and delivered under
Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Corporate Units Certificate shall be deemed to evidence the same rights
and obligations of the Company and the Holder as the mutilated, destroyed, lost
or stolen Corporate Units Certificate.
"PREDECESSOR TREASURY UNITS CERTIFICATE" of any particular Treasury Units
Certificate means every previous Treasury Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Treasury Units evidenced thereby; and, for the purposes of this definition, any
Treasury Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury Units
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Treasury
Units Certificate.
"PRICING COMMITTEE RESOLUTIONS" means the resolutions of the Pricing
Committee of the Company's Board of Directors dated as of November 25, 2002,
including Exhibit B thereto, setting forth the terms and conditions of the
Senior Notes.
"PRIMARY TREASURY DEALER" shall mean a primary U.S. government securities
dealer.
"PROCEEDS" has the meaning set forth in Section 1.01(d) of the Pledge
Agreement.
"PRO RATA" shall mean pro rata to each Holder according to the aggregate
Stated Amount of the Units held by such Holder in relation to the aggregate
Stated Amount of all Units outstanding.
"PROSPECTUS" means the prospectus relating to the delivery of shares of
any securities in connection with an Early Settlement pursuant to Section 5.07
or a Cash Merger Early Settlement of Warrants pursuant to Section 5.04(b)(2), in
the form in which first filed, or transmitted for filing, with the Securities
and Exchange Commission after the effective date of the Registration Statement
pursuant to Rule 424(b) under the Securities Act, including the documents
incorporated by reference therein as of the date of such Prospectus.
"PURCHASED SHARES" has the meaning set forth in Section 5.04(a)(6).
"PUT RIGHT" has the meaning set forth in Exhibit B to the Pricing
Committee Resolutions.
9
"QUOTATION AGENT" means any Primary Treasury Dealer selected by the
Company.
"RECORD DATE" for any distribution or Warrant Fee payable on any Payment
Date means, as to any Global Certificate or any other Certificate, the first
business day of the calendar month in which the relevant Payment Date falls;
provided that the Company may, at its option, select any other day as the Record
Date for any Payment Date so long as such Record Date selected is more than one
Business Day but less than sixty Business Days prior to such Payment Date.
"REDEMPTION AMOUNT" means, for each Senior Note, an amount equal to the
product of the principal amount of that Senior Note and a fraction, the
numerator of which is the Treasury Portfolio Purchase Price and the denominator
of which is the Applicable Principal Amount.
"REDEMPTION PRICE" means, for each Senior Note, the Redemption Amount plus
any accrued and unpaid interest on such Senior Note to but excluding the Special
Event Redemption Date.
"REFERENCE DEALER" means a dealer engaged in trading of convertible
securities.
"REFERENCE PRICE" has the meaning set forth in Section 5.01.
"REGISTRATION STATEMENT" means a registration statement under the
Securities Act prepared by the Company covering, inter alia, the delivery by the
Company of any securities in connection with an Early Settlement on the Early
Settlement Date or a Cash Merger Early Settlement of Warrants on the Cash Merger
Early Settlement Date under Section 5.04(b)(2), including all exhibits thereto
and the documents incorporated by reference in the prospectus contained in such
registration statement, and any post-effective amendments thereto.
"REMARKETED SENIOR NOTES" means, as of the applicable Remarketing Date,
the Senior Notes that are represented by Corporate Units, and each Separate
Senior Note for which the Holder has elected to have such Separate Senior Note
included in the applicable Remarketing.
"REMARKETING" means the remarketing of the Senior Notes by the Remarketing
Agent pursuant to the Remarketing Agreement.
"REMARKETING AGENT" means the remarketing agent specified in the
Remarketing Agreement.
"REMARKETING AGREEMENT" means the Remarketing Agreement substantially in
the form of Exhibit G hereto to be entered into prior to the Initial Remarketing
Date among the Company, the Remarketing Agent and the Warrant Agent, as amended
from time to time.
"REMARKETING DATE" means any of (i) the Initial Remarketing Date, (ii) the
Second Remarketing Date, (iii) the Third Remarketing Date and (iv) the Final
Remarketing Date.
"REMARKETING FEE" has the meaning set forth in Section 5.02(a).
10
"REMARKETING PER SENIOR NOTE PRICE" means the Treasury Portfolio Purchase
Price divided by the number of Senior Notes represented by Corporate Units and
remarketed in the Initial Remarketing, the Second Remarketing or the Third
Remarketing, as the case may be.
"REORGANIZATION EVENT" has the meaning set forth in Section 5.04(b).
"RESET RATE" means (i) in the case of a Successful Remarketing prior to
the Final Remarketing Date, the interest rate per annum on the Senior Notes
determined by the Remarketing Agent as necessary to remarket the Remarketed
Senior Notes at a price per Remarketed Senior Note such that the aggregate price
for the Remarketed Senior Notes is equal to approximately (but not less than)
100.50% of the sum of the Treasury Portfolio Purchase Price and Separate Senior
Notes Purchase Price, and (ii) in the case of a Successful Remarketing on the
Final Remarketing Date, the interest rate per annum on the Senior Notes
determined by the Remarketing Agent as necessary to remarket the Remarketed
Senior Notes at a price per Remarketed Senior Note such that the aggregate price
for the Remarketed Senior Notes is equal to approximately 100.50% (but not less
than 100%, net of any Remarketing Fee) of the aggregate principal amount of the
Remarketed Senior Notes; provided that if there are no Corporate Units
outstanding and none of the Holders elect to have Separate Senior Notes held by
them remarketed, or in the case of a Failed Remarketing, the interest rate
payable on the Senior Notes will not be reset and the interest rate payable on
the Senior Notes shall continue to be 4.00% per year; provided further that in
no event shall the Reset Rate exceed the maximum rate, if any, permitted by
applicable law.
"RESPONSIBLE OFFICER" means, with respect to the Warrant Agent, any
officer of the Warrant Agent assigned by the Warrant Agent to administer this
Warrant Agreement.
"RIGHTS" has the meaning set forth in Section 5.04(a)(11).
"RIGHTS AGREEMENT" has the meaning set forth in Section 5.04(a)(11).
"SECOND REMARKETING" has the meaning set forth in Section 5.02(b).
"SECOND REMARKETING DATE" means the third Business Day immediately
preceding September 16, 2005.
"SECURITIES ACT" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"SECURITIES INTERMEDIARY" means BNY Midwest Trust Company, an Illinois
trust company, as Securities Intermediary under the Pledge Agreement until a
successor Securities Intermediary shall have become such pursuant to the
applicable provisions of the Pledge Agreement, and thereafter "SECURITIES
INTERMEDIARY" shall mean such successor or any subsequent successor who is
appointed pursuant to the Pledge Agreement.
11
"SECURITY REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings set forth in Section 3.05.
"SENIOR NOTES" means the series of notes designated the senior notes due
November 16, 2007 to be issued by the Company under the Indenture.
"SEPARATE SENIOR NOTES" means Senior Notes that are no longer represented
by Corporate Units.
"SEPARATE SENIOR NOTES PURCHASE PRICE" means the amount in cash equal to
the product of the Remarketing Per Senior Note Price multiplied by the number of
Separate Senior Notes remarketed in the Initial Remarketing, the Second
Remarketing or the Third Remarketing, as the case may be.
"SETTLEMENT PRICE" has the meaning set forth in Section 5.01(a).
"SETTLEMENT RATE" has the meaning set forth in Section 5.01.
"SPECIAL EVENT" means either a Tax Event or an Accounting Event.
"SPECIAL EVENT REDEMPTION" means the redemption of the Senior Notes
pursuant to the Indenture following the occurrence of a Special Event.
"SPECIAL EVENT REDEMPTION DATE" means the date upon which a Special Event
Redemption is scheduled to occur pursuant to the Indenture.
"STATED AMOUNT" means $25.00.
"SUCCESSFUL FINAL REMARKETING" has the meaning set forth in Section
5.02(d).
"SUCCESSFUL INITIAL REMARKETING" has the meaning set forth in Section
5.02(a).
"SUCCESSFUL REMARKETING" means any of (i) a Successful Initial
Remarketing, (ii) a Successful Second Remarketing, (iii) a Successful Third
Remarketing or (iv) a Successful Final Remarketing.
"SUCCESSFUL SECOND REMARKETING" has the meaning set forth in Section
5.02(b).
"SUCCESSFUL THIRD REMARKETING" has the meaning set forth in Section
5.02(b).
"TAX EVENT" means the receipt by the Company of an opinion of counsel,
rendered by a law firm having a recognized national law practice, at any time
prior to the earlier of the date of any Successful Remarketing and the Warrant
Settlement Date, to the effect that, as a result of any amendment to, change in
or announced proposed change in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative decision, pronouncement,
judicial decision or action
12
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of original issuance of the Senior Notes, there
is more than an insubstantial increase in the risk that interest payable by the
Company on the Senior Notes is not, or within 90 days of the date of such
opinion, will not be, deductible by the Company, in whole or in part, for United
States federal income tax purposes.
"TERMINATION DATE" means the date, if any, on which a Termination Event
occurs.
"TERMINATION EVENT" means the occurrence of any of the following events:
(i) at any time on or prior to the Warrant Settlement Date, a
judgment, decree or court order shall have been entered granting relief
under the Bankruptcy Code, adjudicating the Company to be insolvent, or
approving as properly filed a petition seeking reorganization or
liquidation of the Company or any other similar applicable Federal or
state law and if such judgment, decree or order shall have been entered
more than 60 days prior to the Warrant Settlement Date, such decree or
order shall have continued undischarged and unstayed for a period of 60
days;
(ii) at any time on or prior to the Warrant Settlement Date, a
judgment, decree or court order for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the termination or liquidation of its
affairs, shall have been entered and if such judgment, decree or order
shall have been entered more than 60 days prior to the Warrant Settlement
Date, such judgment, decree or order shall have continued undischarged and
unstayed for a period of 60 days; or
(iii) at any time on or prior to the Warrant Settlement Date, the
Company shall file a petition for relief under the Bankruptcy Code, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization or
liquidation under the Bankruptcy Code or any other similar applicable
Federal or State law, or shall consent to the filing of any such petition,
or shall consent to the appointment of a receiver or liquidator or trustee
or assignee in bankruptcy or insolvency of it or of its property, or shall
make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due.
"THIRD REMARKETING" has the meaning set forth in Section 5.02(b).
"THIRD REMARKETING DATE" means the third Business Day immediately
preceding October 16, 2005.
"THRESHOLD APPRECIATION PRICE" has the meaning set forth in Section 5.01.
13
"TIA" means the Trust Indenture Act of 1939, as amended from time to time,
or any successor legislation.
"TRADING DAY" has the meaning set forth in Section 5.01.
"TREASURY PORTFOLIO" means a portfolio of (1) U.S. treasury securities (or
principal or interest strips thereof) that mature on or prior to November 15,
2005 in an aggregate amount equal to the Applicable Principal Amount, and (2)
(x) in the case of a Successful Remarketing prior to the Final Remarketing Date,
for the scheduled Payment Date on the Senior Notes that occurs on the Warrant
Settlement Date, U.S. treasury securities (or principal or interest strips
thereof) that mature on or prior to November 15, 2005 in an aggregate amount
equal to the aggregate interest payment (assuming no reset of the interest rate)
that would have been due on the Warrant Settlement Date on the Applicable
Principal Amount, and (y) in the case of a Special Event Redemption, for each
scheduled Payment Date that occurs after the Special Event Redemption Date to
and including the Warrant Settlement Date, U.S. treasury securities (or
principal or interest strips thereof) that mature on or prior to the business
day immediately preceding such scheduled Payment Date in an aggregate amount
equal to the aggregate interest payment (assuming no reset of the interest rate)
that would have been due on such scheduled Payment Date on the Applicable
Principal Amount.
"TREASURY PORTFOLIO PURCHASE PRICE" means the lowest aggregate ask-side
price quoted by a Primary Treasury Dealer to the Quotation Agent between 9:00
a.m. and 11:00 a.m. (New York City time) (i) in the case of a Special Event
Redemption, on the third Business Day immediately preceding the Special Event
Redemption Date for the purchase of the applicable Treasury Portfolio for
settlement on the Special Event Redemption Date, and (ii) in the case of any
Successful Remarketing prior to the Final Remarketing Date, on the date of such
Successful Remarketing for the purchase of the applicable Treasury Portfolio for
settlement on the third Business Day immediately following the date of such
Successful Remarketing.
"TREASURY SECURITIES" means zero-coupon U.S. treasury securities that
mature on November 15, 2005 (CUSIP No. 912820BQ9).
"TREASURY UNIT" means, following the substitution of Treasury Securities
for Pledged Senior Notes or the Pledged Applicable Ownership Interest in the
Treasury Portfolio as collateral to secure a Holder's obligations under the
Warrant, the collective rights and obligations of a Holder of a Treasury Units
Certificate in respect of (i) the Warrants represented thereby and (ii) such
Treasury Securities (subject to the Pledge thereof) represented thereby.
"TREASURY UNITS CERTIFICATE" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Treasury Units specified on
such certificate.
"WARRANT" means, with respect to any Unit, the warrant represented by such
Unit and obligating the Company (i) to sell, against the Holder's payment of the
Settlement Price, shares
14
of Common Stock and (ii) to pay the Holder thereof Warrant Fees, in each case on
the terms and subject to the conditions set forth in Article Five hereof.
"WARRANT AGENT" means the Person named as the "WARRANT AGENT" in the first
paragraph of this Agreement until a successor Warrant Agent shall have become
such pursuant to the applicable provisions of this Agreement, and thereafter
"WARRANT AGENT" shall mean such Person or any subsequent successor who is
appointed pursuant to this Agreement.
"WARRANT FEES" means the payments payable by the Company on the Payment
Dates in respect of each Warrant, at a rate per year of 3.00% of the Stated
Amount per Warrant.
"WARRANT SETTLEMENT DATE" means November 16, 2005.
"WARRANT SETTLEMENT FUND" has the meaning set forth in Section 5.03.
"UNDERWRITERS" means the underwriters identified in Schedule II to the
Underwriting Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated November
25, 2002, among the Company and the Underwriters.
"UNIT" means a Corporate Unit or a Treasury Unit, as the case may be.
"VICE PRESIDENT" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
SECTION 1.02. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Warrant Agent to take any action in
accordance with any provision of this Agreement, the Company shall furnish to
the Warrant Agent an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Agreement relating to the proposed
action have been complied with, except that in the case of any such application
or request as to which the furnishing of such document is specifically required
by any provision of this Agreement relating to such particular application or
request, no additional certificate need be furnished.
Every certificate with respect to compliance with a condition or covenant
provided for in this Agreement (other than the Officers' Certificate provided
for in Section 10.05) shall include:
(i) a statement that each individual signing such certificate has
read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate
are based;
15
(iii) a statement that, in the opinion of each such individual, he
or she has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Warrant Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which its certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Warrant Agent
and, where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "ACT" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 7.01) conclusive in favor of the Warrant Agent and the
Company, if made in the manner provided in this Section.
16
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Warrant Agent deems
sufficient.
(c) The ownership of Units shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Unit shall bind every future Holder of the
same Unit and the Holder of every Certificate evidencing such Unit issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Warrant Agent
or the Company in reliance thereon, whether or not notation of such action is
made upon such Certificate.
(e) The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Units entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Units. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding Corporate Units and the Outstanding Treasury Units,
as the case may be, on such record date, and no other Holders, shall be entitled
to take the relevant action with respect to the Corporate Units or the Treasury
Units, as the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken prior to or on the applicable Expiration Date by Holders of the requisite
number of Outstanding Units on such record date. Nothing contained in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and be of no effect), and nothing
contained in this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite number of Outstanding Units on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Warrant Agent in writing and to each Holder of Units in the manner
set forth in Section 1.06.
With respect to any record date set pursuant to this Section 1.04(e), the
Company may designate any date as the "EXPIRATION DATE" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Warrant Agent in writing, and to each Holder of Units in the
manner set forth in Section 1.06, prior to or on the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the Company shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
SECTION 1.05. Notices.
17
Any notice or communication is duly given if in writing and delivered in
Person or mailed by first-class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Warrant Agent only upon receipt thereof:
If to the Warrant Agent:
Bank One Trust Company, N.A.
153 West 51st Street
New York, New York 10019
Attention: Corporate Trust Administration
Fax: (212) 373-1383
If to the Company:
The Chubb Corporation
15 Mountain View Road
Warren, New Jersey 07061-1615
Attention: General Counsel
Fax: (908) 903-3607
If to the Collateral Agent:
BNY Midwest Trust Company
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Attention: Corporate Finance
Fax: (312) 827-8542
If to the Indenture Trustee:
Bank One Trust Company, N.A.
153 West 51st Street
New York, New York 10019
Attention: Corporate Trust Administration
Fax: (212) 373-1383
The Warrant Agent shall send to the Indenture Trustee at the telecopier
number set forth above a copy of any notices in the form of Exhibits C, D, E or
F it sends or receives.
SECTION 1.06. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed
to any particular
18
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Agreement provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Warrant Agent, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Warrant Agent shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.08. Successors and Assigns.
All covenants and agreements in this Agreement by the Company and the
Warrant Agent shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 1.09. Separability Clause.
In case any provision in this Agreement or in the Units shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
SECTION 1.10. Benefits of Agreement.
Nothing contained in this Agreement or in the Units, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall be bound by all
of the terms and conditions hereof and of the Units evidenced by their
Certificates by their acceptance of delivery of such Certificates.
SECTION 1.11. Governing Law.
This Agreement and the Warrants represented by the Units shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 1.12. Legal Holidays.
19
In any case where any Payment Date shall not be a Business Day
(notwithstanding any other provision of this Agreement, the Warrants or the
Senior Notes), Warrant Fees or other distributions shall not be paid on such
date, but Warrant Fees or such other distributions shall be paid on the next
succeeding Business Day, unless such Business Day is in the next succeeding
calendar year, in which case such Warrant Fees or other distributions shall be
paid on the immediately preceding Business Day, in each case with the same force
and effect as if made on such Payment Date.
In any case where the Warrant Settlement Date or any Early Settlement Date
or Cash Merger Early Settlement Date shall not be a Business Day
(notwithstanding any other provision of this Agreement or the Units), Warrants
shall not be performed and Early Settlement and Cash Merger Early Settlement
shall not be effected on such date, but Warrants shall be performed or Early
Settlement or Cash Merger Early Settlement shall be effected, as applicable, on
the next succeeding Business Day with the same force and effect as if made on
such Warrant Settlement Date, Early Settlement Date or Cash Merger Early
Settlement Date, as applicable.
SECTION 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
SECTION 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.
SECTION 1.15. Appointment of Financial Institution as Agent for the
Company.
The Company may appoint a financial institution (which may be the
Collateral Agent) to act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Warrant Agent and
the Holders, under this Agreement and the Warrants, by giving notice of such
appointment in the manner provided in Section 1.05 hereof. Any such appointment
shall not relieve the Company in any way from its obligations hereunder.
SECTION 1.16. No Waiver. No failure on the part of the Company, the
Warrant Agent, the Collateral Agent, the Securities Intermediary or any of their
respective agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Company, the
Collateral Agent, the Securities Intermediary or any of their respective agents
of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
are cumulative and are not exclusive of any remedies provided by law.
20
ARTICLE 2
CERTIFICATE FORMS
SECTION 2.01. Forms of Certificates Generally.
The Certificates (including the form of Warrant represented by each Unit
evidenced thereby) shall be in substantially the form set forth in Exhibit A
hereto (in the case of Certificates evidencing Corporate Units) or Exhibit B
hereto (in the case of Certificates evidencing Treasury Units), with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Units are listed
or any depositary therefor, or as may, consistently herewith, be determined by
the officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.
The definitive Certificates shall be produced in any manner as determined
by the officers of the Company executing the Certificates evidencing the Units,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Certificate authenticated, executed on behalf of the Holders
and delivered hereunder shall bear a legend in substantially the following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
WARRANT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION (THE "DEPOSITARY"), THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT AND NO
TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS
A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY)
MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
21
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
SECTION 2.02. Form of Warrant Agent's Certificate of Authentication.
The form of the Warrant Agent's certificate of authentication of the Units
shall be in substantially the form set forth on the form of the applicable
Certificates.
ARTICLE 3
THE UNITS
SECTION 3.01. Amount; Form and Denominations.
The aggregate number of Units evidenced by Certificates authenticated,
executed on behalf of the Holders and delivered hereunder is limited to
24,000,000, except for Certificates authenticated, executed and delivered upon
registration of transfer of, in exchange for, or in lieu of, other Certificates
pursuant to Sections 3.04, 3.05, 3.10, 3.13, 3.14 or 8.05.
The Certificates shall be issuable only in registered form and only in
denominations of a single Corporate Unit or Treasury Unit and any integral
multiple thereof.
SECTION 3.02. Rights and Obligations Evidenced by the Certificates.
Each Corporate Units Certificate shall evidence the number of Corporate
Units specified therein, with each such Corporate Unit representing (1) the
ownership by the Holder thereof of a beneficial interest in a Senior Note or the
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
subject to the Pledge of such Senior Note or the Applicable Ownership Interest
(as specified in clause (i) of the definition of such term) in the Treasury
Portfolio, as the case may be, by such Holder pursuant to the Pledge Agreement,
and (2) the rights and obligations of the Holder thereof and the Company under
one Warrant. The Warrant Agent is hereby authorized, as attorney-in-fact for,
and on behalf of, the Holder of each Corporate Unit, to pledge, pursuant to the
Pledge Agreement, the Senior Note and the Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, if any, represented by such Corporate Unit, to the Collateral Agent
for the benefit of the Company, and to grant to the Collateral Agent, for the
benefit of the Company, a security interest in the right, title and interest of
such Holder in such Senior Note and the Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, if any, to secure the obligation of the Holder under each Warrant to
pay the Settlement Price of such Warrant and thereby purchase shares of Common
Stock.
Upon the formation of a Treasury Unit pursuant to Section 3.13, each
Treasury Unit Certificate shall evidence the number of Treasury Units specified
therein, with each such Treasury Unit representing (1) the ownership by the
Holder thereof of a 1/40 undivided
22
beneficial interest in a Treasury Security with a principal amount equal to
$1,000, subject to the Pledge of such interest by such Holder pursuant to the
Pledge Agreement, and (2) the rights and obligations of the Holder thereof and
the Company under one Warrant. The Warrant Agent is hereby authorized, as
attorney-in-fact for, and on behalf of, the Holder of each Treasury Unit, to
pledge, pursuant to the Pledge Agreement, such Holder's interest in the Treasury
Security represented by such Treasury Unit to the Collateral Agent, for the
benefit of the Company, and to grant to the Collateral Agent, for the benefit of
the Company, a security interest in the right, title and interest of such Holder
in such Treasury Security to secure the obligation of the Holder under each
Warrant to pay the Settlement Price of such Warrant and thereby purchase shares
of Common Stock.
Prior to the purchase of shares of Common Stock under any Warrant, such
Warrant shall not entitle the Holder of the Unit representing such Warrant to
any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as a shareholder in respect of the meetings of
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as a shareholder of the Company.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Warrant Agent for authentication, execution on behalf of the Holders and
delivery, together with its Issuer Order for authentication of such
Certificates, and the Warrant Agent in accordance with such Issuer Order shall
authenticate, execute on behalf of the Holders and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board of Directors, its Vice Chairman of the Board of Directors,
its Chief Executive Officer, its President, its Treasurer, its Secretary or one
of its Vice Presidents. The signature of any of these officers on the
Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates.
No Warrant evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature of
an authorized officer of the Warrant Agent, as such Holder's attorney-in-fact.
Such signature by an authorized officer of the Warrant Agent shall be conclusive
evidence that the Holder of such Certificate has entered into the Warrants
evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
23
No Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized officer of the Warrant Agent by manual signature, and
such certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
SECTION 3.04. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Warrant Agent, and the Warrant Agent shall
authenticate, execute on behalf of the Holders, and deliver, in lieu of such
definitive Certificates, temporary Certificates which are in substantially the
form set forth in Exhibit A or Exhibit B hereto, as the case may be, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Corporate Units or
Treasury Units, as the case may be, are listed, or as may, consistently
herewith, be determined by the officers of the Company executing such
Certificates, as evidenced by their execution of the Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Warrant Agent, and
the Warrant Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, one or more definitive Certificates of like tenor
and denominations and evidencing a like number of Units as the temporary
Certificate or Certificates so surrendered. Until so exchanged, the temporary
Certificates shall in all respects evidence the same benefits and the same
obligations with respect to the Units evidenced thereby as definitive
Certificates.
SECTION 3.05. Registration; Registration of Transfer and Exchange.
The Warrant Agent shall keep at the Corporate Trust Office a register (the
"SECURITY REGISTER") in which, subject to such reasonable regulations as it may
prescribe, the Warrant Agent shall provide for the registration of Certificates
and of transfers of Certificates (the Warrant Agent, in such capacity, the
"SECURITY REGISTRAR"). The Security Registrar shall record separately the
registration and transfer of the Certificates evidencing Corporate Units and
Treasury Units.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Warrant
Agent, and the Warrant Agent shall authenticate, execute on behalf of the
designated transferee or transferees, and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any authorized
24
denominations, like tenor, and evidencing a like number of Corporate Units or
Treasury Units, as the case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Corporate Units or Treasury Units, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Warrant Agent, and the Warrant Agent shall authenticate, execute
on behalf of the Holder, and deliver the Certificates which the Holder making
the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Corporate Units
or Treasury Units, as the case may be, and be entitled to the same benefits and
subject to the same obligations under this Agreement as the Corporate Units or
Treasury Units, as the case may be, evidenced by the Certificate surrendered
upon such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer or
exchange shall (if so required by the Warrant Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Warrant Agent duly executed, by the Holder thereof or its
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Warrant Agent may require
payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates, other than any exchanges pursuant to
Sections 3.04, 3.06 and 8.05 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Warrant Agent, and the Warrant Agent shall not be
obligated to authenticate, execute on behalf of the Holder and deliver any
Certificate in exchange for any other Certificate presented or surrendered for
registration of transfer or for exchange on or after the Business Day
immediately preceding the earliest to occur of any Early Settlement Date with
respect to such Certificate, any Cash Merger Early Settlement Date with respect
to such Certificate, the Warrant Settlement Date or the Termination Date. In
lieu of delivery of a new Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Warrant Agent shall:
(i) if the Warrant Settlement Date (including upon any Cash
Settlement) or an Early Settlement Date or a Cash Merger Early Settlement
Date with respect to such other Certificate has occurred, deliver the
shares of Common Stock issuable in respect of the Warrants represented by
the Units evidenced by such other Certificate; or
25
(ii) if a Termination Event shall have occurred prior to the
Warrant Settlement Date, transfer the Senior Notes, the Treasury
Securities, or the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, evidenced thereby, in each
case subject to the applicable conditions and in accordance with the
applicable provisions of Section 3.15 and Article Five hereof.
SECTION 3.06. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form
of one or more fully registered Global Certificates, to be delivered to
the Depositary or its custodian by, or on behalf of, the Company. The
Company hereby designates DTC as the initial Depositary. Such Global
Certificates shall initially be registered on the books and records of the
Company in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner's interest in such Global Certificate, except as provided
in Section 3.09. The Warrant Agent shall enter into an agreement with the
Depositary if so requested by the Company. Unless and until definitive,
fully registered Certificates have been issued to Beneficial Owners
pursuant to Section 3.09:
(i) the provisions of this Section 3.06 shall be in full force
and effect;
(ii) the Company and the Warrant Agent shall be entitled to
deal with the Depositary for all purposes of this Agreement
(including, without limitation, making payments of Warrant Fees and
receiving approvals, votes or consents hereunder) as the Holder of
the Units and the sole holder of the Global Certificates and shall
have no obligation to the Beneficial Owners;
(iii) to the extent that the provisions of this Section 3.06
conflict with any other provisions of this Agreement, the provisions
of this Section 3.06 shall control; and
(iv) the rights of the Beneficial Owners shall be exercised
only through the Depositary and shall be limited to those
established by law and agreements between such Beneficial Owners and
the Depositary or the Depositary Participants.
Transfers of securities evidenced by Global Certificates shall be made
through the facilities of the Depositary, and any cancellation of, or
increase or decrease in the number of, such securities (including the
creation of Treasury Units and the recreation of Corporate Units pursuant
to Sections 3.13 and 3.14 respectively) shall be accomplished by making
appropriate annotations on the Schedule of Increases and Decreases for
such Global Certificate.
SECTION 3.07. Notices to Holders.
Whenever a notice or other communication to the Holders is required
to be given under this Agreement, the Company or the Company's agent shall
give such notices and communications to the Holders and, with respect to
any Units registered in the name of the
26
Depositary or the nominee of the Depositary, the Company or the Company's
agent shall, except as set forth herein, have no obligations to the
Beneficial Owners.
SECTION 3.08. Appointment of Successor Depositary.
If the Depositary elects to discontinue its services as securities
depositary with respect to the Units, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Units.
SECTION 3.09. Definitive Certificates.
If:
(i) the Depositary notifies the Company that it is unwilling
or unable to continue its services as securities depositary with
respect to the Units and no successor Depositary has been appointed
pursuant to Section 3.08 within 90 days after such notice; or
(ii) the Depositary ceases to be a "clearing agency"
registered under Section 17A of the Exchange Act when the Depositary
is required to be so registered to act as the Depositary and so
notifies the Company, and no successor Depositary has been appointed
pursuant to Section 3.08 within 90 days after such notice; or
(iii) the Company determines in its discretion that the Global
Certificates shall be exchangeable for definitive Certificates,
then (x) definitive Certificates evidencing the Units shall be prepared by the
Company and delivered to the Warrant Agent and (y) upon surrender of the
Global Certificates evidencing the Units by the Depositary, accompanied by
registration instructions, the Company shall cause definitive Certificates
to be delivered to Beneficial Owners in accordance with the instructions
of the Depositary. The Company and the Warrant Agent shall not be liable
for any delay in delivery of such instructions and may conclusively rely
on and shall be authorized and protected in relying on, such instructions.
Each definitive Certificate so delivered shall evidence Units of the same
kind and tenor as the Global Certificate so surrendered in respect
thereof.
SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Warrant Agent,
the Company shall execute and deliver to the Warrant Agent, and the
Warrant Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, a new Certificate, evidencing the same
number of Corporate Units or Treasury Units, as the case may be, and
bearing a Certificate number not contemporaneously outstanding.
If there shall be delivered to the Company and the Warrant Agent (i)
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) such security or indemnity
27
as may be required by them to hold each of them and any agent of any of
them harmless, then, in the absence of notice to the Company or the
Warrant Agent that such Certificate has been acquired by a protected
purchaser, the Company shall execute and deliver to the Warrant Agent, and
the Warrant Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Corporate
Units or Treasury Units, as the case may be, and bearing a Certificate
number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Warrant Agent, and the Warrant Agent shall not
be obligated to authenticate, execute on behalf of the Holder, and deliver
to the Holder, a Certificate on or after the Business Day immediately
preceding the earliest of any Early Settlement Date with respect to such
lost or mutilated Certificate, any Cash Merger Early Settlement Date with
respect to such lost or mutilated Certificate, the Warrant Settlement Date
or the Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this Section
and receipt of appropriate registration or transfer instructions from such
Holder, the Warrant Agent shall:
(i) if the Warrant Settlement Date or Early Settlement Date or
Cash Merger Early Settlement Date with respect to such lost, stolen,
destroyed or mutilated Certificate has occurred, deliver the shares
of Common Stock issuable in respect of the Warrants represented by
the Units evidenced by such Certificate; or
(ii) if a Cash Settlement with respect to such lost or
mutilated Certificate or if a Termination Event shall have occurred
prior to the Warrant Settlement Date, transfer the Senior Notes, the
Treasury Securities or the appropriate Applicable Ownership Interest
(as specified in clause (i) of the definition of such term) in the
Treasury Portfolio, as the case may be, evidenced thereby, in each
case subject to the applicable conditions and in accordance with the
applicable provisions of Section 3.15 and Article Five hereof.
Upon the issuance of any new Certificate under this Section, the
Company and the Warrant Agent may require the payment by the Holder of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other fees and expenses (including,
without limitation, the fees and expenses of the Warrant Agent) connected
therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original
additional contractual obligation of the Company and of the Holder in
respect of the Units evidenced thereby, whether or not the destroyed, lost
or stolen Certificate (and the Units evidenced thereby) shall be at any
time enforceable by anyone, and shall be entitled to all the benefits and
be subject to all the obligations of this Agreement equally and
proportionately with any and all other Certificates delivered hereunder.
28
The provisions of this Section are exclusive and shall preclude, to
the extent lawful, all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Certificates.
SECTION 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of
transfer, the Company and the Warrant Agent, and any agent of the Company
or the Warrant Agent, may treat the Person in whose name such Certificate
is registered as the owner of the Units evidenced thereby for purposes of
(subject to any applicable record date) any payment or distribution on the
Senior Notes or on the Applicable Ownership Interests (as specified in
clause (ii) of the definition of such term) in the Treasury Portfolio (if
any), as applicable, payment of Warrant Fees and performance of the
Warrants and for all other purposes whatsoever in connection with such
Units, whether or not such payment, distribution, or performance shall be
overdue and notwithstanding any notice to the contrary, and neither the
Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global
Certificate, nothing contained herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization
furnished by the Depositary (or its nominee), as a Holder, with respect to
such Global Certificate, or impair, as between such Depositary and the
related Beneficial Owner, the operation of customary practices governing
the exercise of rights of the Depositary (or its nominee) as Holder of
such Global Certificate. None of the Company, the Warrant Agent or any
agent of the Company or the Warrant Agent will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Certificate or
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
SECTION 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock
on or after the Warrant Settlement Date or upon the transfer of Senior
Notes, or for delivery of the appropriate Applicable Ownership Interest in
the Treasury Portfolio or Treasury Securities, as the case may be, after
the occurrence of a Termination Event or pursuant to a Cash Settlement, an
Early Settlement or a Cash Merger Early Settlement, or upon the
registration of transfer or exchange of a Unit, or a Collateral
Substitution or the recreation of Corporate Units shall, if surrendered to
any Person other than the Warrant Agent, be delivered to the Warrant Agent
along with appropriate written instructions regarding the cancellation
thereof and, if not already cancelled, shall be promptly cancelled by it.
The Company may at any time deliver to the Warrant Agent for cancellation
any Certificates previously authenticated, executed and delivered
hereunder which the Company may have acquired in any manner whatsoever,
and all Certificates so delivered shall, upon an Issuer Order, be promptly
cancelled by the Warrant Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange
for any
29
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the
Warrant Agent shall be disposed of in accordance with its customary
practices.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Warrant
Agent cancelled or for cancellation.
SECTION 3.13. Creation of Treasury Units by Substitution of Treasury
Securities.
Unless the Treasury Portfolio has replaced the Senior Notes
represented by the Corporate Units, and subject to the conditions set
forth in this Agreement, a Holder may, at any time from and after the date
of this Agreement and prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the Warrant Settlement Date, effect a
Collateral Substitution and separate the Senior Notes represented by such
Holder's Corporate Units from the Warrants so represented by substituting,
for such Senior Notes, Treasury Securities in an aggregate principal
amount at maturity equal to the aggregate principal amount of such Senior
Notes; provided that Holders may make such Collateral Substitutions only
in integral multiples of 40 Corporate Units. To effect such substitution,
the Holder must:
(1) deposit with the Securities Intermediary Treasury
Securities having an aggregate principal amount at
maturity equal to the aggregate principal amount of the
Senior Notes represented by such Corporate Units; and
(2) transfer the related Corporate Units to the Warrant
Agent accompanied by a notice to the Warrant Agent,
substantially in the form of Exhibit C hereto, (i)
stating that the Holder has deposited the relevant
amount of Treasury Securities with the Securities
Intermediary and (ii) requesting that the Warrant Agent
instruct the Collateral Agent to release the Senior
Notes represented by such Corporate Units, whereupon the
Warrant Agent shall promptly provide an instruction to
such effect to the Collateral Agent, substantially in
the form of Exhibit A to the Pledge Agreement.
Upon receipt of the Treasury Securities described in clause (1)
above and the instruction described in clause (2) above, in accordance
with the terms of the Pledge Agreement, the Collateral Agent will cause
the Securities Intermediary to effect the release of such Senior Notes
from the Pledge, free and clear of the Company's security interest
therein, and the transfer of such Senior Notes to the Warrant Agent on
behalf of the Holder. Upon receipt of such Senior Notes, the Warrant Agent
shall promptly:
(i) cancel the related Corporate Units;
(ii) transfer the Senior Notes to the Holder (such Senior
Notes shall be tradeable as a separate security, independent of the
resulting Treasury Units); and
30
(iii) authenticate, execute on behalf of such Holder and
deliver Treasury Units in book-entry form or, if applicable, in the
form of a Treasury Units Certificate executed by the Company in
accordance with Section 3.03, representing the same number of
Warrants as were represented by the cancelled Corporate Units.
Holders who elect to separate the Senior Notes from the related
Warrants and to substitute Treasury Securities for such Senior Notes shall
be responsible for any fees or expenses (including, without limitation,
fees and expenses payable to the Collateral Agent for its services as
Collateral Agent) in respect of the substitution, and neither the Company
nor the Warrant Agent shall be responsible for any such fees or expenses.
If the Treasury Portfolio has replaced the Senior Notes represented
by the Corporate Units and subject to the conditions set forth in this
Agreement, a Holder may, at any time on or prior to the second Business
Day immediately preceding the Warrant Settlement Date, substitute Treasury
Securities for the Applicable Ownership Interests in the Treasury
Portfolio represented by such Corporate Units, but only in integral
multiples of 4,000 Corporate Units. In such an event, the Holder shall
transfer Treasury Securities to the Securities Intermediary, and the
Warrant Agent shall instruct the Collateral Agent to release the Pledge of
and transfer to the Holder the appropriate Applicable Ownership Interests
in the Treasury Portfolio in the manner set forth above.
In the event a Holder making a Collateral Substitution pursuant to
this Section 3.13 fails to effect a book-entry transfer of the Corporate
Units or fails to deliver Corporate Units Certificates to the Warrant
Agent after depositing Treasury Securities with the Securities
Intermediary, any distributions on the Senior Notes or Applicable
Ownership Interest in the Treasury Portfolio represented by such Corporate
Units shall be held in the name of the Warrant Agent or its nominee in
trust for the benefit of such Holder, until such Corporate Units are so
transferred or the Corporate Units Certificate is so delivered, as the
case may be, or, such Holder provides evidence satisfactory to the Company
and the Warrant Agent that such Corporate Units Certificate has been
destroyed, lost or stolen, together with any indemnity that may be
required by the Warrant Agent and the Company.
Except as described in Section 5.02 or in this Section 3.13 or in
connection with a Cash Settlement, an Early Settlement, a Cash Merger
Early Settlement or a Termination Event, for so long as the Warrant
represented by a Corporate Unit remains in effect, such Corporate Units
shall not be separable into the Warrants and Senior Notes or Applicable
Ownership Interests in the Treasury Portfolio, as the case may be,
represented thereby, and the rights and obligations of the Holder in
respect of the Senior Notes or Applicable Ownership Interests in the
Treasury Portfolio, as the case may be, and the Warrant represented by
such Corporate Units may be acquired, and may be transferred and
exchanged, only as a Corporate Unit.
SECTION 3.14. Recreation of Corporate Units.
31
Unless the Treasury Portfolio has replaced the Senior Notes
represented by the Corporate Units, and subject to the conditions set
forth in this Agreement, a Holder of Treasury Units may recreate Corporate
Units at any time on or prior to 5:00 p.m. (New York City time) on the
fifth Business Day immediately preceding the Warrant Settlement Date;
provided that Holders of Treasury Units may only recreate Corporate Units
in integral multiples of 40 Treasury Units. To recreate Corporate Units,
the Holder must:
(1) transfer to the Securities Intermediary Senior Notes
having an aggregate principal amount equal to the
aggregate principal amount at stated maturity of the
Treasury Securities represented by the Treasury Units;
and
(2) transfer the related Treasury Units to the Warrant Agent
accompanied by a notice to the Warrant Agent,
substantially in the form of Exhibit C hereto, (i)
stating that the Holder has transferred the relevant
amount of Senior Notes to the Securities Intermediary
and (ii) requesting that the Warrant Agent instruct the
Collateral Agent to release the Treasury Securities
represented by such Treasury Units, whereupon the
Warrant Agent shall promptly provide an instruction to
such effect to the Collateral Agent, substantially in
the form of Exhibit C to the Pledge Agreement.
Upon receipt of the Senior Notes described in clause (1) above and the
instruction described in clause (2) above, in accordance with the terms of
the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to effect the release of the Treasury Securities having a
corresponding aggregate principal amount at maturity from the Pledge, free
and clear of the Company's security interest therein, and the transfer
thereof to the Warrant Agent on behalf of the Holder. Upon receipt of such
Treasury Securities, the Warrant Agent shall promptly:
(i) cancel the related Treasury Units;
(ii) transfer the Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and
deliver Corporate Units in book-entry form or, if applicable, in the
form of a Corporate Units Certificate executed by the Company in
accordance with Section 3.03, representing the same number of
Warrants as were represented by the cancelled Treasury Units.
Holders who elect to recreate Corporate Units shall be responsible
for any fees or expenses (including, without limitation, fees and expenses
payable to the Collateral Agent for its services as Collateral Agent) in
respect of the recreation, and neither the Company nor the Warrant Agent
shall be responsible for any such fees or expenses.
If the Treasury Portfolio has replaced the Senior Notes represented
by the Corporate Units, a Holder may at any time on or prior to the second
Business Day immediately preceding the Warrant Settlement Date substitute
the Applicable Ownership Interests in the Treasury
32
Portfolio for Treasury Securities, but only in multiples of 4,000 Treasury
Units. In such an event, the Holder shall transfer the appropriate
Applicable Ownership Interests in the Treasury Portfolio to the Collateral
Agent, and the Warrant Agent shall instruct the Collateral Agent to
release the Pledge of and transfer to the Holder Treasury Securities in
the manner set forth above.
Except as provided in Section 5.02 or in this Section 3.14 or in
connection with a Cash Settlement, an Early Settlement, a Cash Merger
Early Settlement or a Termination Event, for so long as the Warrant
represented by a Treasury Unit remains in effect, such Treasury Unit shall
not be separable into its constituent parts and the rights and obligations
of the Holder of such Treasury Unit in respect of the 1/40 of a Treasury
Security and the Warrant represented by such Treasury Unit may be
acquired, and may be transferred and exchanged, only as a Treasury Unit.
SECTION 3.15. Transfer of Collateral upon Occurrence of Termination
Event.
Upon the occurrence of a Termination Event and the transfer to the
Warrant Agent of the Senior Notes, the appropriate Applicable Ownership
Interests in the Treasury Portfolio or the Treasury Securities, as the
case may be, represented by the Corporate Units or the Treasury Units, as
the case may be, pursuant to the terms of the Pledge Agreement, the
Warrant Agent shall request transfer instructions with respect to such
Senior Notes, the appropriate Applicable Ownership Interests in the
Treasury Portfolio or Treasury Securities, as the case may be, from each
Holder by written request, substantially in the form of Exhibit D hereto,
mailed to such Holder at its address as it appears in the Security
Register.
Upon book-entry transfer of the Corporate Units or the Treasury
Units or delivery of a Corporate Units Certificate or Treasury Units
Certificate to the Warrant Agent with such transfer instructions, the
Warrant Agent shall transfer the Senior Notes, the appropriate Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as
the case may be, represented by such Corporate Units or Treasury Units, as
the case may be, to such Holder by book-entry transfer, or other
appropriate procedures, in accordance with such instructions. In the event
a Holder of Corporate Units or Treasury Units fails to effect such
transfer or delivery, the Senior Notes, the appropriate Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as
the case may be, represented by such Corporate Units or Treasury Units, as
the case may be, and any distributions thereon, shall be held in the name
of the Warrant Agent or its nominee in trust for the benefit of such
Holder, until the earlier to occur of:
(i) the transfer of such Corporate Units or Treasury Units or
surrender of the Corporate Units Certificate or Treasury Units
Certificate or the receipt by the Company and the Warrant Agent from
such Holder of satisfactory evidence that such Corporate Units
Certificate or Treasury Units Certificate has been destroyed, lost
or stolen, together with any indemnity that may be required by the
Warrant Agent and the Company; and
(ii) the expiration of the time period specified in the
abandoned property laws of the relevant State in which the Warrant
Agent holds such property.
33
SECTION 3.16. No Consent to Assumption.
Each Holder of a Unit, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365
of the Bankruptcy Code or otherwise, of the Warrant by the Company or its
trustee, receiver, liquidator or a person or entity performing similar
functions in the event that the Company becomes the debtor under the
Bankruptcy Code or subject to other similar state or Federal law providing
for reorganization or liquidation.
ARTICLE 4
THE SENIOR NOTES AND APPLICABLE OWNERSHIP INTERESTS IN THE TREASURY PORTFOLIO
SECTION 4.01. Interest Payments; Rights to Interest Payments
Preserved.
Any payment on any Senior Note or on the appropriate Applicable
Ownership Interests (as specified in clause (ii) of the definition of such
term) in the Treasury Portfolio, as the case may be, which is paid on any
Payment Date shall, subject to receipt thereof by the Warrant Agent from
the Collateral Agent as provided by the terms of the Pledge Agreement, be
paid to the Person in whose name the Corporate Units Certificate (or one
or more Predecessor Corporate Units Certificates) representing such Senior
Note or the appropriate Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, is registered at the close of business on
the Record Date for such Payment Date.
Each Corporate Units Certificate evidencing Senior Notes or the
appropriate Applicable Ownership Interests in the Treasury Portfolio
delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Corporate Units Certificate shall
carry the right to accrued and unpaid interest or distributions, and to
accrue interest or distributions, which were carried by the Senior Notes
or the appropriate Applicable Ownership Interests in the Treasury
Portfolio represented by such other Corporate Units Certificate.
In the case of any Corporate Unit with respect to which (A) Cash
Settlement of the Warrant represented by such Corporate Unit is properly
effected pursuant to Section 5.02 hereof, (B) Early Settlement of the
Warrant represented by such Corporate Unit is properly effected pursuant
to Section 5.07 hereof, (C) Cash Merger Early Settlement of the Warrant
represented by such Corporate Unit is properly effected pursuant to
Section 5.04(b)(2) hereof, (D) a Collateral Substitution is properly
effected pursuant to Section 3.13, or (E) a Successful Initial Remarketing
occurs with respect to the Senior Note that is represented by such
Corporate Unit, in each case on a date that is after any Record Date and
prior to or on the next succeeding Payment Date, interest on the Senior
Notes or distributions on the appropriate Applicable Ownership Interests
in the Treasury Portfolio, as the case may be, represented by such
Corporate Unit otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Cash Settlement, Early Settlement,
Cash Merger Early Settlement, Collateral Substitution or Initial
34
Remarketing, and such payment or distributions shall, subject to receipt
thereof by the Warrant Agent, be payable to the Person in whose name the
Corporate Units Certificate (or one or more Predecessor Corporate Units
Certificates) was registered at the close of business on the Record Date.
Except as otherwise expressly provided in the immediately preceding
paragraph, in the case of any Corporate Units with respect to which Cash
Settlement, Early Settlement or Cash Merger Early Settlement of the
Warrant represented by such Corporate Unit is properly effected, or with
respect to which a Collateral Substitution has been effected, payments on
the related Senior Notes or distributions on the appropriate Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, that
would otherwise be payable or made after the Warrant Settlement Date,
Early Settlement Date, Cash Merger Early Settlement Date or the date of
the Collateral Substitution, as the case may be, shall not be payable
hereunder to the Holder of such Corporate Units; provided, however, that
to the extent that such Holder continues to hold Separate Senior Notes or
Applicable Ownership Interests in the Treasury Portfolio that were
formerly represented by such Holder's Corporate Units, such Holder shall
be entitled to receive interest on such Separate Senior Notes or
distributions on the Applicable Ownership Interests in the Treasury
Portfolio.
SECTION 4.02. Notice and Voting.
Under the terms of the Pledge Agreement, the Warrant Agent will be
entitled to exercise the voting and any other consensual rights pertaining
to the Pledged Senior Notes, but only to the extent instructed in writing
by the Holders as described below. Upon receipt of notice of any meeting
at which holders of Senior Notes are entitled to vote or upon any
solicitation of consents, waivers or proxies of holders of Senior Notes,
the Warrant Agent shall, as soon as practicable thereafter, mail, first
class, postage pre-paid, to the Holders of Corporate Units a notice:
(i) containing such information as is contained in the notice
or solicitation;
(ii) stating that each Holder on the record date set by the
Warrant Agent therefor (which, to the extent possible, shall be the
same date as the record date for determining the holders of Senior
Notes, as the case may be, entitled to vote) shall be entitled to
instruct the Warrant Agent as to the exercise of the voting rights
pertaining to such Senior Notes represented by their Corporate
Units; and
(iii) stating the manner in which such instructions may be
given.
Upon the written request of the Holders of Corporate Units on such record date
received by the Warrant Agent at least six days prior to such meeting, the
Warrant Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum number of Senior Notes, as the case may be, as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of a Corporate Unit, the Warrant Agent shall
abstain from voting the Senior Notes represented by
35
such Corporate Unit. The Company hereby agrees, if applicable, to solicit
Holders of Corporate Units to timely instruct the Warrant Agent in order
to enable the Warrant Agent to vote such Senior Notes.
The Holders of Corporate Units and Treasury Units shall have no
voting or other rights in respect of Common Stock.
SECTION 4.03. Special Event Redemption.
(a) If the Company elects to redeem the Senior Notes on any Payment
Date following the occurrence of a Special Event as permitted by the
Indenture, it shall notify the Collateral Agent in writing that a Special
Event has occurred and that it intends to redeem the Senior Notes and the
Special Event Redemption Date. On the Special Event Redemption Date, the
Collateral Agent shall surrender the Pledged Senior Notes to the Indenture
Trustee against delivery of an amount equal to the aggregate Redemption
Price for such Pledged Senior Notes. Thereafter, pursuant to the terms of
the Pledge Agreement, the Collateral Agent shall cause the Securities
Intermediary to apply an amount equal to the aggregate Redemption Amount
of such funds to purchase on behalf of the Holders of Corporate Units the
Treasury Portfolio and promptly remit the remaining portion of such funds
to the Warrant Agent for payment to the Holders of such Corporate Units.
(b) Upon the occurrence of a Special Event Redemption, (i) the
Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio will be substituted as
Collateral for the Pledged Senior Notes and will be held by the Securities
Intermediary in accordance with the terms of the Pledge Agreement to
secure the obligation of each Holder of a Corporate Unit to pay the
Settlement Price of the related Warrant and thereby purchase Common Stock
of the Company thereunder, (ii) the Holders of Corporate Units and the
Collateral Agent shall have such security interest rights and obligations
with respect to such Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) as the Holders of Corporate
Units and the Collateral Agent had in respect of the Senior Notes, as the
case may be, subject to the Pledge thereof as provided in the Pledge
Agreement, and (iii) any reference herein to the Senior Notes shall be
deemed to be a reference to such Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio. The Company may cause to be made in any Corporate Units
Certificates thereafter to be issued such change in phraseology and form
(but not in substance) as may be appropriate to reflect the substitution
of the Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio for Senior Notes as
Collateral.
(c) The Holders of Separate Senior Notes shall directly receive the
redemption price for the Separate Senior Notes.
ARTICLE 5
THE WARRANTS
36
SECTION 5.01. Purchase of Shares of Common Stock.
(a) Each Warrant shall have an exercise price of $0.00 and shall be
subject to automatic exercise on the Warrant Settlement Date, unless a
Termination Event shall occur on or prior to such date. The premium
payable by the Holder in consideration for the issuance of the Warrant
shall be $25.00. Such amount shall not be payable on the issue date of
such Warrant but shall be deferred and payable as the settlement price of
the Warrant (the "SETTLEMENT PRICE") on the earlier of the Warrant
Settlement Date and any Early Settlement Date or Cash Merger Early
Settlement Date, unless a Termination Event shall occur on or prior to any
such date. Accordingly, each Warrant shall obligate the Holder of the
related Units to purchase, and the Company to sell, on the Warrant
Settlement Date at a price equal to the Settlement Price, a number of
newly issued shares of Common Stock (subject to Section 5.09) equal to the
Settlement Rate unless an Early Settlement, a Cash Merger Early Settlement
or a Termination Event with respect to such Warrant shall have occurred.
The "SETTLEMENT RATE" is equal to:
(i) if the Adjusted Applicable Market Value (as defined below)
is greater than $69.10 (the "THRESHOLD APPRECIATION PRICE"), 0.3618
shares of Common Stock per Warrant;
(ii) if the Adjusted Applicable Market Value is less than or
equal to the Threshold Appreciation Price but greater than or equal
to $56.64 (the "REFERENCE PRICE"), the number of shares of Common
Stock per Warrant having a value equal to the Stated Amount divided
by the Adjusted Applicable Market Value;
(iii) if the Adjusted Applicable Market Value is less than the
Reference Price, 0.4414 shares of Common Stock per Warrant;
in each case subject to adjustment as provided in Section 5.04 (and in each
case rounded upward or downward to the nearest 1/10,000th of a share).
The "APPLICABLE MARKET VALUE" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Warrant
Settlement Date, subject to adjustments set forth under Section 5.04
hereof.
The "ADJUSTED APPLICABLE MARKET VALUE" means (i) prior to any
adjustment of the Settlement Rate pursuant to paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of Section 5.04(a), the Applicable Market
Value, and (ii) at the time of and after any adjustment of the Settlement
Rate pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of
Section 5.04(a), the Applicable Market Value multiplied by a fraction of
which the numerator shall be the Settlement Rate immediately after such
adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of Section 5.04(a) and the denominator shall be the Settlement Rate
immediately prior to such adjustment; provided, however, that if such
adjustment to the Settlement Rate is required to be made pursuant to the
occurrence of any of the events contemplated by paragraph (1), (2), (3),
(4),
37
(5), (6), (7) or (10) of Section 5.04(a) during the period taken into
consideration for determining the Applicable Market Value, appropriate and
customary adjustments shall be made to the Settlement Rate.
The "CLOSING PRICE" per share of Common Stock on any date of
determination means:
(i) the closing sale price as of the close of the principal
trading session (or, if no closing price is reported, the last
reported sale price) per share on the New York Stock Exchange, Inc.
(the "NYSE") on such date;
(ii) if the Common Stock is not listed for trading on the NYSE
on any such date, the closing sale price (or, if no closing price is
reported, the last reported sale price) per share as reported in the
composite transactions for the principal United States national or
regional securities exchange on which the Common Stock is so listed;
(iii) if the Common Stock is not so listed on a United States
national or regional securities exchange, the last reported sale
price per share as reported by The Nasdaq National Market, Inc.;
(iv) if the Common Stock is not so reported by the Nasdaq
National Market, Inc., the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization; or
(v) if the bid price referred to in clause (iv) is not
available, the market value of Common Stock on such date as
determined by a nationally recognized independent investment banking
firm retained by the Company for purposes of determining the Closing
Price.
A "TRADING DAY" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2)
has traded at least once on the national or regional securities exchange
or association or over-the-counter market that is the primary market for
the trading of the Common Stock.
(b) Each Holder of a Corporate Unit or a Treasury Unit, by its
acceptance of such Unit:
(i) irrevocably authorizes the Warrant Agent to enter into and
perform the Warrant represented thereby on its behalf as its
attorney-in-fact (including, without limitation, the execution of
Certificates on behalf of such Holder);
(ii) agrees to be bound by the terms and provisions thereof;
38
(iii) covenants and agrees to perform its obligations under
such Warrant for so long as such Holder remains a Holder of a
Corporate Unit or a Treasury Unit representing such Warrant;
(iv) consents to the provisions hereof;
(v) irrevocably authorizes the Warrant Agent to enter into and
perform this Agreement and the Pledge Agreement on its behalf and in
its name as its attorney-in-fact;
(vi) consents to, and agrees to be bound by, the Pledge of
such Holder's right, title and interest in and to the Collateral
Account, including the Senior Notes and the Applicable Ownership
Interests (as specified in clause (i) of the definition of such
term) in the Treasury Portfolio or the Treasury Securities pursuant
to the Pledge Agreement; and
(vii) for United States federal, state and local income and
franchise tax purposes, agrees to (i) treat an acquisition of the
Corporate Units as an acquisition of the Senior Note and Warrant
represented by each Corporate Unit, (ii) treat the Senior Notes as
indebtedness of the Company and (iii) treat itself as the owner of
the applicable interest in the Collateral Account, including the
Senior Notes and the Applicable Ownership Interests in the Treasury
Portfolio (as specified in clause (i) of the definition of such
term) or the Treasury Securities,
provided that upon a Termination Event, the rights of the Holder of such Units
under the Warrant may be enforced without regard to any other rights or
obligations.
(c) Each Holder of a Corporate Unit or a Treasury Unit, by its
acceptance thereof, further covenants and agrees that to the extent and in
the manner provided in Section 5.02 and the Pledge Agreement, but subject
to the terms thereof, the Treasury Securities, the Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in
the Treasury Portfolio or a portion of the Proceeds of the Holder's
exercise of the Put Right equal to the Settlement Price, as applicable, on
the Warrant Settlement Date, shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Warrant
and such Holder shall acquire no right, title or interest in such portion
of the Proceeds.
(d) Upon registration of transfer of a Certificate, the transferee
shall be bound (without the necessity of any other action on the part of
such transferee) by the terms of this Agreement, the Warrants represented
by such Certificate and the Pledge Agreement and the transferor shall be
released from the obligations under this Agreement, the Warrants
represented by the Certificate so transferred and the Pledge Agreement.
The Company covenants and agrees, and each Holder of a Certificate, by its
acceptance thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
SECTION 5.02. Remarketing; Payment of Settlement Price.
39
(a) (i) Unless a Special Event Redemption has occurred prior to the
Initial Remarketing Date, the Company shall engage the Remarketing Agent
pursuant to the Remarketing Agreement for Remarketing the Senior Notes. By
11:00 a.m. (New York City time) on the Business Day immediately preceding
the Initial Remarketing Date, the Warrant Agent shall notify the
Remarketing Agent of the aggregate principal amount of Pledged Senior
Notes, and the Custodial Agent shall notify the Remarketing Agent of the
aggregate principal amount of Separate Senior Notes (if any) that are to
be remarketed pursuant to clause (ii) below. Concurrently, the Collateral
Agent, pursuant to the terms of the Pledge Agreement, will present for
Remarketing the Pledged Senior Notes, and the Custodial Agent, pursuant to
clause (ii) below, will present for Remarketing the Separate Senior Notes,
to the Remarketing Agent. Upon receipt of such notice from the Warrant
Agent and Custodial Agent and the Pledged Senior Notes and Separate Senior
Notes (if any) from the Collateral Agent and Custodial Agent, the
Remarketing Agent will, on the Initial Remarketing Date, use its
reasonable efforts to remarket (based on the Reset Rate) (the "INITIAL
REMARKETING") such Pledged Senior Notes and Separate Senior Notes on such
date at a price of approximately (but not less than) 100.50% of the sum of
the Treasury Portfolio Purchase Price plus the Separate Senior Notes
Purchase Price. If the Remarketing Agent is able to remarket the Pledged
Senior Notes and Separate Senior Notes at a price not less than 100.50% of
the Treasury Portfolio Purchase Price plus the Separate Senior Notes
Purchase Price (a "SUCCESSFUL INITIAL REMARKETING"), the portion of the
proceeds from such Successful Initial Remarketing equal to the Treasury
Portfolio Purchase Price will be applied to purchase the Treasury
Portfolio. The Remarketing Agent shall deduct as a remarketing fee (the
"REMARKETING FEE") an amount not execeeding 25 basis points (0.25%) of the
sum of the Treasury Portfolio Purchase Price plus the Separate Senior
Notes Purchase Price. None of the Company, the Warrant Agent, or any
Holders of Corporate Units or holders of Separate Senior Notes whose
Senior Notes or Separate Senior Notes, as applicable, are so remarketed
will otherwise be responsible for the payment of any Remarketing Fee in
connection therewith. With respect to Separate Senior Notes, the proceeds
of a Successful Initial Remarketing in excess of the Remarketing Fee
attributable to the Separate Senior Notes will be remitted to the
Custodial Agent for payment to the holders of Separate Senior Notes. With
respect to Pledged Senior Notes, the proceeds of a Successful Initial
Remarketing in excess of the sum of the Treasury Portfolio Purchase Price
plus the Remarketing Fee with respect to such Pledged Senior Notes will be
remitted to the Warrant Agent for payment to the Holders of the related
Corporate Units. The Treasury Portfolio will be substituted for the
Pledged Senior Notes and the appropriate Applicable Ownership Interests
(as specified in clause (i) of the definition of such term) in the
Treasury Portfolio will be pledged to the Collateral Agent to secure the
obligation of the Holders of Corporate Units to pay the Settlement Price
for the Common Stock under the related Warrants on the Warrant Settlement
Date.
Following the occurrence of a Successful Initial Remarketing, the Holders
of Corporate Units and the Collateral Agent shall have such security
interests, rights and obligations
40
with respect to the Applicable Ownership Interests (as specified in clause
(i) of the definition of such term) in the Treasury Portfolio as the
Holder of Corporate Units and the Collateral Agent had in respect of the
Senior Notes, subject to the Pledge thereof as provided in the Pledge
Agreement, and any reference herein or in the Certificates to the Senior
Notes shall be deemed to be a reference to such Applicable Ownership
Interests in the Treasury Portfolio and any reference herein or in the
Certificates to interest on the Senior Notes shall be deemed to be a
reference to corresponding distributions on such Applicable Ownership
Interests in the Treasury Portfolio. The Company may cause to be made in
any Corporate Units Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to
reflect the substitution of such Applicable Ownership Interests in the
Treasury Portfolio for Senior Notes.
If, in spite of using its reasonable efforts, the Remarketing Agent cannot
remarket the Pledged Senior Notes and the Separate Senior Notes (if any)
in the Initial Remarketing (other than to the Company) at a price not less
than 100.50% of the sum of the Treasury Portfolio Purchase Price plus the
Separate Senior Notes Purchase Price or a condition precedent set forth in
the Remarketing Agreement is not fulfilled, the Initial Remarketing will
be deemed to have failed (a "FAILED INITIAL REMARKETING"). Upon a Failed
Initial Remarketing, the Remarketing Agent shall return the Pledged Senior
Notes and Separate Senior Notes (if any) subject to such Remarketing to
the Collateral Agent or the Custodial Agent, as the case may be.
(ii) Prior to 5:00 p.m. (New York City time) on the fifth Business
Day immediately preceding the applicable Remarketing Date, but no earlier
than the Payment Date immediately preceding such date, Holders of Separate
Senior Notes may elect to have their Separate Senior Notes remarketed
under the Remarketing Agreement by delivering their Separate Senior Notes,
along with a notice of such election, substantially in the form of Exhibit
F to the Pledge Agreement, to the Custodial Agent. After such time, such
election shall become an election to have such Separate Senior Notes
remarketed in such Remarketing and, if such Remarketing fails, in any
subsequent Remarketing. The Custodial Agent shall hold Separate Senior
Notes in an account separate from the Collateral Account in which the
Pledged Senior Notes shall be held. Holders of Separate Senior Notes
electing to have their Separate Senior Notes remarketed will also have the
right to withdraw that election by written notice to the Custodial Agent,
substantially in the form of Exhibit G to the Pledge Agreement, on or
prior to 5:00 p.m. (New York City time) on the fifth Business Day
immediately preceding the applicable Remarketing Date, upon which notice
the Custodial Agent shall return such Separate Senior Notes to such
Holder. By 11:00 a.m. on the Business Day immediately preceding the
applicable Remarketing Date, the Custodial Agent shall notify the
Remarketing Agent of the aggregate principal amount of the Separate Senior
Notes to be remarketed and will deliver to the Remarketing Agent for
remarketing all such Separate Senior Notes delivered to the Custodial
Agent pursuant to Section 5.07(c) of the Pledge Agreement and not validly
withdrawn prior to such date.
41
(iii) Not later than seven calendar days nor more than 15 calendar
days prior to the applicable Remarketing Date, the Company shall request
the Depositary or its nominee to notify the Beneficial Owners or
Depositary Participants holding Units of the procedures to be followed in
such Remarketing.
(iv) The Company agrees to use commercially reasonable efforts to
ensure that, if required by applicable law, a registration statement with
regard to the full amount of the Senior Notes to be remarketed in the
Initial Remarketing, the Second Remarketing, the Third Remarketing or the
Final Remarketing, as the case may be, shall be effective with the
Securities and Exchange Commission in a form that will enable the
Remarketing Agent to use it in connection with such Remarketing.
(v) The Company shall cause a notice of a Failed Remarketing to be
published (with a copy of such notice to be provided to the Warrant Agent)
on the Business Day immediately following the applicable Remarketing Date,
in a daily newspaper in the English language of general circulation in the
City of New York.
(b) (i) Unless a Special Event Redemption has occurred prior to the
Second Remarketing Date, if a Failed Initial Remarketing occurs, the
Remarketing Agent will use its reasonable efforts to remarket the Senior
Notes (a "SECOND REMARKETING") on the Second Remarketing Date. By 11:00
a.m. (New York City time) on the Business Day immediately preceding the
Second Remarketing Date for such Second Remarketing, the Warrant Agent
shall notify the Remarketing Agent of the aggregate principal amount of
Pledged Senior Notes, and the Custodial Agent shall notify the Remarketing
Agent of the aggregate principal amount of Separate Senior Notes (if any)
that are to be remarketed pursuant to Section 5.02(a)(ii). Concurrently,
the Collateral Agent, pursuant to the terms of the Pledge Agreement, and
the Custodial Agent, pursuant to Section 5.02(a)(ii), will present for
Remarketing the Pledged Senior Notes and the Separate Senior Notes (if
any) that are to be remarketed to the Remarketing Agent. Upon receipt of
such notice from the Warrant Agent and the Custodial Agent and Pledged
Senior Notes and Separate Senior Notes (if any) from the Collateral Agent
and the Custodial Agent, the Remarketing Agent will, on the Second
Remarketing Date, use its reasonable efforts to remarket (based on the
Reset Rate) such Pledged Senior Notes and Separate Senior Notes on such
date at a price of approximately (but not less than) 100.50% of the sum of
the Treasury Portfolio Purchase Price plus the Separate Senior Notes
Purchase Price. If the Remarketing Agent is able to remarket the Pledged
Senior Notes and Separate Senior Notes at a price not less than 100.50% of
the Treasury Portfolio Purchase Price plus the Separate Senior Notes
Purchase Price (a "SUCCESSFUL SECOND REMARKETING"), the portion of the
proceeds from such Successful Second Remarketing equal to the Treasury
Portfolio Purchase Price will be applied to purchase the Treasury
Portfolio. The Remarketing Agent shall deduct the Remarketing Fee from any
amount of such proceeds in excess of the sum of the Treasury Portfolio
Purchase Price plus the Separate Senior Notes Purchase Price. None of the
42
Company, the Warrant Agent or any Holders of Corporate Units or holders of
Separate Senior Notes whose Senior Notes or Separate Senior Notes are so
remarketed will otherwise be responsible for the payment of any
Remarketing Fee in connection therewith. With respect to Separate Senior
Notes, the proceeds of the Second Remarketing in excess of the Remarketing
Fee attributable to the Separate Senior Notes will be remitted to the
Custodial Agent for payment to the holders of Separate Senior Notes. With
respect to Pledged Senior Notes, the proceeds of the Second Remarketing in
excess of the sum of the Treasury Portfolio Purchase Price plus the
Remarketing Fee with respect to such Pledged Senior Notes will be remitted
to the Warrant Agent for payment to the Holders of the related Corporate
Units. The Treasury Portfolio will be substituted for the Pledged Senior
Notes and the appropriate Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) in the Treasury Portfolio will
be pledged to the Collateral Agent to secure the obligation of the Holders
of Corporate Units to pay the Settlement Price for the Common Stock under
the related Warrants on the Warrant Settlement Date.
Following the occurrence of a Successful Second Remarketing, the Holders
of Corporate Units and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in
the Treasury Portfolio as the Holder of Corporate Units and the Collateral
Agent had in respect of the related Senior Notes, subject to the Pledge
thereof as provided in the Pledge Agreement, and any reference herein or
in the Certificates to the Senior Notes shall be deemed to be a reference
to such Applicable Ownership Interests in the Treasury Portfolio and any
reference herein or in the Certificates to interest on the Senior Notes
shall be deemed to be a reference to corresponding distributions on such
Applicable Ownership Interests in the Treasury Portfolio. The Company may
cause to be made in any Corporate Units Certificates thereafter to be
issued such change in phraseology and form (but not in substance) as may
be appropriate to reflect the substitution of such Applicable Ownership
Interests in the Treasury Portfolio for Senior Notes.
If, in spite of using its reasonable efforts, the Remarketing Agent cannot
remarket the Pledged Senior Notes and Separate Senior Notes (if any) in a
Second Remarketing (other than to the Company) at a price not less than
100.50% of the sum of the Treasury Portfolio Purchase Price plus the
Separate Senior Notes Purchase Price or a condition precedent set forth in
the Remarketing Agreement is not fulfilled, the Second Remarketing will be
deemed to have failed (a "FAILED SECOND REMARKETING"). Upon a Failed
Second Remarketing, the Remarketing Agent shall return the Pledged Senior
Notes and the Separate Senior Notes (if any) subject to such Remarketing
to the Collateral Agent or the Custodial Agent, as the case may be.
(ii) Unless a Special Event Redemption has occurred prior to the
Third Remarketing Date, if a Failed Second Remarketing occurs, the
Remarketing Agent will use its reasonable efforts to remarket the Senior
Notes (a "THIRD REMARKETING") on the
43
Third Remarketing Date. By 11:00 a.m. (New York City time) on the Business
Day immediately preceding the Third Remarketing Date for such Third
Remarketing, the Warrant Agent shall notify the Remarketing Agent of the
aggregate principal amount of Pledged Senior Notes, and the Custodial
Agent shall notify the Remarketing Agent of the aggregate principal amount
of Separate Senior Notes (if any) that are to be remarketed pursuant to
Section 5.02(a)(ii). Concurrently, the Collateral Agent, pursuant to the
terms of the Pledge Agreement, and the Custodial Agent, pursuant to
Section 5.02(a)(ii), will present for Remarketing the Pledged Senior Notes
and the Separate Senior Notes (if any) that are to be remarketed to the
Remarketing Agent. Upon receipt of such notice from the Warrant Agent and
the Custodial Agent and such Pledged Senior Notes and Separate Senior
Notes from the Collateral Agent and the Custodial Agent, the Remarketing
Agent will, on the Third Remarketing Date, use its reasonable efforts to
remarket (based on the Reset Rate) such Pledged Senior Notes and Separate
Senior Notes on such date at a price of approximately (but not less than)
100.50% of the sum of the Treasury Portfolio Purchase Price plus the
Separate Senior Notes Purchase Price. If the Remarketing Agent is able to
remarket the Pledged Senior Notes and the Separate Senior Notes at a price
not less than 100.50% of the Treasury Portfolio Purchase Price plus the
Separate Senior Notes Purchase Price (a "SUCCESSFUL THIRD REMARKETING"),
the portion of the proceeds from such Successful Third Remarketing equal
to the Treasury Portfolio Purchase Price will be applied to purchase the
Treasury Portfolio. The Remarketing Agent shall deduct the Remarketing Fee
from any amount of such proceeds in excess of the sum of the Treasury
Portfolio Purchase Price plus the Separate Senior Notes Purchase Price.
None of the Company, the Warrant Agreement or any Holders of Corporate
Units or holders of Separate Senior Notes whose Senior Notes or Separate
Senior Notes are so remarketed will otherwise be responsible for the
payment of any Remarketing Fee in connection therewith. With respect to
Separate Senior Notes, the proceeds of the Third Remarketing in excess of
the Remarketing Fee attributable to the Separate Senior Notes will be
remitted to the Custodial Agent for payment to the holders of Separate
Senior Notes. With respect to Pledged Senior Notes, the proceeds of the
Third Remarketing in excess of the sum of the Treasury Portfolio Purchase
Price plus the Remarketing Fee with respect to such Pledged Senior Notes
will be remitted to the Warrant Agent for payment to the Holders of the
related Corporate Units. The Treasury Portfolio will be substituted for
the Pledged Senior Notes and the appropriate Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in
the Treasury Portfolio will be pledged to the Collateral Agent to secure
the obligation of the Holders of Corporate Units to pay the Settlement
Price for the Common Stock under the related Warrants on the Warrant
Settlement Date.
Following the occurrence of a Successful Third Remarketing, the Holders of
Corporate Units and the Collateral Agent shall have such security
interests (with respect to the Collateral Agent), rights and obligations
with respect to the Applicable Ownership Interests (as specified in clause
(i) of the definition of such term) in the Treasury Portfolio as the
Holder of Corporate Units and the Collateral Agent had in respect of the
Senior
44
Notes, subject to the Pledge thereof as provided in the Pledge Agreement,
and any reference herein or in the Certificates to the Senior Notes shall
be deemed to be a reference to such Applicable Ownership Interests in the
Treasury Portfolio and any reference herein or in the Certificates to
interest on the Senior Notes shall be deemed to be a reference to
corresponding distributions on such Applicable Ownership Interests in the
Treasury Portfolio. The Company may cause to be made in any Corporate
Units Certificates thereafter to be issued such change in phraseology and
form (but not in substance) as may be appropriate to reflect the
substitution of such Applicable Ownership Interests in the Treasury
Portfolio for Senior Notes.
If, in spite of using its reasonable efforts, the Remarketing Agent cannot
remarket the Pledged Senior Notes and the Separate Senior Notes (if any)
in a Third Remarketing (other than to the Company) at a price not less
than 100.50% of the sum of the Treasury Portfolio Purchase Price plus the
Separate Senior Notes Purchase Price or a condition precedent set forth in
the Remarketing Agreement is not fulfilled, the Third Remarketing will be
deemed to have failed (a "FAILED THIRD REMARKETING"). Upon a Failed Third
Remarketing, the Remarketing Agent shall return the Pledged Senior Notes
and the Separate Senior Notes (if any) subject to such Remarketing to the
Collateral Agent or the Custodial Agent, as the case may be.
(c) (i) Unless a Special Event Redemption, an Early Settlement or a
Cash Merger Early Settlement has occurred prior to the Final Remarketing
Date, if no Successful Remarketing has occurred prior to the Final
Remarketing Date, each Holder shall have the right to satisfy such
Holder's obligations under the Warrant on the Warrant Settlement Date in
cash by notifying the Warrant Agent by use of a notice in substantially
the form of Exhibit E hereto of its intention to pay in cash ("CASH
SETTLEMENT") prior to 5:00 p.m. (New York City time) on the fifth Business
Day immediately preceding the Warrant Settlement Date. Promptly following
5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Warrant Settlement Date, the Warrant Agent shall notify the
Collateral Agent and the Indenture Trustee of the receipt of such notices
from Holders intending to make a Cash Settlement.
(ii) A Holder of a Corporate Unit who has so notified the Warrant
Agent of its intention to effect a Cash Settlement shall pay the
Settlement Price to the Securities Intermediary for deposit in the
Collateral Account prior to 5:00 p.m. (New York City time) on the fourth
Business Day immediately preceding the Warrant Settlement Date, in lawful
money of the United States by certified or cashiers' check or wire
transfer, in each case in immediately available funds payable to or upon
the order of the Securities Intermediary. Any cash so received shall be
invested promptly by the Securities Intermediary in Permitted Investments
and paid to the Company on the Warrant Settlement Date in settlement of
the Warrants in accordance with the terms of this Agreement and the Pledge
Agreement. Any funds received by the Securities Intermediary in respect of
the investment earnings from such Permitted Investments in excess of the
45
Settlement Price for the shares of Common Stock to be purchased by such
Holder shall be distributed to the Warrant Agent when received for payment
to the Holder.
(iii) If a Holder of a Corporate Unit does not notify the Warrant
Agent of its intention to make a Cash Settlement in accordance with
paragraph 5.02(c)(i) above, or does notify the Warrant Agent in accordance
with paragraph 5.02(c)(i) above but fails to make such payment as required
by paragraph 5.02(c)(ii) above, such Holder shall be deemed to have
consented to the disposition of the Pledged Senior Notes pursuant to the
Final Remarketing as described in paragraph 5.02(d) below.
(iv) Promptly after 5:00 p.m. (New York City time) on the fourth
Business Day preceding the Warrant Settlement Date, the Collateral Agent,
based on cash payments received by the Securities Intermediary pursuant to
Section 5.02(c)(ii) hereof, shall promptly notify the Warrant Agent and
the Indenture Trustee of the aggregate principal amount of Senior Notes to
be tendered for purchase in the Final Remarketing in a notice pursuant to
the terms of the Pledge Agreement.
(d) (i) Unless a Special Event Redemption, an Early Settlement or a
Cash Merger Early Settlement has occurred prior to the Final Remarketing
Date, if a Failed Third Remarketing has occurred, the Senior Notes of such
Holders of Corporate Units who have not notified the Warrant Agent of
their intention to effect a Cash Settlement as provided in paragraph
5.02(c)(i) above, or who have so notified the Warrant Agent in accordance
with paragraph 5.02(c)(i) above but have failed to make such payment as
required by paragraph 5.02(c)(ii) above, and the Separate Senior Notes of
any holder who has elected for its Separate Senior Notes to be remarketed
pursuant to Section 5.02(a)(ii) will be sold by the Remarketing Agent (the
"FINAL REMARKETING") on the third Business Day immediately preceding the
Warrant Settlement Date (the "FINAL REMARKETING DATE"). In order to
facilitate the Final Remarketing, the Warrant Agent, based on the notices
specified in Section 5.02(c)(iv), and the Collateral Agent, based on the
notices specified in Section 5.02(a)(ii), shall notify the Remarketing
Agent, by 11:00 a.m. (New York City time) on the Business Day immediately
preceding the Final Remarketing Date, of the aggregate principal amount of
Pledged Senior Notes or aggregate principal amount of Separate Senior
Notes that are to be remarketed pursuant to Section 5.02(a)(ii), as the
case may be, to be remarketed. Concurrently, the Collateral Agent,
pursuant to the terms of the Pledge Agreement, and the Custodial Agent
shall cause such Pledged Senior Notes and Separate Senior Notes to be
presented to the Remarketing Agent for Remarketing.
(ii) Upon receipt of such notice from the Warrant Agent and the
Collateral Agent and the Pledged Senior Notes and Separate Senior Notes
(if any) from the Collateral Agent or Custodial Agent, as set forth in
clause (i) above, the Remarketing Agent shall, on the Final Remarketing
Date, use its reasonable efforts to remarket (based on the Reset Rate)
such Pledged Senior Notes and the Separate Senior Notes on such date at a
price equal to approximately 100.50% (or, if the Remarketing Agent is
unable to
46
remarket the Pledged Senior Notes and the Separate Senior Notes at such
price, at a price below 100.50%, but in no event less than 100%, net of
the Final Remarketing Fee) of the aggregate principal amount of such
Senior Notes and Separate Senior Notes being remarketed, as provided in
the Remarketing Agreement. If the Remarketing Agent is able to remarket
the Senior Notes and Separate Senior Notes at a price equal to or greater
than 100% (net of the Final Remarketing Fee) of the aggregate principal
amount of the Senior Notes and Separate Senior Notes (if any) (a
"SUCCESSFUL FINAL REMARKETING"), the Remarketing Agent will remit the
proceeds attributable to the Remarketing of the Pledged Senior Notes from
such Successful Final Remarketing to the Securities Intermediary. The
Remarketing Agent shall deduct as the remarketing fee (the "FINAL
REMARKETING FEE") an amount not exceeding 25 basis points (0.25%) of the
aggregate principal amount of the remarketed Pledged Senior Notes and
Separate Senior Notes (if any); provided that such fee shall be payable
out of, and only to the extent of, remarketing proceeds, if any, in excess
of such amount. With respect to Separate Senior Notes, any proceeds of the
Final Remarketing in excess of the Final Remarketing Fee attributable to
the Separate Senior Notes will be remitted to the Custodial Agent for
payment to the holders of Separate Senior Notes. The proceeds from the
Remarketing remitted to the Securities Intermediary shall be invested by
the Collateral Agent in Permitted Investments, in accordance with the
Pledge Agreement, and then applied to satisfy in full the obligations of
such Holders of Corporate Units to pay the Settlement Price for the shares
of Common Stock under the related Warrants on the Warrant Settlement Date.
Any proceeds in excess of those required to pay the Settlement Price and
the Final Remarketing Fee will be remitted to the Warrant Agent for
payment to the Holders of the related Corporate Units.
(iii) If, in spite of using its reasonable efforts, the Remarketing
Agent cannot remarket the Pledged Senior Notes and Separate Senior Notes
(if any) at a price not less than 100% (net of the Final Remarketing Fee)
of the aggregate principal amount of the Pledged Senior Notes and Separate
Senior Notes to be remarketed in the Final Remarketing (other than to the
Company) or a condition precedent set forth in the Remarketing Agreement
is not fulfilled, the remarketing will be deemed to have failed (a "FAILED
FINAL REMARKETING"). Upon a Failed Final Remarketing, the Remarketing
Agent shall return the remarketed Pledged Senior Notes and Separate Senior
Notes (if any) to the Collateral Agent or the Custodial Agent, as the case
may be. As of the Warrant Settlement Date, each Holder of any Pledged
Senior Notes that are subject to a Failed Final Remarketing, and any
Senior Notes that are represented by a Corporate Unit with respect to
which the Holder has notified the Warrant Agent of his intent to effect
Cash Settlement and failed to deliver the Settlement Price pursuant to
Section 5.02(c)(ii) shall be deemed to have exercised such Holder's Put
Right with respect to such Senior Notes and to have elected to pay the
Settlement Price for the shares of Common Stock to be issued under such
Warrants from a portion of the Proceeds of the Put Right equal to the
Settlement Price in full satisfaction of such Holders' obligations under
the Warrants.
(e) Intentionally Omitted.
47
(f) (i) Unless a Holder of a Treasury Unit or a Corporate Unit (if
the Treasury Portfolio has replaced the Senior Notes represented by such
Corporate AUnit) effects an Early Settlement of the Warrant represented by
such Unit through the early delivery of cash to the Warrant Agent in the
manner described in Section 5.07 or a Cash Merger Early Settlement of the
Warrant represented by such Unit through the early delivery of cash to the
Warrant Agent in the manner described in Section 5.04(b)(2), each Holder
of a Treasury Unit or a Corporate Unit who intends to effect Cash
Settlement of the Warrant represented by such Unit shall so notify the
Warrant Agent by use of a notice in substantially the form of Exhibit E
hereto prior to 5:00 p.m. (New York City time) on the fifth Business Day
immediately preceding the Warrant Settlement Date. Prior to 11:00 a.m.
(New York City time) on the next succeeding Business Day, the Warrant
Agent shall notify the Collateral Agent of the receipt of such notices
from such Holders intending to make a Cash Settlement. Holders of Treasury
Units may make Cash Settlements only in integral multiples of 40 Corporate
Units.
(ii) A Holder of a Treasury Unit or a Corporate Unit (if the
Treasury Portfolio has replaced the Senior Note represented by such
Corporate Unit) who has so notified the Warrant Agent of its intention to
make a Cash Settlement in accordance with paragraph 5.02(f)(i) above shall
pay the Settlement Price to the Securities Intermediary for deposit in the
Collateral Account prior to 5:00 p.m. (New York City time) on the fourth
Business Day immediately preceding the Warrant Settlement Date, in lawful
money of the United States by certified or cashiers' check or wire
transfer, in each case in immediately available funds payable to or upon
the order of the Securities Intermediary. Any cash received by the
Securities Intermediary shall be invested promptly by the Collateral Agent
in Permitted Investments and paid to the Company on the Warrant Settlement
Date in settlement of the Warrant in accordance with the terms of this
Agreement and the Pledge Agreement. Any funds received by the Securities
Intermediary in respect of the investment earnings from the investment in
such Permitted Investments in excess of the Settlement Price for the
shares of Common Stock to be purchased by such Holder shall be distributed
to the Warrant Agent when received for payment to the Holder.
(iii) If a Holder of a Treasury Unit or a Corporate Unit (if the
Treasury Portfolio has replaced the Senior Note represented by such
Corporate Unit) fails to notify the Warrant Agent of its intention to make
a Cash Settlement in accordance with Section 5.02(f)(i), or does notify
the Warrant Agent as provided in Section 5.02(f)(i) of its intention to
pay the Settlement Price in cash, but fails to make such payment as
required by Section 5.02(f)(ii), then upon the maturity of the Pledged
Treasury Securities or the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio held by the Securities Intermediary on or prior to the Business
Day immediately preceding the Warrant Settlement Date, the principal
amount of the Treasury Securities or the appropriate Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in
the Treasury Portfolio received by the Collateral Agent shall be invested
promptly in Permitted Investments. On the Warrant
48
Settlement Date, an amount equal to the Settlement Price shall be remitted
to the Company as payment of such Holder's obligation to pay such
Settlement Price under the related Warrants without receiving any
instructions from the Holder. In the event the sum of the Proceeds from
related Pledged Treasury Securities or the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such
term) in the Treasury Portfolio and the Proceeds from such Permitted
Investments is in excess of the aggregate Settlement Price, the Collateral
Agent shall cause the Securities Intermediary to distribute such excess to
the Warrant Agent for the benefit of the Holder of the related Treasury
Units or Corporate Units when received.
(g) Any distribution to Holders of any payments described above shall be
payable at the office of the Warrant Agent in New York City maintained for that
purpose or, at the option of the Holder, by check mailed to the address of the
Person entitled thereto at such address as it appears on the Security Register.
(h) Upon Cash Settlement of any Warrant:
(i) the Collateral Agent will in accordance with the terms of the
Pledge Agreement cause the Pledged Senior Notes, the appropriate
Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio or the Pledged Treasury
Securities, as the case may be, represented by the relevant Units to be
released from the Pledge, free and clear of any security interest of the
Company, and transferred to the Warrant Agent for delivery to the Holder
thereof or its designee as soon as practicable; and
(ii) subject to the receipt thereof, the Warrant Agent shall, by
book-entry transfer or other appropriate procedures, in accordance with
written instructions provided by the Holder thereof, transfer such Senior
Notes, or the appropriate Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) in the Treasury Portfolio or
such Treasury Securities, as the case may be (or, if no such instructions
are given to the Warrant Agent by the Holder, the Warrant Agent shall hold
such Senior Notes or the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio or such Treasury Securities, as the case may be, and any
interest payment thereon, in the name of the Warrant Agent or its nominee
in trust for the benefit of such Holder until the expiration of the time
period specified in the abandoned property laws of the relevant state
where such property is held).
(i) The obligations of the Holders to pay the Settlement Price are
non-recourse obligations and, except to the extent satisfied by Early
Settlement, Cash Merger Early Settlement or Cash Settlement, are payable solely
out of the proceeds of any Collateral pledged to secure the obligations of the
Holders, and in no event will Holders be liable for any deficiency between the
proceeds of the disposition of Collateral and the Settlement Price.
49
(j) The Company shall not be obligated to issue any shares of Common Stock
in respect of a Warrant or deliver any certificates thereof to the Holder of the
related Units unless the Company shall have received payment of the Settlement
Price for the Common Stock to be purchased thereunder in the manner herein set
forth.
SECTION 5.03. Issuance of Shares of Common Stock. Unless a Termination
Event, an Early Settlement or a Cash Merger Early Settlement shall have
occurred, subject to Section 5.04(b), on the Warrant Settlement Date upon
receipt of the aggregate Settlement Price payable on all Outstanding Units, the
Company shall issue and deposit with the Warrant Agent, for the benefit of the
Holders of the Outstanding Units, one or more certificates representing newly
issued shares of Common Stock registered in the name of the Warrant Agent (or
its nominee) as custodian for the Holders (such certificates for shares of
Common Stock, together with any dividends or distributions for which a record
date and payment date for such dividend or distribution has occurred after the
Warrant Settlement Date, being hereinafter referred to as the "WARRANT
SETTLEMENT FUND") to which the Holders are entitled hereunder.
Subject to the foregoing, upon surrender of a Certificate to the Warrant
Agent on or after the Warrant Settlement Date, Early Settlement Date or Cash
Merger Early Settlement Date, as the case may be, together with settlement
instructions thereon duly completed and executed, the Holder of such Certificate
shall be entitled to receive forthwith in exchange therefor a certificate
representing that number of newly issued whole shares of Common Stock which such
Holder is entitled to receive pursuant to the provisions of this Article Five
(after taking into account all Units then held by such Holder), together with
cash in lieu of fractional shares as provided in Section 5.09 and any dividends
or distributions with respect to such shares constituting part of the Warrant
Settlement Fund, but without any interest thereon, and the Certificate so
surrendered shall forthwith be cancelled. Such shares shall be registered in the
name of the Holder or the Holder's designee as specified in the settlement
instructions provided by the Holder to the Warrant Agent. If any shares of
Common Stock issued in respect of a Warrant are to be registered to a Person
other than the Person in whose name the Certificate evidencing such Warrant is
registered (but excluding any Depositary or nominee thereof), no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Certificate evidencing such
Warrant or has established to the satisfaction of the Company that such tax
either has been paid or is not payable.
SECTION 5.04. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other distribution
on Common Stock in Common Stock, the Settlement Rate in effect at the close of
business on the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be increased by dividing such
Settlement Rate by a fraction of which:
50
(i) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination; and
(ii) the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other
distribution,
such increase to become effective immediately at the opening of business
on the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company agrees that it shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights, warrants or options, other
than pursuant to any dividend reinvestment plans or share purchase plans, to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Units upon settlement of the Warrants represented by such Units)
entitling them, for a period expiring within 45 days after the record date for
the determination of shareholders entitled to receive such rights, warrants or
options, to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Price per share of Common Stock on the date
of announcement of such issuance, the Settlement Rate in effect at the close of
business on the date of such announcement shall be increased by dividing such
Settlement Rate by a fraction of which:
(i) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date of such announcement plus
the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such Current Market Price; and
(ii) the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date of such announcement plus
the number of shares of Common Stock so offered for subscription or
purchase,
such increase to become effective immediately after the opening of
business on the Business Day following the date of such announcement. The
Company agrees that it shall notify the Warrant Agent if any issuance of such
rights, warrants or options is cancelled or not completed following the
announcement thereof and the Settlement Rate shall thereupon be readjusted to
the Settlement Rate in effect immediately prior to the date of such
announcement. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company agrees that it shall not issue any such rights, warrants or options in
respect of shares of Common Stock held in the treasury of the Company.
51
(3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the close of business on the day preceding the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the close of business on the day preceding the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately at the opening of
business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
shares of capital stock, securities, cash and property but excluding any rights,
warrants or options referred to in paragraph (2) of this Section 5.04(a), any
dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in paragraph (1) of this Section 5.04(a)), the
Settlement Rate in effect at the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution shall be
adjusted by dividing such rate by a fraction of which:
(i) the numerator shall be the Current Market Price per share of
Common Stock on the date fixed for such determination less the then fair
market value (as reasonably determined by the Board of Directors, whose
determination shall be conclusive and the basis for which shall be
described in a Board Resolution) of the portion of the assets or evidences
of indebtedness so distributed applicable to one share of Common Stock;
and
(ii) the denominator shall be such Current Market Price per share of
Common Stock,
such adjustment to become effective at the opening of business on the day
following the date fixed for the determination of shareholders entitled to
receive such distribution. In any case in which this paragraph (4) is
applicable, paragraph (2) of this Section 5.04(a) shall not be applicable. In
the event that such dividend or distribution is not so paid or made, the
Settlement Rate shall again be adjusted to be the Settlement Rate which would
then be in effect if such dividend or distribution had not been declared.
(5) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed in a
Reorganization Event to which Section 5.04(b) applies, as part of a distribution
referred to in paragraph (4) of this Section or as a regular quarterly cash
distribution) in an aggregate amount that, combined together with (I) the
aggregate amount of any other distributions (other than regular quarterly cash
distributions) to all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such distribution (the
"TRAILING 12 MONTH PERIOD") and in respect of which no adjustment pursuant to
this paragraph (5) or paragraph (6) of this Section has been made and (II) the
aggregate amount of any cash plus the fair market value (as determined by the
Board of
52
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration (other than consideration payable in respect of any
odd-lot tender offer) payable in respect of any tender or exchange offer by the
Company or any of its subsidiaries and calculated as of the expiration of such
tender or exchange offer for all or any portion of the Common Stock concluded
within the Trailing 12 Month Period and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this Section has been made,
exceeds 10% of the product of the Current Market Price per share of the Common
Stock on the date for the determination of holders of shares of Common Stock
entitled to receive such distribution multiplied by the number of shares of
Common Stock outstanding on such date, then, in such case, the Settlement Rate
in effect at the close of business on such record date shall be adjusted by
dividing such rate by a fraction of which:
(i) the numerator shall be the Current Market Price of Common Stock
on such record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock; and
(ii) the denominator shall be the Current Market Price of Common
Stock,
such increase to be effective at the opening of business on the day
following the record date; provided, however, that in the event the portion of
cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price per share of Common Stock on the record
date, in lieu of the foregoing adjustment, adequate provision shall be made so
that each holder of a Unit shall have the right to receive upon settlement of
the Units the amount of cash such Holder would have received had such Holder
settled each Unit on the record date. In the event that such dividend or
distribution is not so paid or made, the Settlement Rate shall again be adjusted
to be the Settlement Rate which would then be in effect if such dividend or
distribution had not been declared.
(6) If the Company or any subsidiary of the Company shall make a tender or
exchange offer (other than any odd-lot tender offer) for all or any portion of
the Common Stock and upon expiration of such tender or exchange offer (as
amended upon the expiration thereof) the Company or its subsidiary shall be
required to pay to shareholders based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of Purchased Shares (as
herein defined) any consideration, then if the sum of (I) the fair market value
of the aggregate consideration to be paid in such tender offer or exchange offer
(as reasonably determined by the Board of Directors, whose determination shall
be conclusive and the basis for which shall be described in a Board Resolution)
plus (II) the aggregate of the cash plus the fair market value (as reasonably
determined by the Board of Directors, whose determination shall be conclusive
and the basis for which shall be described in a Board Resolution), as of the
expiration of such tender or exchange offer, of consideration payable in respect
of any other tender or exchange offer (other than consideration payable in
respect of any odd-lot tender offer), by the Company or any subsidiary of the
Company for all or any portion of Common Stock expiring within the 12 months
preceding the expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to this paragraph (6) has been made, plus (III) the
aggregate amount of any
53
distributions (other than regular quarterly cash distributions) to all holders
of Common Stock made exclusively in cash within the 12 months preceding the
expiration of such tender or exchange offer and in respect of which no
adjustment pursuant to paragraph (5) has been made, exceeds 10% of the product
of the Current Market Price per share of Common Stock as of the last time (the
"EXPIRATION TIME") tenders could have been made pursuant to such tender or
exchange offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration Time, then, the
Settlement Rate in effect at the close of business on the day of the Expiration
Time shall be adjusted by dividing by a fraction:
(i) the numerator of which shall be equal to (A) the product of (I)
the Current Market Price per share of Common Stock on the date of the
Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the date of the Expiration Time less
(B) the amount of cash plus the fair market value (determined as
aforesaid) of the aggregate consideration payable to shareholders based on
the transactions described in clauses (I), (II) and (III) above (assuming
in the case of clause (I) the acceptance, up to any maximum specified in
the terms of the tender or exchange offer, of Purchased Shares); and
(ii) the denominator of which shall be equal to the product of (A)
the Current Market Price per share of Common Stock as of the Expiration
Time and (B) the number of shares of Common Stock outstanding (including
any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "PURCHASED SHARES"),
such adjustment to become effective at the opening of business on the date
following the date of the Expiration Time.
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.04(b) applies) shall be deemed to
involve:
(i) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of
shareholders entitled to receive such distribution" and the "date fixed
for such determination" within the meaning of paragraph (4) of this
Section); and
(ii) a subdivision, split or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification
shall be deemed to be "the day upon which such subdivision or split
becomes effective" or "the day upon which such combination becomes
effective",
54
as the case may be, and "the day upon which such subdivision, split or
combination becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "CURRENT MARKET PRICE" per share of Common Stock on any date of
determination means the average of the daily Closing Prices on each of the
twenty (20) consecutive Trading Days ending on the earlier of such date of
determination and the day before the "ex date" with respect to the issuance or
distribution requiring the computation. For purposes of this paragraph, the term
"ex date," when used with respect to any issuance or distribution, shall mean
the first date on which Common Stock trades regular way on such exchange or in
such market without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
(10) The Company may, but shall not be required to, make such increases in
the Settlement Rate, in addition to those required by this Section, as the Board
of Directors considers to be advisable in order to avoid or diminish any income
tax to any holders of shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to purchase or subscribe
for stock or from any event treated as such for income tax purposes or for any
other reason.
(11) The Company has entered into a Rights Agreement dated as of March 12,
1999 (the "RIGHTS AGREEMENT") with First Chicago Trust Company of New York
pursuant to which share purchase rights (the "RIGHTS") have been, and may in the
future be, issued in respect of shares of Common Stock. Each share of Common
Stock issued upon settlement of any Warrant pursuant to this Article 5 shall be
entitled to receive the appropriate number of Rights, if any, and the
certificates representing the Common Stock issued upon such settlement shall
bear such legends, if any, in each case as provided by and subject to the terms
of the Rights Agreement as in effect at the time of such settlement. If after
the date of this Agreement the Rights separate from the Common Stock in
accordance with the provisions of the Rights Agreement so that a Holder would
not be entitled to receive any Rights in respect of the Common Stock issuable
upon settlement of such Warrant, the Settlement Rate will be adjusted as
provided in this Section 5.04 on the separation date, subject to readjustment in
the event of the expiration, termination or redemption of the Rights. In lieu of
any such adjustment, the Company may amend the Rights Agreement to provide that
upon settlement Holders will receive, in addition to the Common Stock issuable
upon such settlement, the Rights that would have attached to such shares of
Common Stock if the Rights had not become separated from the Common Stock
pursuant to the provisions of the Rights Agreement. If the Company hereafter
adopts any stockholder rights plan similar to the Rights Agreement, a Holder
shall be entitled to receive upon settlement of its
55
Warrants in addition to the shares of Common Stock issuable upon settlement the
related rights for the Common Stock whether or not the rights under the future
stockholder rights plan have separated from the Common Stock at the time of
settlement but otherwise subject to the generally applicable terms of such plan
and no additional adjustment to the Settlement Rate shall be made for the future
stockholder rights plan under this Section 5.04.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
(1) In the event of:
(i) any consolidation or merger of the Company with or into another
Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the shares of Common Stock outstanding
immediately prior to the merger or consolidation are not exchanged for
cash, securities or other property of the Company or another corporation);
(ii) any sale, transfer, lease or conveyance to another Person of
the property of the Company as an entirety or substantially as an
entirety;
(iii) any statutory share exchange of the Company with another
Person (other than in connection with a merger or acquisition); or
(iv) any liquidation, dissolution or termination of the Company
other than as a result of or after the occurrence of a Termination Event
(any event described in clauses (i), (ii), (iii) and (iv), a
"REORGANIZATION EVENT"),
each Warrant shall become, without the consent of the Holder of the Unit
representing such Warrant, an agreement to purchase only the kind of securities,
cash and other property receivable upon consummation of such Reorganization
Event by a holder of Common Stock immediately prior to the closing date of such
Reorganization Event.
The amount of such securities, cash and other property receivable upon
settlement of each such Warrant after the consummation of the Reorganization
Event shall be based on the value as of such settlement date of the hypothetical
amount of securities, cash and other property that would have been received upon
consummation of the Reorganization Event in exchange for the maximum number of
Common Stock deliverable under a Warrant immediately prior to the closing date
of the Reorganization Event (collectively, the "EXCHANGE PROPERTY"). In
determining the kind and amount of the Exchange Property pursuant to the
foregoing, it will be assumed that such holder of Common Stock is not a Person
with which the Company consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer was made, as the case
may be (any such Person, a "CONSTITUENT PERSON"), or an Affiliate of a
Constituent Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of the Company and
non-affiliates and such Holder failed to exercise its rights of election, if
any, as to the kind or amount of securities,
56
cash and other property receivable upon such Reorganization Event (provided that
if the kind or amount of securities, cash and other property receivable upon
such Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares).
The actual amount of Exchange Property receivable upon settlement of each
Warrant shall be (1) in the case of settlement on the Warrant Settlement Date or
pursuant to Section 5.04(b)(2), a variable amount based upon the applicable
Settlement Rate and the Adjusted Applicable Market Value of the Exchange
Property at such time and (2) in the case of any Early Settlement, determined in
accordance with the procedures described under Section 5.07 using the Settlement
Rate that results in the minimum amount of Exchange Property being delivered
under such Warrant.
For purposes of this Section 5.04(b)(1) and Section 5.04(b)(2), the term
"Adjusted Applicable Market Value" shall be deemed to refer to the "Adjusted
Applicable Market Value" of the Exchange Property, and such value shall be
determined (A) with respect to any publicly traded securities that comprise all
or part of the Exchange Property, based on the Closing Price of such securities,
(B) in the case of any cash that comprises all or part of the Exchange Property,
based on the amount of such cash and (C) in the case of any other property that
comprises all or part of the Exchange Property, based on the value of such
property, as determined by a nationally recognized independent investment
banking firm retained by the Company for this purpose; provided that prior to
the separation of the Rights or any similar stockholder rights from the Common
Stock, such Rights or similar stockholder rights shall be deemed to have no
value. The term "Closing Price" shall be deemed to refer to the closing sale
price, last quoted bid price or mid-point of the last bid and ask prices, as the
case may be, of any publicly traded securities that comprise all or part of the
Exchange Property. The term "Trading Day" shall be deemed to refer to any
publicly traded securities that comprise all or part of the Exchange Property.
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation, dissolution or termination of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Warrant Agent an agreement supplemental hereto
providing that each Holder of an Outstanding Unit shall have the rights provided
by this Section 5.04(b). Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 5.04. The above provisions of this
Section 5.04 shall similarly apply to successive Reorganization Events.
(2) In the event of a consolidation or merger of the Company with or
into another Person or any merger of another Person into the Company (other than
a merger that does not
57
result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), in each case in which 30% or more of the
total consideration paid to the Company's shareholders consists of cash or cash
equivalents (a "CASH MERGER"), a Holder of a Unit may settle ("CASH MERGER EARLY
SETTLEMENT") the Warrant represented by such Unit, upon the conditions set forth
below, at the Settlement Rate in effect immediately prior to the closing of the
Cash Merger; provided that (i) the Cash Merger Early Settlement Date (as defined
below) is no later than the fifth Business Day immediately preceding the Warrant
Settlement Date and (ii) no Cash Merger Early Settlement will be permitted
pursuant to this Section 5.04(b)(2) unless, at the time such Cash Merger Early
Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Cash Merger Early Settlement, if such a Registration Statement is required (in
the view of counsel, which need not be in the form of a written opinion, for the
Company) under the Securities Act. If such a Registration Statement is so
required, the Company covenants and agrees to use commercially reasonable
efforts to (A) have in effect a Registration Statement covering any securities
to be delivered in respect of the Warrants being settled and (B) provide a
Prospectus in connection therewith, in each case in a form that may be used in
connection with such Cash Merger Early Settlement. If a Holder effects a Cash
Merger Early Settlement of some or all of its Warrants, such Holder shall be
entitled to receive, on the Cash Merger Early Settlement Date, the aggregate
amount of any Deferred Warrant Fees and any Accrued and Unpaid Warrant Fees
since the immediately preceding Payment Date with respect to such Warrants. The
Company shall pay such amount as a credit against the amount otherwise payable
by the Holders to effect such Cash Merger Early Settlement.
Within five Business Days of the completion of a Cash Merger, the Company
shall provide written notice to Holders of Units of such completion of a Cash
Merger, which shall specify the deadline for submitting the notice to settle
early in cash pursuant to this Section 5.04(b)(2), the date on which such Cash
Merger Early Settlement shall occur (which date shall be 10 days after the date
of such written notice by the Company, but which shall in no event be later than
the fifth Business Day immediately preceding the Warrant Settlement Date) (the
"CASH MERGER EARLY SETTLEMENT DATE"), the applicable Settlement Rate and the
amount (per share of Common Stock) of cash, securities and other consideration
receivable by the Holder upon settlement, including the amount of Warrant Fees
receivable upon settlement.
Corporate Units Holders and Treasury Units Holders may only effect Cash
Merger Early Settlement pursuant to this Section 5.04(b)(2) in integral
multiples of 40 Corporate Units or Treasury Units, as the case may be. If the
Treasury Portfolio has replaced the Senior Notes represented by the Corporate
Units, Corporate Units Holders may only effect Cash Merger Early Settlement
pursuant to this Section 5.04(b)(2) in multiples of 4,000 Corporate Units. Other
than the provisions relating to timing of notice and settlement, which shall be
as set forth above, the provisions of Section 5.01(a) shall apply with respect
to a Cash Merger Early Settlement pursuant to this Section 5.04(b)(2).
In order to exercise the right to effect Cash Merger Early Settlement with
respect to any Warrants, the Holder of the Certificate evidencing Units shall
deliver, no later than 5:00 p.m.
58
(New York City time) on the third Business Day immediately preceding the Cash
Merger Early Settlement Date, such Certificate to the Warrant Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early on the reverse thereof duly completed
and accompanied by payment (payable to the Company in immediately available
funds) in an amount equal to the product of (A) the Stated Amount times (B) the
number of Warrants with respect to which the Holder has elected to effect Cash
Merger Early Settlement, less the amount of any Warrant Fees payable to the
Holder on the Cash Merger Early Settlement Date.
If a Holder properly effects an effective Cash Merger Early Settlement in
accordance with the provisions of this Section 5.04(b)(2), the Company will
deliver (or will cause the Collateral Agent to deliver) to the Holder on the
Cash Merger Early Settlement Date:
(i) the kind and amount of securities, cash and other property
receivable upon such Cash Merger by a Holder of the number of shares of
Common Stock issuable on account of each Warrant if the Warrant Settlement
Date had occurred immediately prior to such Cash Merger (based on the
Settlement Rate in effect at such time), assuming such Holder of Common
Stock is not a Constituent Person or an Affiliate of a Constituent Person
to the extent such Cash Merger provides for different treatment of Common
Stock held by Affiliates of the Company and non-affiliates and such Holder
failed to exercise its rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such Cash
Merger (provided that if the kind or amount of securities, cash and other
property receivable upon such Cash Merger is not the same for each non-
electing share, then for the purpose of this Section 5.04(b)(2), the kind
and amount of securities, cash and other property receivable upon such
Cash Merger by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
For the avoidance of doubt, for the purposes of determining the Adjusted
Applicable Market Value (in connection with determining the appropriate
Settlement Rate to be applied in the foregoing sentence), the date of the
closing of the Cash Merger shall be deemed to be the Warrant Settlement
Date;
(ii) the Senior Notes, the Applicable Ownership Interests in the
Treasury Portfolio or Treasury Securities, as the case may be, related to
the Warrants with respect to which the Holder is effecting a Cash Merger
Early Settlement; and
(iii) if so required under the Securities Act, a Prospectus as
contemplated by this Section 5.04(b)(2).
(c) All calculations and determinations pursuant to this Section 5.04
shall be made by the Company or its agent and the Warrant Agent shall have no
responsibility with respect thereto.
(d) The Corporate Units or the Treasury Units of the Holders who do not
elect Cash Merger Early Settlement in accordance with the foregoing will
continue to remain outstanding and be subject to settlement on the Warrant
Settlement Date in accordance with the terms hereof.
59
SECTION 5.05. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall within 10 Business Days following the occurrence of an event that
requires an adjustment to the Settlement Rate pursuant to Section 5.04 (or if
the Company is not aware of such occurrence, as soon as practicable after
becoming so aware):
(i) compute the adjusted Settlement Rate in accordance with Section
5.04 and prepare and transmit to the Warrant Agent an Officers'
Certificate setting forth the Settlement Rate, the method of calculation
thereof in reasonable detail, and the facts requiring such adjustment and
upon which such adjustment is based; and
(ii) provide a written notice to the Holders of the Units of the
occurrence of such event and a statement in reasonable detail setting
forth the method by which the adjustment to the Settlement Rate was
determined and setting forth the adjusted Settlement Rate.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any Holder of Units to determine whether any facts exist which
may require any adjustment of the Settlement Rate, or with respect to the nature
or extent or calculation of any such adjustment when made, or with respect to
the method employed in making the same. The Warrant Agent shall be fully
authorized and protected in relying on any Officers' Certificate delivered
pursuant to Section 5.05(a)(i) and any adjustment contained therein and the
Warrant Agent shall not be deemed to have knowledge of any adjustment unless and
until it has received such certificate. The Warrant Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at the time
be issued or delivered with respect to any Warrant; and the Warrant Agent makes
no representation with respect thereto. The Warrant Agent shall not be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock pursuant to a Warrant or to comply with any of the
duties, responsibilities or covenants of the Company contained in this Article.
SECTION 5.06. Termination Event; Notice.
The Warrants and all obligations and rights of the Company and the Holders
thereunder, including, without limitation, the rights of the Holders to receive
and the obligation of the Company to pay any Warrant Fees (including any accrued
and unpaid Warrant Fees and any Deferred Warrant Fees), if the Company shall
have such obligation, and the rights and obligations of Holders to purchase
Common Stock, shall immediately and automatically terminate, without the
necessity of any notice or action by any Holder, the Warrant Agent or the
Company, if, prior to or on the Warrant Settlement Date, a Termination Event
shall have occurred.
60
Upon and after the occurrence of a Termination Event, the Units shall
thereafter represent solely the right to receive the Senior Notes, the Treasury
Securities or the appropriate Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, represented by such Units, in accordance with the
provisions of Section 5.04 of the Pledge Agreement. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Warrant Agent, the
Collateral Agent and the Holders, at their addresses as they appear in the
Security Register.
SECTION 5.07. Early Settlement. (a) Subject to and upon compliance with
the provisions of this Section 5.07, at the option of the Holder thereof,
Warrants represented by Units may be settled early ("EARLY SETTLEMENT") at any
time prior to 5:00 p.m. (New York City time) on the fifth Business Day
immediately preceding the Warrant Settlement Date; provided that no Early
Settlement will be permitted pursuant to this Section 5.07 unless, at the time
such Early Settlement is effected, there is an effective Registration Statement
with respect to any securities to be issued and delivered in connection with
such Early Settlement, if such a Registration Statement is required (in the view
of counsel, which need not be in the form of a written opinion, for the Company)
under the Securities Act. If such a Registration Statement is so required, the
Company covenants and agrees to use commercially reasonable efforts to (A) have
in effect a Registration Statement covering any securities to be delivered in
respect of the Warrants being settled and (B) provide a Prospectus in connection
therewith, in each case in a form that may be used in connection with such Early
Settlement.
(b) In order to exercise the right to effect Early Settlement with respect
to any Warrants, the Holder of the Certificate evidencing Units shall deliver,
at any time prior to 5:00 a.m. (New York City time) on the fifth Business Day
immediately preceding the Warrant Settlement Date, such Certificate to the
Warrant Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment (payable to the Company in
immediately available funds) in an amount (the "EARLY SETTLEMENT AMOUNT") equal
to:
(i) the sum of (A) the product of (I) the Settlement Price, times
(II) the number of Warrants with respect to which the Holder has elected
to effect Early Settlement, plus (B) if such delivery is made with respect
to any Warrants during the period from the close of business on any Record
Date next preceding any Payment Date to the opening of business on such
Payment Date, an amount equal to the Warrant Fees payable on such Payment
Date with respect to such Warrants, less
(ii) the amount of any Deferred Warrant Fees payable to such Holder
as a result of such Early Settlement.
Except as provided in the immediately preceding sentence, no payment shall
be made upon Early Settlement of any Warrant on account of any Warrant Fees
accrued on such Warrant since the immediately preceding Payment Date or on
account of any dividends on the Common Stock issued upon such Early Settlement.
However, a Holder effecting an Early Settlement of
61
some or all of its Warrants shall be entitled to receive, on the date it
receives the shares of Common Stock referred to in Section 5.07(d), the amount
of any Deferred Warrant Fees with respect to such Warrants, calculated as of the
immediately preceding Payment Date. The amount of such Deferred Warrant Fees
shall be credited against the amount otherwise payable by the Holder to effect
such Early Settlement as set forth in clause (ii) above. If the foregoing
requirements are first satisfied with respect to Warrants represented by any
Units at or prior to 5:00 p.m. (New York City time) on a Business Day, such day
shall be the "EARLY SETTLEMENT DATE" with respect to such Units and if such
requirements are first satisfied after 5:00 p.m. (New York City time) on a
Business Day or on a day that is not a Business Day, the "EARLY SETTLEMENT DATE"
with respect to such Units shall be the next succeeding Business Day.
Upon the receipt of such Certificate and Early Settlement Amount from the
Holder, the Warrant Agent shall pay to the Company such Early Settlement Amount,
the receipt of which payment the Company shall confirm in writing. The Warrant
Agent shall then, in accordance with Section 5.06 of the Pledge Agreement,
notify the Collateral Agent that (A) such Holder has elected to effect an Early
Settlement, which notice shall set forth the number of such Warrants as to which
such Holder has elected to effect Early Settlement, (B) the Warrant Agent has
received from such Holder, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amount and (C) all conditions to such
Early Settlement have been satisfied.
Holders of Treasury Units may only effect Early Settlement pursuant to
this Section 5.07 in integral multiples of 40 Treasury Units. If the Treasury
Portfolio has replaced the Senior Notes represented by the Corporate Units,
Corporate Units Holders may only effect Early Settlement pursuant to this
Section 5.07 in integral multiples of 4,000 Corporate Units.
Upon Early Settlement of the Warrants, the rights of the Holders to
receive and the obligation of the Company to pay any accrued and unpaid Warrant
Fees since the immediately preceding Payment Date and any future Warrant Fees
with respect to such Warrants shall immediately and automatically terminate.
(c) Upon Early Settlement of Warrants by a Holder of the related Units,
the Company shall issue, and the Holder shall be entitled to receive, 0.3618
shares of Common Stock on account of each Warrant as to which Early Settlement
is effected (the "EARLY SETTLEMENT RATE"). The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the Settlement Rate is
adjusted pursuant to Section 5.04.
(d) No later than the third Business Day after the applicable Early
Settlement Date, the Company shall cause:
(i) the shares of Common Stock issuable upon Early Settlement of
Warrants to be issued and delivered, together with payment in lieu of any
fraction of a share, as provided in Section 5.09; and
62
(ii) the related Senior Notes or the Applicable Ownership Interests
in the Treasury Portfolio, as applicable, in the case of Corporate Units,
or the related Treasury Securities, in the case of Treasury Units, to be
released from the Pledge by the Collateral Agent and transferred, in each
case, to the Warrant Agent for delivery to the Holder thereof or its
designee.
(e) Upon Early Settlement of any Warrants, and subject to receipt of
shares of Common Stock from the Company and the Senior Notes, the Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as the
case may be, from the Securities Intermediary, as applicable, the Warrant Agent
shall, in accordance with the instructions provided by the Holder thereof on the
applicable form of Election to Settle Early on the reverse of the Certificate
evidencing the related Units:
(i) transfer to the Holder the Senior Notes, the Applicable
Ownership Interests in the Treasury Portfolio or Treasury Securities, as
the case may be, represented by such Units,
(ii) deliver to the Holder a certificate or certificates for the
full number of shares of Common Stock issuable upon such Early Settlement,
together with payment in lieu of any fraction of a share, as provided in
Section 5.09, and
(iii) if so required under the Securities Act, deliver a Prospectus
for the shares of Common Stock issuable upon such Early Settlement as
contemplated by Section 5.07(a).
(f) In the event that Early Settlement is effected with respect to
Warrants represented by less than all the Units evidenced by a Certificate, upon
such Early Settlement the Company shall execute and the Warrant Agent shall
execute on behalf of the Holder, authenticate and deliver to the Holder thereof,
at the expense of the Company, a Certificate evidencing the Units as to which
Early Settlement was not effected.
(g) A Holder of a Unit who effects Early Settlement may elect to have the
Senior Notes no longer represented by a Corporate Unit remarketed in accordance
with the provisions of Section 5.02.
SECTION 5.08. Intentionally Omitted.
SECTION 5.09. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Warrant Settlement
Date, or upon Early Settlement or Cash Merger Early Settlement of any Warrants.
If Certificates evidencing more than one Warrant shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Warrants evidenced by the Certificates so surrendered.
Instead
63
of any fractional share of Common Stock which would otherwise be deliverable
upon settlement of any Warrants on the Warrant Settlement Date, or upon Early
Settlement or Cash Merger Early Settlement, the Company, through the Warrant
Agent, shall make a cash payment in respect of such fractional interest in an
amount equal to the percentage of such fractional share times the Applicable
Market Value calculated as if the date of such settlement were the Warrant
Settlement Date. The Company shall provide the Warrant Agent from time to time
with sufficient funds to permit the Warrant Agent to make all cash payments
required by this Section 5.09 in a timely manner.
SECTION 5.10. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Warrants; provided, however, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Unit or any issuance of a share of
Common Stock in a name other than that of the registered Holder of a Certificate
surrendered in respect of the Units evidenced thereby, other than in the name of
the Warrant Agent, as custodian for such Holder, and the Company shall not be
required to issue or deliver such share certificates or Certificates unless or
until the Person or Persons requesting the transfer or issuance thereof shall
have paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
SECTION 5.11. Warrant Fees.
(a) Subject to Section 5.11(d) and Section 5.12, the Company shall pay, on
each Payment Date, the Warrant Fees payable in respect of each Warrant to the
Person in whose name a Certificate is registered at the close of business on the
Record Date relating to such Payment Date. The Warrant Fees will be payable at
the office of the Warrant Agent in the Borough of Manhattan, New York City
maintained for that purpose. If the book-entry system for the Units has been
terminated, the Warrant Fees will be payable, at the option of the Company, by
check mailed to the address of the Person entitled thereto at such Person's
address as it appears on the Security Register, or by wire transfer to the
account designated by such Person by a prior written notice to the Warrant
Agent. If any date on which Warrant Fees are to be made is not a Business Day,
then payment of the Warrant Fees payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest in respect of
any such delay); provided that if such Business Day is in the next succeeding
calendar year, then payment of the Warrant Fees will be made on the Business Day
immediately preceding such Business Day. Warrant Fees payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. The
Warrant Fees will accrue from December 2, 2002.
(b) Upon the occurrence of a Termination Event, the Company's obligation
to pay future Warrant Fees (including any accrued Warrant Fees and any Deferred
Warrant Fees) shall cease.
64
(c) Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the recreation of Corporate Units) any other
Certificate shall carry the right to accrued and unpaid Warrant Fees and
Deferred Warrant Fees, which right was carried by the Warrants represented by
such other Certificates.
(d) In the case of any Unit with respect to which Early Settlement or Cash
Merger Early Settlement of the Warrant represented by such Unit is effected on a
date that is after any Record Date and prior to or on the next succeeding
Payment Date, Warrant Fees otherwise payable on such Payment Date shall be
payable on such Payment Date notwithstanding such Early Settlement or Cash
Merger Early Settlement, and such Warrant Fees shall be paid to the Person in
whose name the Certificate evidencing such Unit is registered at the close of
business on such Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Unit with respect to which
Early Settlement or Cash Merger Early Settlement of the Warrant represented by
such Unit is effected, Warrant Fees that would otherwise be payable after the
Early Settlement or Cash Merger Early Settlement Date with respect to such
Warrant shall not be payable.
(e) The Company's obligations with respect to Warrant Fees, if any, will
be subordinated and junior in right of payment to the Company's obligations
under any Indebtedness.
(f) In the event (x) of any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, or (y) subject to the provisions of Section
5.11(h) below, that (i) a default shall have occurred and be continuing with
respect to the payment of principal, interest or any other monetary amounts due
and payable on any Indebtedness and such default shall have continued beyond the
period of grace, if any, specified in the instrument evidencing such
Indebtedness (and the Warrant Agent shall have received written notice thereof
from the Company or one or more holders of Indebtedness or their representative
or representatives or the trustee or trustees under any indenture pursuant to
which any such Indebtedness may have been issued), or (ii) the maturity of any
Indebtedness shall have been accelerated because of a default in respect of such
Indebtedness (and the Warrant Agent shall have received written notice thereof
from the Company or one or more holders of Indebtedness or their representative
or representatives or the trustee or trustees under any indenture pursuant to
which any such Indebtedness may have been issued), then:
(i) the holders of all Indebtedness shall first be entitled to
receive, in the case of clause (x) above, payment of all amounts due or to
become due upon all Indebtedness and, in the case of subclauses (i) and
(ii) of clause (y) above, payment of all amounts due thereon, or provision
shall be made for such payment in money or money's worth, before the
Holders of any of the Units are entitled to receive any Warrant Fees on
the Warrants represented by the Units;
65
(ii) any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities, to which
the Holders of any of the Units would be entitled except for the
provisions of Section 5.11(e) through (q), shall be paid or delivered by
the Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the representative or representatives of the holders of Indebtedness or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of such
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all Indebtedness remaining unpaid after giving effect
to any concurrent payment or distribution (or provision therefor) to the
holders of such Indebtedness, before any payment or distribution is made
of such Warrant Fees to the Holders of such Units; and
(iii) in the event that, notwithstanding the foregoing, any payment
by, or distribution of assets of, the Company of any kind or character,
whether in cash, property or securities, shall be received by the Warrant
Agent or the Holders of any of the Units when such payment or distribution
is prohibited pursuant to Section 5.11(e) through (q), such payment or
distribution shall be paid over to the representative or representatives
of the holders of Indebtedness or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such
Indebtedness may have been issued, ratably as aforesaid, for application
to the payment of all Indebtedness remaining unpaid until all such
Indebtedness shall have been paid in full, after giving effect to any
concurrent payment or distribution (or provision therefor) to the holders
of such Indebtedness.
(g) For purposes of Section 5.11(e) through (q), the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other Person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in Section 5.11(e) through (q)
with respect to such Warrant Fees on the Units to the payment of all
Indebtedness which may at the time be outstanding; provided that (i) the
indebtedness or guarantee of indebtedness, as the case may be, that constitutes
Indebtedness is assumed by the Person, if any, resulting from any such
reorganization or readjustment, and (ii) the rights of the holders of the
Indebtedness are not, without the consent of each such holder adversely affected
thereby, altered by such reorganization or readjustment;
(h) Any failure by the Company to make any payment on or perform any other
obligation under Indebtedness, other than any indebtedness incurred by the
Company or assumed or guaranteed, directly or indirectly, by the Company for
money borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which the provisions of Section 5.11(e) through
(g) shall have been waived by the Company in the instrument or instruments by
which the Company incurred, assumed, guaranteed or otherwise created such
indebtedness or obligation, shall not be deemed a default or event of default if
(i) the Company shall be disputing its obligation to make such payment or
perform such obligation
66
and (ii) either (A) no final judgment relating to such dispute shall have been
issued against the Company which is in full force and effect and is not subject
to further review, including a judgment that has become final by reason of the
expiration of the time within which a party may seek further appeal or review,
and (B) in the event a judgment that is subject to further review or appeal has
been issued, the Company shall in good faith be prosecuting an appeal or other
proceeding for review and a stay of execution shall have been obtained pending
such appeal or review.
(i) Subject to the irrevocable payment in full of all Indebtedness, the
Holders of the Units shall be subrogated (equally and ratably with the holders
of all obligations of the Company which by their express terms are subordinated
to Indebtedness of the Company to the same extent as payment of the Warrant Fees
in respect of the Warrants represented by the Units is subordinated and which
are entitled to like rights of subrogation) to the rights of the holders of
Indebtedness to receive payments or distributions of cash, property or
securities of the Company applicable to the Indebtedness until all such Warrant
Fees owing on the Units shall be paid in full, and as between the Company, its
claimholders other than holders of such Indebtedness and the Holders, no such
payment or distribution made to the holders of Indebtedness by virtue of Section
5.11(e) through (q) that otherwise would have been made to the Holders shall be
deemed to be a payment by the Company on account of such Indebtedness, it being
understood that the provisions of Section 5.11(e) through (q) are and are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Indebtedness, on the other hand.
(j) Nothing contained in Section 5.11(e) through (q) or elsewhere in this
Agreement or in the Units is intended to or shall impair, as among the Company,
its claimholders other than the holders of Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders such Warrant Fees on the Units as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and claimholders of the Company other than the
holders of Indebtedness, nor shall anything herein or therein prevent the
Warrant Agent or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under Section 5.11(e) through (q), of the holders of Indebtedness in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy.
(k) Upon payment or distribution of assets of the Company referred to in
Section 5.11(e) through (q), the Warrant Agent and the Holders shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which any such dissolution, winding up, liquidation or reorganization proceeding
affecting the affairs of the Company is pending or upon a certificate of the
trustee in bankruptcy, receiver, assignee for the benefit of creditors,
liquidating trustee or Warrant Agent or other person making any payment or
distribution, delivered to the Warrant Agent or to the Holders, for the purpose
of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts
67
paid or distributed thereon and all other facts pertinent thereto or to these
Section 5.11(e) through (q).
(l) The Warrant Agent shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Indebtedness
(or a trustee or representative on behalf of such holder) to establish that such
notice has been given by a holder of Indebtedness or a trustee or representative
on behalf of any such holder or holders. In the event that the Warrant Agent
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Indebtedness to participate in any payment or
distribution pursuant to Section 5.11(e) through (q), the Warrant Agent may
request such Person to furnish evidence to the reasonable satisfaction of the
Warrant Agent as to the amount of Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under Section 5.11(e)
through (q), and, if such evidence is not furnished, the Warrant Agent may defer
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
(m) Nothing contained in Section 5.11(e) through (q) shall affect the
obligations of the Company to make, or prevent the Company from making, payment
of the Warrant Fees, except as otherwise provided in these Section 5.11(e)
through (q).
(n) Each Holder of Units, by its acceptance thereof, authorizes and
directs the Warrant Agent on its behalf to take such action as may be necessary
or appropriate to effectuate the subordination provided in Section 5.11 (e)
through (q) and appoints the Warrant Agent its attorney-in-fact, as the case may
be, for any and all such purposes.
(o) The Company shall give prompt written notice to the Warrant Agent of
any fact known to the Company that would prohibit the making of any payment of
moneys to or by the Warrant Agent in respect of the Units pursuant to the
provisions of this Section. Notwithstanding the provisions of Section 5.11(e)
through (q) or any other provisions of this Agreement, the Warrant Agent shall
not be charged with knowledge of the existence of any facts that would prohibit
the making of any payment of moneys to or by the Warrant Agent, or the taking of
any other action by the Warrant Agent, unless and until the Warrant Agent shall
have received written notice thereof mailed or delivered to the Warrant Agent
from the Company, any Holder, or the holder or representative of any
Indebtedness; provided that if at least two Business Days prior to the date upon
which by the terms hereof any such moneys may become payable for any purpose,
the Warrant Agent shall not have received with respect to such moneys the notice
provided for in this Section, then, anything herein contained to the contrary
notwithstanding, the Warrant Agent shall have full power and authority to
receive such moneys and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to or on or after such date.
(p) The Warrant Agent in its individual capacity shall be entitled to all
the rights set forth in this Section with respect to any Indebtedness at the
time held by it, to the same extent as
68
any other holder of Indebtedness and nothing in this Agreement shall deprive the
Warrant Agent of any of its rights as such holder.
(q) No right of any present or future holder of any Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
(r) Nothing in this Section 5.11 shall apply to claims of, or payments to,
the Warrant Agent under or pursuant to Section 7.07.
(s) With respect to the holders of Indebtedness, (i) the duties and
obligations of the Warrant Agent shall be determined solely by the express
provisions of this Agreement; (ii) the Warrant Agent shall not be liable to any
such holders if it shall, acting in good faith, mistakenly pay over or
distribute to the Holders or to the Company or any other Person cash, property
or securities to which any holders of Indebtedness shall be entitled by virtue
of this Section 5.11 or otherwise; (iii) no implied covenants or obligations
shall be read into this Agreement against the Warrant Agent; and (iv) the
Warrant Agent shall not be deemed to be a fiduciary as to such holders.
SECTION 5.12. Deferral of Warrant Fees. (a) The Company has the right to
defer payment of all or part of the Warrant Fees in respect of each Warrant
until no later than the Warrant Settlement Date (or, in the event of an
effective Early Settlement or Cash Merger Early Settlement, the Early Settlement
Date or Cash Merger Early Settlement Date, as the case may be), but only if the
Company shall give the Holders and the Warrant Agent written notice of its
election to defer such payment (specifying the amount to be deferred) at least
ten Business Days prior to the earlier of (i) the next succeeding Payment Date
or (ii) the date the Company is required to give notice of the Record Date or
Payment Date with respect to payment of such Warrant Fees to the NYSE or other
applicable self-regulatory organization or to Holders, but in any event not less
than one Business Day prior to such Record Date. If the Company so elects to
defer Warrant Fees, the Company shall pay additional Warrant Fees on such
deferred installments of Warrant Fees at a rate equal to 7.00% per annum,
compounding on each succeeding Payment Date, until such deferred installments
are paid in full (such deferred installments of Warrant Fees together with the
accrued additional Warrant Fees thereon, being referred to herein as the
"DEFERRED WARRANT FEES"). Deferred Warrant Fees shall be due on the next
succeeding Payment Date except to the extent that payment is deferred pursuant
to this Section.
(b) In the event that the Company elects to defer the payment of Warrant
Fees on the Warrants until the Warrant Settlement Date (or, in the event of an
effective Early Settlement or Cash Merger Early Settlement, the Early Settlement
Date or Cash Merger Early Settlement Date, as the case may be), each Holder will
receive on the Warrant Settlement Date, Early Settlement Date or Cash Merger
Early Settlement Date, as applicable, the aggregate amount of Deferred
69
Warrant Fees to the extent such amounts are not deducted from the Settlement
Price in the case of a Cash Settlement, any Early Settlement or any Cash Merger
Early Settlement. The Company shall pay such amount on the Warrant Settlement
Date (or, in the event of an effective Early Settlement or Cash Merger Early
Settlement, the Early Settlement Date or Cash Merger Early Settlement Date, as
the case may be) in the manner described in Section 5.11(a).
(c) In the event the Company exercises its option to defer the payment of
Warrant Fees, then, until all Deferred Warrant Fees have been paid, the Company
shall not, and shall not permit any of its subsidiaries to, declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or their capital stock; provided that the Company's subsidiaries will not be
restricted from declaring or paying such dividends, or making such
distributions, to the Company or any of the Company's other subsidiaries as a
result of the foregoing.
ARTICLE 6
REMEDIES
SECTION 6.01. Unconditional Right of Holders to Receive Warrant Fees and
to Purchase Shares of Common Stock.
Each Holder of a Unit shall have the right, which is absolute and
unconditional, (i) subject to Article 5, to receive each Warrant Fee with
respect to the Warrant represented by such Unit on the applicable Payment Date
and (ii) except upon and following a Termination Event, to purchase shares of
Common Stock pursuant to such Warrant and, in each such case, to institute suit
for the enforcement of any such right to receive Warrant Fees and the right to
purchase shares of Common Stock, and such rights shall not be impaired without
the consent of such Holder.
SECTION 6.02. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.
SECTION 6.03. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy
70
herein conferred upon or reserved to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.04. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right upon a default or
remedy upon a default shall impair any such right or remedy or constitute a
waiver of any such right. Every right and remedy given by this Article or by law
to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
SECTION 6.05. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of a Unit, by its
acceptance of such Unit shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Agreement, or in any suit against the Warrant Agent for any action
taken, suffered or omitted by it as Warrant Agent, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and costs against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; provided that the provisions of this Section shall not apply to any
suit instituted by the Warrant Agent, to any suit instituted by any Holder, or
group of Holders, holding in the aggregate more than 10% of the Outstanding
Units, or to any suit instituted by any Holder for the enforcement of interest
on any Senior Notes or Warrant Fees on or after the respective Payment Date
therefor in respect of any Unit held by such Holder, or for enforcement of the
right to purchase shares of Common Stock under the Warrants represented by any
Unit held by such Holder.
SECTION 6.06. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Warrant Agent or the Holders, but will suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
71
THE WARRANT AGENT
SECTION 7.01. Certain Duties and Responsibilities.
(a) The Warrant Agent:
(1) undertakes to perform, with respect to the Units, such duties and only
such duties as are specifically set forth in this Agreement, the Pledge
Agreement and the Remarketing Agreement and no implied covenants or obligations
shall be read into this Agreement, the Pledge Agreement or the Remarketing
Agreement against the Warrant Agent; and
(2) in the absence of bad faith or gross negligence on its part, may, with
respect to the Units, conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Warrant Agent and conforming to the requirements of this
Agreement or the Pledge Agreement or the Remarketing Agreement, as applicable,
but in the case of any certificates or opinions which by any provision hereof
are specifically required to be furnished to the Warrant Agent, the Warrant
Agent shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Agreement, the Pledge Agreement or the
Remarketing Agreement, as applicable (but need not confirm or investigate the
accuracy of the mathematical calculations or other facts stated therein).
(b) No provision of this Agreement, the Pledge Agreement or the
Remarketing Agreement shall be construed to relieve the Warrant Agent from
liability for its own grossly negligent action, its own grossly negligent
failure to act, or its own willful misconduct, except that:
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Warrant Agent shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be conclusively
determined by a court of competent jurisdiction that the Warrant Agent was
grossly negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement or the Pledge Agreement or the
Remarketing Agreement shall require the Warrant Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(c) Whether or not therein expressly so provided, every provision of this
Agreement, the Pledge Agreement and the Remarketing Agreement relating to the
conduct or affecting the liability of or affording protection to the Warrant
Agent shall be subject to the provisions of this Section.
72
(d) The Warrant Agent is authorized to execute and deliver the Pledge
Agreement and the Remarketing Agreement in its capacity as Warrant Agent.
SECTION 7.02. Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Warrant Agent has actual
knowledge, the Warrant Agent shall transmit by mail to the Company and the
Holders of Units, as their names and addresses appear in the Security Register,
notice of such default hereunder, unless such default shall have been cured or
waived.
SECTION 7.03. Certain Rights of Warrant Agent.
Subject to the provisions of Section 7.01:
(1) the Warrant Agent may, in the absence of bad faith, conclusively rely
and shall be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, Senior Note, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Agreement or the Pledge
Agreement or the Remarketing Agreement the Warrant Agent shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting to
take any action hereunder, the Warrant Agent (unless other evidence be herein
specifically prescribed in this Agreement) may, in the absence of bad faith on
its part, conclusively rely upon an Officers' Certificate of the Company;
(4) the Warrant Agent may consult with counsel of its selection appointed
with due care by it hereunder and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(5) the Warrant Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Warrant Agent, in its discretion, may make reasonable further inquiry or
investigation into such facts or matters related to the execution, delivery and
performance of the Warrants as it may see fit, and, if the Warrant Agent shall
determine to make such further
73
inquiry or investigation, it shall be entitled to examine the relevant books,
records and premises of the Company, personally or by agent or attorney;
(6) the Warrant Agent may execute any of the powers hereunder or perform
any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees or an Affiliate and the Warrant Agent shall not be
responsible for any misconduct or negligence on the part of any agent, attorney,
custodian or nominee or an Affiliate appointed with due care by it hereunder;
(7) the Warrant Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Holders pursuant to this Agreement, unless such Holders shall have
offered to the Warrant Agent security or indemnity satisfactory to the Warrant
Agent against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(8) the Warrant Agent shall not be liable for any action taken, suffered,
or omitted to be taken by it in the absence of bad faith or gross negligence by
it;
(9) the Warrant Agent shall not be deemed to have notice of any default
hereunder unless a Responsible Officer of the Warrant Agent has actual knowledge
thereof or unless written notice of any event which is in fact such a default is
received by the Warrant Agent at the Corporate Trust Office of the Warrant
Agent, and such notice references the Units and this Agreement;
(10) the Warrant Agent may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Agreement,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded;
(11) the rights, privileges, protections, immunities and benefits given to
the Warrant Agent, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Warrant Agent in each of its
capacities hereunder, and to each agent, custodian and other Person employed to
act hereunder; and
(12) The Warrant Agent shall not be required to initiate or conduct any
litigation or collection proceedings hereunder and shall have no
responsibilities with respect to any default hereunder except as expressly set
forth herein.
SECTION 7.04. Not Responsible for Recitals or Issuance of Units.
The recitals contained herein, in the Pledge Agreement, the Remarketing
Agreement and in the Certificates shall be taken as the statements of the
Company, and the Warrant Agent assumes no responsibility for their accuracy or
validity. The Warrant Agent makes no
74
representations as to the validity or sufficiency of either this Agreement or of
the Units, or of the Pledge Agreement or the Pledge or the Collateral and shall
have no responsibility for perfecting or maintaining the perfection of any
security interest in the Collateral. The Warrant Agent shall not be accountable
for the use or application by the Company of the proceeds in respect of the
Warrants.
SECTION 7.05. May Hold Units.
Any Security Registrar or any other agent of the Company, or the Warrant
Agent and its Affiliates, in their individual or any other capacity, may become
the owner or pledgee of Units and may otherwise deal with the Company, the
Collateral Agent or any other Person with the same rights it would have if it
were not Security Registrar or such other agent, or the Warrant Agent. The
Company may become the owner or pledgee of Units.
SECTION 7.06. Money Held in Custody.
Money held by the Warrant Agent in custody hereunder need not be
segregated from the Warrant Agent's other funds except to the extent required by
law or provided herein. The Warrant Agent shall be under no obligation to invest
or pay interest on any money received by it hereunder except as otherwise
provided hereunder or agreed in writing with the Company.
SECTION 7.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Warrant Agent compensation for all services rendered by
it hereunder, under the Pledge Agreement and under the Remarketing Agreement as
the Company and the Warrant Agent shall from time to time agree in writing;
(2) except as otherwise expressly provided for herein, to reimburse the
Warrant Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Warrant Agent in accordance with any provision
of this Agreement, the Pledge Agreement and the Remarketing Agreement (including
the reasonable compensation and the expenses and disbursements of its agents and
counsel) in connection with the negotiation, preparation, execution and delivery
and performance of this Agreement, the Pledge Agreement and the Remarketing
Agreement and any modification, supplement or waiver of any of the terms
thereof, except any such expense, disbursement or advance as may be attributable
to its gross negligence, willful misconduct or bad faith; and
(3) to indemnify the Warrant Agent and any predecessor Warrant Agent (and
each of its directors, officers, agents and employees (collectively, the
"INDEMNITEES") for, and to hold it harmless against, any loss, claim, damage,
fine, penalty, liability or expense (including reasonable fees and expenses of
counsel) incurred without gross negligence, willful misconduct or bad faith on
its part, arising out of or in connection with the acceptance or administration
of its duties hereunder and under the Pledge Agreement and the Remarketing
Agreement, including the
75
Indemnitees' reasonable costs and expenses of defending themselves against any
claim (whether asserted by the Company, a Holder or any other person) or
liability in connection with the exercise or performance of any of the Warrant
Agent's powers or duties hereunder or thereunder.
The provisions of this Section shall survive the resignation and
removal of the Warrant Agent and the termination of this Agreement.
SECTION 7.08. Corporate Warrant Agent Required; Eligibility.
There shall at all times be a Warrant Agent hereunder which shall be a
Person organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having a
corporate trust office in the Borough of Manhattan, New York City, if there be
such a Person in the Borough of Manhattan, New York City, qualified and eligible
under this Article and willing to act on reasonable terms. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Warrant Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Warrant Agent and no appointment of a
successor Warrant Agent pursuant to this Article shall become effective until
the acceptance of appointment by the successor Warrant Agent in accordance with
the applicable requirements of Section 7.10.
(b) The Warrant Agent may resign at any time by giving written notice
thereof to the Company 60 days prior to the effective date of such resignation.
If the instrument of acceptance by a successor Warrant Agent required by Section
7.10 shall not have been delivered to the Warrant Agent within 30 days after the
giving of such notice of resignation, the resigning Warrant Agent may petition,
at the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Warrant Agent.
(c) The Warrant Agent may be removed at any time by Act of the Holders of
a majority in number of the Outstanding Units delivered to the Warrant Agent and
the Company. If the instrument of acceptance by a successor Warrant Agent
required by Section 7.10 shall not have been delivered to the Warrant Agent
within 30 days after such Act, the Warrant Agent being removed may petition any
court of competent jurisdiction for the appointment of a successor Warrant
Agent.
76
(d) If at any time:
(1) the Warrant Agent fails to comply with Section 310(b) of the
TIA, as if the Warrant Agent were an indenture trustee under an indenture
qualified under the TIA, and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona fide Holder
of a Unit for at least six months;
(2) the Warrant Agent shall cease to be eligible under Section 7.08
and shall fail to resign after written request therefor by the Company or
by any such Holder; or
(3) the Warrant Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Warrant Agent or of
its property shall be appointed or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Warrant Agent, or (ii) any Holder who has been a bona fide Holder of a Unit for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Warrant
Agent and the appointment of a successor Warrant Agent.
(e) If the Warrant Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Warrant Agent for any
cause, the Company, by a Board Resolution, shall promptly appoint a successor
Warrant Agent and shall comply with the applicable requirements of Section 7.10.
If no successor Warrant Agent shall have been so appointed by the Company and
accepted appointment in the manner required by Section 7.10, any Holder who has
been a bona fide Holder of a Unit for at least six months, on behalf of itself
and all others similarly situated, or the Warrant Agent may petition at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Warrant Agent.
(f) The Company shall give, or shall cause such successor Warrant Agent to
give, notice of each resignation and each removal of the Warrant Agent and each
appointment of a successor Warrant Agent by mailing written notice of such event
by first-class mail, postage prepaid, to all Holders as their names and
addresses appear in the applicable Security Register. Each notice shall include
the name of the successor Warrant Agent and the address of its Corporate Trust
Office.
SECTION 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Warrant Agent,
every such successor Warrant Agent so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Warrant Agent an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Warrant Agent shall become effective and such successor
77
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the rights, powers, agencies and duties of the retiring Warrant Agent;
but, on the request of the Company or the successor Warrant Agent, such retiring
Warrant Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Warrant Agent all the rights, powers
and trusts of the retiring Warrant Agent and duly assign, transfer and deliver
to such successor Warrant Agent all property and money held by such retiring
Warrant Agent hereunder.
(b) Upon request of any such successor Warrant Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Warrant Agent all such rights, powers and agencies
referred to in paragraph (a) of this Section.
(c) No successor Warrant Agent shall accept its appointment unless at the
time of such acceptance such successor Warrant Agent shall be qualified and
eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Warrant Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Warrant Agent, shall be the successor of the Warrant Agent hereunder,
provided that such Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Warrant Agent then in office, any successor by merger, conversion or
consolidation to such Warrant Agent may adopt such authentication and execution
and deliver the Certificates so authenticated and executed with the same effect
as if such successor Warrant Agent had itself authenticated and executed such
Units.
SECTION 7.12. Preservation of Information; Communications to Holders.
(a) The Warrant Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Warrant Agent in its capacity as Security Registrar.
(b) If three or more Holders (herein referred to as "APPLICANTS") apply in
writing to the Warrant Agent, and furnish to the Warrant Agent reasonable proof
that each such applicant has owned a Unit for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or under the Units and is accompanied by a copy of the form
of proxy or other communication which such applicants propose to transmit, then
the Warrant Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with reasonable
promptness after a tender to the Warrant Agent of the
78
materials to be mailed and of payment, or provision for the payment, of the
reasonable expenses of such mailing.
SECTION 7.13. No Obligations of Warrant Agent.
Except to the extent otherwise expressly provided in this Agreement, the
Warrant Agent assumes no obligations and shall not be subject to any liability
under this Agreement, the Pledge Agreement, the Remarketing Agreement or any
Warrant in respect of the obligations of the Holder of any Unit thereunder. The
Company agrees, and each Holder of a Certificate, by its acceptance thereof,
shall be deemed to have agreed, that the Warrant Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Warrant Agent shall have no
obligation to perform such Warrants on behalf of the Holders, except to the
extent expressly provided in Article Five hereof. Anything contained in this
Agreement to the contrary notwithstanding, in no event shall the Warrant Agent
or its officers, directors, employees or agents be liable under this Agreement,
the Pledge Agreement or the Remarketing Agreement to any third party for
indirect, incidental, special, punitive, or consequential loss or damage of any
kind whatsoever, including lost profits, whether or not the likelihood of such
loss or damage was known to the Warrant Agent and regardless of the form of
action.
SECTION 7.14. Tax Compliance.
(a) The Warrant Agent, on its own behalf and on behalf of the Company,
will comply with all applicable certification, information reporting and
withholding (including "backup" withholding) requirements imposed by applicable
tax laws, regulations or administrative practice with respect to (i) any
payments made with respect to the Units or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Units. Such compliance
shall include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
(b) The Warrant Agent shall comply in accordance with the terms hereof
with any written direction received from the Company with respect to the
execution or certification of any required documentation and the application of
such requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with the provisions of Section 7.01(a)(2) hereof.
(c) The Warrant Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
79
ARTICLE 8
SUPPLEMENTAL AGREEMENTS
SECTION 8.01. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Warrant Agent, at any time and from time to time, may
enter into one or more agreements supplemental hereto, in form satisfactory to
the Company and the Warrant Agent, to:
(1) evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company
herein and in the Certificates;
(2) evidence and provide for the acceptance of appointment hereunder
by a successor Warrant Agent;
(3) add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the
Company;
(4) make provision with respect to the rights of Holders pursuant to
the requirements of Section 5.04(b); or
(5) except as provided for in Section 5.04, cure any ambiguity,
correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, or make any other provisions with respect to
such matters or questions arising under this Agreement, provided that such
action shall not adversely affect the interests of the Holders in any
material respect.
SECTION 8.02. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
Outstanding Units voting together as one class, including without limitation the
consent of the Holders obtained in connection with a tender or an exchange
offer, by Act of said Holders delivered to the Company and the Warrant Agent,
the Company, when authorized by a Board Resolution, and the Warrant Agent may
enter into an agreement or agreements supplemental hereto for the purpose of
modifying in any manner the terms of the Warrants, or the provisions of this
Agreement or the rights of the Holders in respect of the Units; provided,
however, that, except as contemplated herein, no such supplemental agreement
shall, without the unanimous consent of the Holders of each outstanding Warrant
affected thereby,
(1) change any Payment Date;
80
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's obligations under the Warrant, unless such
change is not adverse to the Holders, impair the right of the Holder of
any Warrant to receive distributions on the related Collateral or
otherwise adversely affect the Holder's rights in or to such Collateral or
adversely alter the rights in or to such Collateral;
(3) impair the right to institute suit for the enforcement of any
Warrant or payment of any Warrant Fees;
(4) reduce the number of shares of Common Stock or the amount of any
other property to be purchased pursuant to any Warrant, increase the price
to purchase shares of Common Stock or any other property upon settlement
of any Warrant or change the Warrant Settlement Date or the right to Early
Settlement or Cash Merger Early Settlement or otherwise adversely affect
the Holder's rights under the Warrant;
(5) reduce any Warrant Fees or change any place where, or the coin
or currency in which, any Warrant Fee is payable; or
(6) reduce the percentage of the outstanding Warrants the consent of
whose Holders is required for any modification or amendment to the
provisions of this Agreement, the Warrants or the Pledge Agreement;
provided that if any amendment or proposal referred to above would
adversely affect only the Corporate Units or the Treasury Units, then only the
affected class of Holders as of the record date for the Holders entitled to vote
thereon will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than a majority of such class; and provided, further, that the
unanimous consent of the Holders of each outstanding Warrant of such class
affected thereby shall be required to approve any amendment or proposal
specified in clauses (1) through (6) above.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 8.03. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Warrant Agent shall be provided, and
(subject to Section 7.01) shall be fully authorized and protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
agreement is authorized or permitted by this Agreement and an Officers'
Certificate stating that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied. The Warrant Agent
may, but shall not be obligated to, enter into any such
81
supplemental agreement which affects the Warrant Agent's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 8.04. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.
SECTION 8.05. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Warrant Agent, bear a notation in form
approved by the Warrant Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Warrant Agent and the Company, to any such
supplemental agreement may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Warrant
Agent in exchange for outstanding Certificates.
ARTICLE 9
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or
Lease Property Except under Certain Conditions.
The Company covenants that it will not consolidate with, convert into, or
merge with and into, any other corporation or sell, assign, transfer, lease or
convey all or substantially all of its properties and assets to any Person,
unless:
(i) either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof
or the District of Columbia and such corporation shall expressly assume
all the obligations of the Company under the Warrants, this Agreement, the
Pledge Agreement, the Indenture (including any supplement thereto) and the
Remarketing Agreement by one or more supplemental agreements in form
reasonably satisfactory to the Warrant Agent and the Collateral Agent,
executed and delivered to the Warrant Agent and the Collateral Agent by
such corporation; and
82
(ii) the Company or such successor corporation, as the case may be,
shall not, immediately after such consolidation, conversion, merger, sale,
assignment, transfer, lease or conveyance, be in default of payment
obligations under the Warrants, this Agreement, the Pledge Agreement, the
Indenture (including any supplement thereto) or the Remarketing Agreement
or in material default in the performance of any other covenants under any
of the foregoing agreements.
SECTION 9.02. Rights and Duties of Successor Corporation.
In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor corporation in accordance with Section 9.01, such successor
corporation shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of The Chubb Corporation, any or all of the Certificates evidencing Units
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Warrant Agent; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Agreement prescribed, the Warrant Agent shall
authenticate and execute on behalf of the Holders and deliver any Certificates
which previously shall have been signed and delivered by the officers of the
Company to the Warrant Agent for authentication and execution, and any
Certificate evidencing Units which such successor corporation thereafter shall
cause to be signed and delivered to the Warrant Agent for that purpose. All the
Certificates issued shall in all respects have the same legal rank and benefit
under this Agreement as the Certificates theretofore or thereafter issued in
accordance with the terms of this Agreement as though all of such Certificates
had been issued at the date of the execution hereof.
In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Units
thereafter to be issued as may be appropriate.
SECTION 9.03. Officers' Certificate and Opinion of Counsel Given to
Warrant Agent.
The Warrant Agent, subject to Sections 7.01 and 7.03, shall receive an
Opinion of Counsel as conclusive evidence that any such merger, consolidation,
share exchange, sale, assignment, transfer, lease or conveyance, and any such
assumption, complies with the provisions of this Article and an Officers'
Certificate that all conditions precedent to the consummation of any such
merger, consolidation, share exchange, sale, assignment, transfer, lease or
conveyance have been met.
83
ARTICLE 10
COVENANTS
SECTION 10.01. Performance under Warrants.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Units that it will duly and punctually perform its obligations
under the Warrants in accordance with the terms of the Warrants and this
Agreement.
SECTION 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, New York City an
office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Warrants on the
Warrant Settlement Date or upon Early Settlement or Cash Merger Early Settlement
and for transfer of Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or exchange, for a
Collateral Substitution or recreation of Corporate Units and where notices and
demands to or upon the Company in respect of the Units and this Agreement may be
served. The Company will give prompt written notice to the Warrant Agent of the
location, and any change in the location, of such office or agency. The Company
initially designates Bank One Trust Company, N.A., 55 Water Street, 1st Floor,
Jeanette Park Entrance, New York, New York 10041 as such office of the Company.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Warrant Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address set forth in the previous sentence, and the Company hereby appoints the
Warrant Agent as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, New York City for such purposes. The Company will give prompt written
notice to the Warrant Agent of any such designation or rescission and of any
change in the location of any such other office or agency. The Company hereby
designates as the place of payment for the Units the Corporate Trust Office and
appoints the Warrant Agent at its Corporate Trust Office as paying agent in such
city.
SECTION 10.03. Company to Reserve Common Stock.
The Company shall at all times prior to the Warrant Settlement Date
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Warrants represented by the Units
evidenced by Outstanding Certificates.
84
SECTION 10.04. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Warrant represented by the
Outstanding Units will, upon issuance, be duly authorized, validly issued, fully
paid and nonassessable.
SECTION 10.05. Statements of Officers of the Company as to Default.
The Company will deliver to the Warrant Agent, within 120 days after the
end of each fiscal year of the Company (which as of the date hereof is December
31) ending after the date hereof, an Officers' Certificate, stating whether or
not to the knowledge of the signers thereof the Company is in default in the
performance and observance of any of the terms, provisions and conditions
hereof, and if the Company shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge.
SECTION 10.06. Tax Treatment. The Company covenants and agrees, and by
purchasing a Corporate Unit each Holder agrees, for United States federal, state
and local income and franchise tax purposes, to (i) treat a Holder's acquisition
of the Corporate Units as the acquisition of the Senior Note and Warrant
represented by the Corporate Units, (ii) treat each Holder as the owner of the
applicable interest in the Collateral Account, including the Senior Notes and
Applicable Ownership Interests in the Treasury Portfolio or the Treasury
Securities and (iii) treat each Warrant as a forward purchase contract for the
purchase of Common Stock.
[SIGNATURES ON THE FOLLOWING PAGE]
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
THE CHUBB CORPORATION
By: /s/ Michael O'Reilly
--------------------------------
Name: Michael O'Reilly
Title: Vice Chairman
BANK ONE TRUST COMPANY, N.A.,
as Warrant Agent
By: /s/ Sandra Whalen
--------------------------------
Name: Sandra Whalen
Title: Vice President
EXHIBIT A
(FORM OF FACE OF CORPORATE UNIT CERTIFICATE)
[For inclusion in Global Certificates only - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE WARRANT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS THE NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF
THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. 4 CUSIP No. 171232 30 9
Number of Corporate Units: 24,000,000
THE CHUBB CORPORATION
Corporate Units
This Corporate Units Certificate certifies that [Cede & Co.] [_______]
is the registered Holder of the number of Corporate Units set forth above [For
inclusion in Global Certificates only - or such other number of Corporate Units
as is reflected in the Schedule of Increases or Decreases in Global Certificate
attached hereto]. Each Corporate Unit represents (i) either (a) the beneficial
ownership by the Holder of $25.00 principal amount of Senior Notes due November
16, 2007 (the "SENIOR NOTES") of The Chubb Corporation, a New Jersey corporation
(the "COMPANY"), subject to the Pledge of such Senior Note by such Holder
pursuant to the Pledge Agreement, or (b) upon the occurrence of a Special Event
Redemption prior to the Warrant
Settlement Date or a Successful Remarketing of the Senior Notes prior to the
Final Remarketing Date, the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio by such Holder pursuant to the Pledge Agreement, and (ii) the rights
and obligations of the Holder under one Warrant with the Company. All
capitalized terms used herein which are defined in the Warrant Agreement (as
defined on the reverse hereof) have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Senior Notes or the appropriate
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, as the case may be, represented by each
Corporate Unit evidenced hereby have been pledged to the Collateral Agent, for
the benefit of the Company, to secure the obligations of the Holder under the
Warrant represented by such Corporate Unit.
The Pledge Agreement provides that all payments of the principal amount
with respect to any of the Pledged Senior Notes or the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, as the case may be, or interest or distributions on
any Pledged Senior Notes (as defined in the Pledge Agreement) or the appropriate
Applicable Ownership Interests (as specified in clause (ii) of the definition of
such term) in the Treasury Portfolio, as the case may be, represented by the
Corporate Units received by the Securities Intermediary shall be paid by wire
transfer in same day funds (i) in the case of (A) interest on Pledged Senior
Notes or distributions with respect to the appropriate Applicable Ownership
Interests (as specified in clause (ii) of the definition of such term) in the
Treasury Portfolio, as the case may be, and (B) any payments of the principal
amount of any Senior Notes or with respect to the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, as the case may be, that have been released from the
Pledge pursuant to the Pledge Agreement, to the Warrant Agent to the account
designated by the Warrant Agent, no later than 2:00 p.m., New York City time, on
the Business Day such payment is received by the Securities Intermediary
(provided that in the event such payment is received by the Securities
Intermediary on a day that is not a Business Day or after 12:30 p.m., New York
City time, on a Business Day, then such payment shall be made no later than
10:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in
the case of payments with respect to the principal amount of the Senior Notes or
with respect to the appropriate Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) in the Treasury Portfolio, to the
Company on the Warrant Settlement Date (as described herein) in accordance with
the terms of the Pledge Agreement, in full satisfaction of the respective
obligations of the Holders of the Corporate Units representing such Pledged
Senior Notes or the Applicable Ownership Interests (as specified in clause (i)
of the definition of such term) in the Treasury Portfolio, as the case may be,
under the Warrants represented by such Corporate Units. Interest on the Senior
Notes and distributions on the appropriate Applicable Ownership Interests (as
specified in clause (ii) of the definition of such term) in the Treasury
Portfolio, as the case may be, represented by a Corporate Units evidenced
hereby, which are payable quarterly in arrears on February 16, May 16, August
16, and November 16 of each year, commencing February 16, 2003 (a "PAYMENT
DATE"), shall, subject to receipt thereof by the Warrant Agent from the
Securities Intermediary, be paid to the Person in whose name this
A-2
Corporate Units Certificate (or a Predecessor Corporate Units Certificate) is
registered at the close of business on the Record Date for such Payment Date.
Each Warrant evidenced hereby shall have an exercise price of $0.00 and
shall be subject to automatic exercise on November 16, 2005 (the "WARRANT
SETTLEMENT DATE"), unless a Termination Event shall occur on or prior such date.
The premium payable by the Holder in consideration for the issuance of the
Warrant evidenced hereby shall be $25.00. Such amount shall not be payable on
the issue date of such Warrant but shall be deferred and payable as the
settlement price of the Warrant (the "SETTLEMENT PRICE") on the earlier of the
Warrant Settlement Date and any Early Settlement Date or Cash Merger Early
Settlement Date, unless a Termination Event shall occur on or prior to any such
date. Accordingly, each Warrant evidenced hereby shall obligate the Holder of
this Corporate Units Certificate to purchase, and the Company to sell, on the
Warrant Settlement Date, at a price equal to the Settlement Price, a number of
newly issued shares of common stock, par value $1.00 per share ("COMMON STOCK"),
of the Company, equal to the Settlement Rate, unless on or prior to the Warrant
Settlement Date there shall have occurred a Termination Event or an Early
Settlement or Cash Merger Early Settlement with respect to such Warrant, all as
provided in the Warrant Agreement and more fully described on the reverse
hereof. The Settlement Price for the shares of Common Stock purchased pursuant
to each Warrant evidenced hereby, if not paid earlier, shall be paid on the
Warrant Settlement Date by application of payment received in respect of the
principal amount with respect to any Pledged Senior Notes pursuant to the
Remarketing or exercise of the Put Right or the appropriate Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in the
Treasury Portfolio, as the case may be, pledged to secure the obligations under
such Warrant of the Holder of the Corporate Units of which such Warrant is a
part.
Each Warrant evidenced hereby obligates the holder to agree, for United
States federal, state and local income and franchise tax purposes, to (i) treat
an acquisition of the Corporate Units as an acquisition of the Senior Notes and
Warrants represented by the Corporate Units, (ii) treat itself as owner of the
applicable interest in the Collateral Account, including the Senior Notes and
the Applicable Ownership Interests in the Treasury Portfolio and (iii) treat
each Warrant as a forward purchase contract for the purchase of Common Stock.
The Company shall pay, on each Payment Date, in respect of each Warrant
represented by a Corporate Unit evidenced hereby, an amount (the "WARRANT FEES")
equal to 3.00% per year of the Stated Amount. Such Warrant Fees shall be payable
to the Person in whose name this Corporate Units Certificate is registered at
the close of business on the Record Date for such Payment Date. The Company may,
at its option, defer such Warrant Fees.
Interest on the Senior Notes and distributions on the Applicable
Ownership Interests (as specified in clause (ii) of the definition of such term)
and the Warrant Fees will be payable at the office of the Warrant Agent in New
York City. If the book-entry system for the Corporate Units has been terminated,
the Warrant Fees will be payable, at the option of the Company, by check mailed
to the address of the Person entitled thereto at such Person's address as it
appears on the
A-3
Security Register, or by wire transfer to the account designated by such Person
by a prior written notice to the Warrant Agent.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Warrant Agent by manual signature, this Corporate Units Certificate shall
not be entitled to any benefit under the Pledge Agreement or the Warrant
Agreement or be valid or obligatory for any purpose.
A-4
IN WITNESS WHEREOF, the Company and the Holder specified above have
caused this instrument to be duly executed.
The Chubb Corporation
By:
---------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Warrants)
By: BANK ONE TRUST COMPANY,
N.A., not individually but solely as
Attorney-in-Fact of such Holder
By:
---------------------------------
Name:
Title:
DATED:
-----------------
A-5
CERTIFICATE OF AUTHENTICATION
OF WARRANT AGENT
This is one of the Corporate Units Certificates referred to in the
within mentioned Warrant Agreement.
By: BANK ONE TRUST COMPANY, N.A.,
as Warrant Agent
By:
------------------------------------
Name:
Title:
Dated:
---------------------
A-6
(FORM OF REVERSE OF CORPORATE UNIT CERTIFICATE)
Each Warrant evidenced hereby is governed by a Warrant Agreement, dated
as of December 2, 2002 (as may be supplemented from time to time, the "WARRANT
AGREEMENT"), between the Company and Bank One Trust Company, N.A., as Warrant
Agent (including its successors hereunder, the "WARRANT AGENT"), to which
Warrant Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Warrant Agent, the Company, and the
Holders and of the terms upon which the Corporate Units Certificates are, and
are to be, executed and delivered.
Each Warrant evidenced hereby shall have an exercise price of $0.00 and
shall be subject to automatic exercise on November 16, 2005 (the "WARRANT
SETTLEMENT DATE"), unless a Termination Event shall occur on or prior to such
date. The premium payable by the Holder in consideration for the issuance of the
Warrant evidenced hereby shall be $25.00. Such amount shall not be payable on
the issue date of such Warrant but shall be deferred and payable as the
settlement price of the Warrant (the "SETTLEMENT PRICE") on the earlier of the
Warrant Settlement Date and any Early Settlement Date or Cash Merger Early
Settlement Date, unless a Termination Event shall occur on or prior to any such
date. Accordingly, each Warrant evidenced hereby shall obligate the Holder of
this Corporate Units Certificate to purchase, and the Company to sell, on the
Warrant Settlement Date, at a price equal to the Settlement Price, a number of
newly issued shares of common stock, par value $1.00 per share ("COMMON STOCK"),
of the Company, equal to the Settlement Rate, unless on or prior to the Warrant
Settlement Date there shall have occurred a Termination Event or an Early
Settlement or Cash Merger Early Settlement with respect to such Warrant. The
"SETTLEMENT RATE" is equal to:
(1) if the Adjusted Applicable Market Value (as defined below)
is greater than $69.10 (the "THRESHOLD APPRECIATION PRICE"), 0.3618
shares of Common Stock per Warrant;
(2) if the Adjusted Applicable Market Value is less than or
equal to the Threshold Appreciation Price but greater than or equal to
$56.64 (the "REFERENCE PRICE"), the number of shares of Common Stock
per Warrant having a value equal to the Stated Amount divided by the
Adjusted Applicable Market Value; and
(3) if the Adjusted Applicable Market Value is less than the
Reference Price, 0.4414 shares of Common Stock per Warrant;
in each case subject to adjustment as provided in the Warrant Agreement (and in
each case rounded upward or downward to the nearest 1/10,000th of a share).
No fractional shares of Common Stock will be issued upon settlement of
Warrants, as provided in Section 5.09 of the Warrant Agreement.
A-7
Each Warrant evidenced hereby that is settled through Early Settlement
or Cash Merger Early Settlement shall obligate the Holder of the related
Corporate Units to purchase at the Settlement Price, and the Company to sell, a
number of newly issued shares of Common Stock equal to the Early Settlement Rate
(in the case of an Early Settlement) or applicable Settlement Rate (in the case
of a Cash Merger Early Settlement).
The "APPLICABLE MARKET VALUE" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Warrant Settlement Date subject
to adjustments set forth under Section 5.04 of the Warrant Agreement.
The "ADJUSTED APPLICABLE MARKET VALUE" means (i) prior to any
adjustment of the Settlement Rate pursuant to paragraph (1), (2), (3), (4), (5),
(6), (7) or (10) of Section 5.04(a) of the Warrant Agreement, the Applicable
Market Value, and (ii) at the time of and after any adjustment of the Settlement
Rate pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of Section
5.04(a) of the Warrant Agreement, the Applicable Market Value multiplied by a
fraction, the numerator of which shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of Section 5.04(a) of the Warrant Agreement and the denominator of which shall
be the Settlement Rate immediately prior to such adjustment; provided, however,
that if such adjustment to the Settlement Rate is required to be made pursuant
to the occurrence of any of the events contemplated by paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of Section 5.04(a) of the Warrant Agreement during
the period taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Settlement Rate.
The "CLOSING PRICE" per share of Common Stock on any date of
determination means:
(1) the closing sale price as of the close of the principal
trading session (or, if no closing price is reported, the last reported
sale price) per share on the New York Stock Exchange, Inc. (the "NYSE")
on such date;
(2) if Common Stock is not listed for trading on the NYSE on
any such date, the closing sale price (or, if no closing price is
reported, the last reported sale price) per share as reported in the
composite transactions for the principal United States national or
regional securities exchange on which Common Stock is so listed;
(3) if Common Stock is not so listed on a United States
national or regional securities exchange, the last reported sale price
per share as reported by The Nasdaq Stock Market, Inc.;
(4) if Common Stock is not so reported, the last quoted bid
price for Common Stock in the over-the-counter market as reported by
the National Quotation Bureau or similar organization; or
A-8
(5) if such bid price is not available, the market value of
Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Company.
A "TRADING DAY" means a day on which Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of Common
Stock.
In accordance with the terms of the Warrant Agreement, the Holder of
this Corporate Units Certificate may pay the Settlement Price for the shares of
Common Stock purchased pursuant to each Warrant evidenced hereby by effecting a
Cash Settlement, an Early Settlement or, if applicable, a Cash Merger Early
Settlement or from the proceeds of the Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio or a Remarketing of the related Pledged Senior Notes. Unless the
Treasury Portfolio has replaced the Senior Notes represented by Corporate Units,
a Holder of Corporate Units who (1) does not, on or prior to 5:00 p.m. (New York
City time) on the fifth Business Day immediately preceding the Warrant
Settlement Date, notify the Warrant Agent of its intention to effect a Cash
Settlement, or who does so notify the Warrant Agent but fails to make an
effective Cash Settlement prior to 5:00 p.m. (New York City time) on the fourth
Business Day immediately preceding the Warrant Settlement Date, or (2) on or
prior to 5:00 p.m. (New York City time) on the fifth Business Day prior to the
Warrant Settlement Date, does not make an effective Early Settlement, shall pay
the Settlement Price for the shares of Common Stock to be delivered under the
related Warrant from the proceeds of the sale of the related Pledged Senior
Notes held by the Collateral Agent unless the Holder has previously made a Cash
Merger Early Settlement. Unless the Treasury Portfolio has replaced the Senior
Notes represented by Corporate Unit, such sale will be made by the Remarketing
Agent pursuant to the terms of the Remarketing Agreement on the Final
Remarketing Date. If the Treasury Portfolio has replaced the Senior Notes
represented by Corporate Units, a Holder of Corporate Units who does not notify
the Warrant Agent, on or prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the Warrant Settlement Date of its intention
to effect a Cash Settlement shall pay the Settlement Price for the shares of
Common Stock to be delivered under the related Warrant from the proceeds at
maturity of the Applicable Ownership Interests (as defined in clause (i) of the
definition of such term) in the Treasury Portfolio.
As provided in the Warrant Agreement, upon the occurrence of a Failed
Final Remarketing, each Holder of any Pledged Senior Notes that are subject to a
Failed Final Remarketing, and any Senior Notes that are represented by a
Corporate Unit with respect to which the Holder has notified the Warrant Agent
of his intent to effect Cash Settlement and failed to deliver the Settlement
Price pursuant to Section 5.02(c)(ii) shall be deemed to have exercised such
Holder's Put Right and to have elected to pay for the shares of Common Stock to
be issued under such Warrants from a portion of the Proceeds of the Put Right
equal to the Settlement Price in full satisfaction of such Holders' obligations
under the Warrants.
A-9
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Warrant or deliver any certificates therefor to the Holder
unless it shall have received payment of the aggregate Settlement Price for the
shares of Common Stock to be purchased thereunder in the manner set forth in the
Warrant Agreement.
Each Warrant evidenced hereby and all obligations and rights of the
Company and the Holder thereunder shall terminate if a Termination Event shall
occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Warrant Agent and to the Holders, at their addresses as
they appear in the Security Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Senior Notes
or the appropriate Applicable Ownership Interests (as specified in clause (i) of
the definition of such term) in the Treasury Portfolio represented by each
Corporate Unit from the Pledge. A Corporate Unit shall thereafter represent the
right to receive the Senior Note or the appropriate Applicable Ownership
Interests in the Treasury Portfolio represented by such Corporate Units in
accordance with the terms of the Warrant Agreement and the Pledge Agreement.
Under the terms of the Pledge Agreement and the Warrant Agreement, the
Warrant Agent will be entitled to exercise the voting and any other consensual
rights pertaining to the Pledged Senior Notes, but only to the extent instructed
in writing by the Holders. Upon receipt of notice of any meeting at which
holders of Senior Notes are entitled to vote or upon the solicitation of
consents, waivers or proxies of holders of Senior Notes, the Warrant Agent
shall, as soon as practicable thereafter, mail to the Corporate Units Holders a
notice:
(1) containing such information as is contained in the notice
or solicitation;
(2) stating that each Corporate Units Holder on the record
date set by the Warrant Agent therefor (which, to the extent possible,
shall be the same date as the record date for determining the holders
of Senior Notes entitled to vote) shall be entitled to instruct the
Warrant Agent as to the exercise of the voting rights pertaining to the
Senior Notes represented by such Holder's Corporate Units; and
(3) stating the manner in which such instructions may be
given.
Upon the written request of the Corporate Units Holders on such record date,
received by the Warrant Agent at least six days prior to such meeting, the
Warrant Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such requests, the
maximum aggregate principal amount of Senior Notes as to which any particular
voting instructions are received. In the absence of specific instructions from
the Holder of a Corporate Unit, the Warrant Agent shall abstain from voting the
Senior Note evidenced by such Corporate Unit.
Upon the occurrence of a Special Event Redemption, the Collateral Agent
shall surrender the Pledged Senior Notes against delivery of an amount equal to
the aggregate Redemption Price of the Pledged Senior Notes and shall deposit
funds in the Collateral Account in exchange for the
A-10
Pledged Senior Notes. Thereafter, pursuant to the terms of the Pledge Agreement,
the Collateral Agent shall cause the Securities Intermediary to apply an amount
equal to the aggregate Redemption Amount of such funds to purchase on behalf of
the Holders of Corporate Units, the Treasury Portfolio and promptly (a) transfer
the Applicable Ownership Interests (as specified in clause (i) of the definition
of such term) in the Treasury Portfolio to the Collateral Account to secure the
obligations of each Holder of Corporate Units to purchase shares of Common Stock
under the Warrants represented by such Corporate Units, (b) transfer the
Applicable Ownership Interests (as specified in clause (ii) of the definition of
such term) in the Treasury Portfolio to the Warrant Agent for the benefit of the
Holders of such Corporate Units and (C) remit the remaining portion of such
funds to the Warrant Agent for payment to the Holders of such Corporate Units.
Upon the occurrence of a Successful Remarketing of Senior Notes prior
to the Final Remarketing Date, pursuant to the terms of the Remarketing
Agreement, the Remarketing Agent will apply an amount equal to the Treasury
Portfolio Purchase Price to purchase on behalf of the Holders of Corporate
Units, the Treasury Portfolio, and, after deducting the Remarketing Fee to the
extent permitted under the terms of the Remarketing Agreement, promptly remit
the remaining portion of such proceeds of such Successful Remarketing to the
Warrant Agent for payment to the Holders of such Corporate Units.
Following the occurrence of (i) a Special Event Redemption prior to the
Warrant Settlement Date, or (ii) a Successful Remarketing of the Senior Notes
prior to the Final Remarketing Date, the Holders of Corporate Units and the
Collateral Agent shall have such security interest rights and obligations with
respect to the Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio as the Holder of Corporate
Units and the Collateral Agent had in respect of the Senior Notes, as the case
may be, subject to the Pledge thereof as provided in the Pledge Agreement and
any reference herein to the Senior Notes shall be deemed to be a reference to
such Treasury Portfolio.
The Corporate Units Certificates are issuable only in registered form
and only in denominations of a single Corporate Unit and any integral multiple
thereof. The transfer of any Corporate Units Certificate will be registered and
Corporate Units Certificates may be exchanged as provided in the Warrant
Agreement. The Security Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the Warrant
Agreement. No service charge shall be required for any such registration of
transfer or exchange, but the Company and the Warrant Agent may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. A Holder who elects to substitute a Treasury Security for
a Senior Note, thereby creating Treasury Units, shall be responsible for any
fees or expenses payable in connection therewith. Except as provided in the
Warrant Agreement, for so long as the Warrant represented by a Corporate Units
remains in effect, such Corporate Units shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such
Corporate Units in respect of the Senior Notes and Warrant represented by such
Corporate Units may be transferred and exchanged only as a Corporate Unit.
A-11
Unless the Treasury Portfolio has replaced the Senior Notes represented
by the Corporate Units, and subject to the conditions set forth in the Warrant
Agreement, the Holder of Corporate Units may substitute, at any time prior to
5:00 p.m. (New York City time) on the fifth Business Day immediately preceding
the Warrant Settlement Date, for the Pledged Senior Notes securing such Holder's
obligations under the related Warrants, Treasury Securities in an aggregate
principal amount at maturity equal to the aggregate principal amount of the
Pledged Senior Notes in accordance with the terms of the Warrant Agreement and
the Pledge Agreement. From and after such Collateral Substitution, each Unit for
which such Pledged Treasury Securities secures the Holder's obligation under the
Warrant shall be referred to as a "TREASURY UNIT". A Holder may make such
Collateral Substitution only in integral multiples of 40 Corporate Units for 40
Treasury Units.
If the Treasury Portfolio has replaced the Senior Notes represented by
the Corporate Units, a Holder may, at any time on or prior to the second
Business Day immediately preceding the Warrant Settlement Date, substitute
Treasury Securities for the Applicable Ownership Interests in the Treasury
Portfolio, but only in integral multiples of 4,000 Corporate Units. In such an
event, the Holder shall transfer Treasury Securities to the Collateral Agent,
and the Warrant Agent shall instruct the Collateral Agent to release the Pledge
of and transfer to the Holder the appropriate Applicable Ownership Interests in
the Treasury Portfolio.
The Company shall pay, on each Payment Date, the Warrant Fees payable
in respect of each Warrant to the Person in whose name the Corporate Units
Certificate evidencing such Warrant is registered at the close of business on
the Record Date for such Payment Date. Warrant Fees will be payable at the
office of the Warrant Agent in New York City. If the book- entry system for the
Corporate Units has been terminated, the Warrant Fees will be payable, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such Person's address as it appears on the Security Register, or by
wire transfer to the account designated by such Person by a prior written notice
to the Warrant Agent.
The Company has the right to defer payment of all or part of the
Warrant Fees in respect of each Warrant until no later than the Warrant
Settlement Date (or in the event of an effective Early Settlement or Cash Merger
Early Settlement, the Early Settlement Date or Cash Merger Early Settlement
Date, as the case may be). If the Company so elects to defer Warrant Fees, the
Company shall pay additional Warrant Fees on such deferred installments of
Warrant Payments at a rate equal to 7.00% per annum, compounding on each
succeeding Payment Date, until such deferred installments are paid. In the event
that the Company elects to defer the payment of Warrant Fees on the Warrants
until the Warrant Settlement Date (or, in the event of an effective Early
Settlement or Cash Merger Early Settlement, the Early Settlement Date or Cash
Merger Early Settlement Date, as the case may be), each Holder will receive on
the Warrant Settlement Date, Early Settlement Date or Cash Merger Early
Settlement Date, as applicable, the aggregate amount of Deferred Warrant Fees to
the extent such fees are not deducted from the Settlement Price in the case of a
Cash Settlement or any Early Settlement or Cash Merger Early Settlement.
A-12
The Warrants and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Warrant Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Warrant Agent or the Company, if, on or prior to the
Warrant Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Warrant
Agent, the Collateral Agent and the Holders, at their addresses as they appear
in the Security Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Senior Notes or the appropriate
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, as the case may be, from the Pledge in
accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Warrant
Agreement, at the option of the Holder thereof, Warrants represented by Units
may be settled early at any time prior to 5:00 p.m. (New York City time) on the
fifth Business Day immediately preceding the Warrant Settlement Date ("EARLY
SETTLEMENT") as provided in the Warrant Agreement. In order to exercise the
right to effect Early Settlement with respect to any Warrant evidenced by this
Certificate, the Holder of this Corporate Units Certificate shall deliver to the
Warrant Agent at the Corporate Trust Office an Election to Settle Early form set
forth below duly completed and accompanied by payment in the form of immediately
available funds payable to the order of the Company in an amount (the "EARLY
SETTLEMENT AMOUNT") equal to:
(i) (A) the product of (I) the Stated Amount, times (B) the
number of Warrants with respect to which the Holder has elected to
effect Early Settlement, plus (B) if such delivery is made with respect
to any Warrants during the period from the close of business on any
Record Date next preceding any Payment Date to the opening of business
on such Payment Date, an amount equal to the Warrant Fees payable on
such Payment Date with respect to such Warrants, less
(ii) the amount of any Deferred Warrant Fees payable to such
Holder as a result of such Early Settlement.
Upon Early Settlement of Warrants by a Holder of the related Units, the
Pledged Senior Notes or Pledge Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) represented by such Units shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Warrant represented by a Corporate Unit as to which Early Settlement is
effected equal to 0.3618 shares of Common Stock per Warrant (the "EARLY
SETTLEMENT RATE"). The Early Settlement Rate shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as provided in
Section 5.04 of the Warrant Agreement.
Upon the occurrence of a Cash Merger, a Holder of Corporate Units may
effect Cash Merger Early Settlement of the Warrant represented by such Corporate
Units pursuant to the
A-13
terms of Section 5.04(b)(2) of the Warrant Agreement. Upon Cash Merger Early
Settlement of Warrants by a Holder of the related Corporate Units, the Pledged
Senior Notes or Pledged Applicable Ownership Interests (as specified in clause
(i) of the definition of such term) in the Treasury Portfolio represented by
such Corporate Units shall be released from the Pledge as provided in the Pledge
Agreement.
Upon registration of transfer of this Corporate Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Warrant Agent pursuant to
the Warrant Agreement), under the terms of the Warrant Agreement and the
Warrants evidenced hereby and the transferor shall be released from the
obligations under the Warrants evidenced by this Corporate Units Certificate.
The Company covenants and agrees, and the Holder, by its acceptance hereof,
likewise covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Corporate Units Certificate, by its acceptance
hereof, authorizes the Warrant Agent to enter into and perform the related
Warrants represented by the Corporate Units evidenced hereby on its behalf as
its attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Warrants by the Company or its trustee in the event that the
Company becomes the subject of a case under the Bankruptcy Code, agrees to be
bound by the terms and provisions thereof, covenants and agrees to perform its
obligations under such Warrants, consents to the provisions of the Warrant
Agreement, authorizes the Warrant Agent to enter into and perform the Warrant
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Senior Notes or the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, as the case may be, represented by this Corporate
Units Certificate pursuant to the Pledge Agreement. The Holder further covenants
and agrees that, to the extent and in the manner provided in the Warrant
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
with respect to the aggregate principal amount of the Pledged Senior Notes or
the appropriate Applicable Ownership Interests (as specified in clause (i) of
the definition of such term) in the Treasury Portfolio, as the case may be, on
the Warrant Settlement Date shall be paid by the Collateral Agent to the Company
in satisfaction of such Holder's obligations under such Warrant and such Holder
shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Warrant Agreement
may be amended with the consent of the Holders of a majority of the Warrants.
The Warrants shall be governed by, and construed in accordance with,
the laws of the State of New York.
Prior to due presentment of this Certificate for registration of
transfer, the Company, the Warrant Agent and its Affiliates and any agent of the
Company or the Warrant Agent may treat the Person in whose name this Corporate
Units Certificate is registered as the owner of the Corporate Units evidenced
hereby for the purpose of receiving payments of interest payable on the Senior
Notes, receiving payments of Warrant Fees (subject to any applicable record
date),
A-14
performance of the Warrants and for all other purposes whatsoever, whether or
not any payments in respect thereof be overdue and notwithstanding any notice to
the contrary, and neither the Company, the Warrant Agent nor any such agent
shall be affected by notice to the contrary.
The Warrants shall not, prior to the settlement thereof, entitle the
Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Warrant Agreement is available for inspection at the
offices of the Warrant Agent.
A-15
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM: as tenants in common
UNIF GIFT MIN ACT: Custodian
------------------- -------------------
(cust) (minor)
Under Uniform Gifts to Minors Act of
------------
-------------------------------------------------
TENANT: as tenants by the entireties
JT TEN: as joint tenants with right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list.
------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
- --------------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D.
or other Identifying Number of Assignee)
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address
Including Postal Zip Code of Assignee)
the within Corporate Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney , to transfer
------------------
said Corporate Units Certificates on the books of The Chubb
Corporation, with full power of substitution in the premises.
Dated: Signature
----------------------------- ----------------------------
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Corporate Units
Certificates in every particular,
without alteration or enlargement or
any change whatsoever.
Signature Guarantee:
------------------------------------
A-16
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Warrant Settlement Date of the
Warrants represented by the number of Corporate Units evidenced by this
Corporate Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
-------------------------------
- --------------------------------------------------------------------------------
Signature
Signature Guarantee:
-----------------------------------------------------------
(if assigned to another person)
If shares are to be registered in the name of and delivered to a Person other
than the Holder, please (i) print such Person's name and address and (ii)
provide a guarantee of your signature:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTERED HOLDER
Please print name and address of Registered Holder:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Social Security or other
Taxpayer Identification
Number, if any ---------------------------------------
A-17
ELECTION TO SETTLE EARLY/CASH MERGER EARLY SETTLEMENT
The undersigned Holder of this Corporate Units Certificate hereby
irrevocably exercises the option to effect [Early Settlement] [Cash Merger Early
Settlement following a Cash Merger] in accordance with the terms of the Warrant
Agreement with respect to the Warrants represented by the number of Corporate
Units evidenced by this Corporate Units Certificate specified below. The
undersigned Holder directs that a certificate for shares of Common Stock or
other securities deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] be registered in the name of, and delivered, together with a check
in payment for any fractional share and any Corporate Units Certificate
representing any Corporate Units evidenced hereby as to which [Early Settlement]
[Cash Merger Early Settlement] of the related Warrants is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Senior Notes or the appropriate Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, deliverable
upon such [Early Settlement] [Cash Merger Early Settlement] will be transferred
in accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated:
--------------------------------- -----------------------------------
Signature
Signature Guarantee:
------------------------------------
A-18
Number of Units evidenced hereby as to which [Early Settlement] [Cash
Merger Early Settlement] of the related Warrants is being elected:
If shares of Common Stock or Corporate Units Certificates are to be registered
in the name of and delivered to and Pledged Senior Notes or the Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, are to be
transferred to a Person other than the Holder, please print such Person's name
and address:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTERED HOLDER
Please print name and address of Registered Holder:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Social Security or other
Taxpayer Identification
Number, if any ---------------------------------------
A-19
Transfer Instructions for Pledged Senior Notes or the Applicable Ownership
Interests in the Treasury Portfolio, as the case may be, transferable upon
[Early Settlement] [Cash Merger Early Settlement] or a Termination Event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A-20
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
Number of Corporate
Amount of increase in Amount of decrease in Units evidenced by this
Number of Corporate Number of Corporate Global Certificate Signature of authorized
Units evidenced by the Units evidenced by the following such signatory of Warrant
Date Global Certificate Global Certificate decrease or increase Agent
- ---- ------------------ ------------------ -------------------- -----
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
A-21
EXHIBIT B
(FORM OF FACE OF TREASURY UNIT CERTIFICATE)
[For inclusion in Global Certificate only - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE WARRANT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF
THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR
BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. 2 CUSIP No. 171232 40 8
Number of Treasury Units: 0
The Chubb Corporation
Treasury Units
This Treasury Units Certificate certifies that [Cede & Co.]
[__________________] is the registered Holder of the number of Treasury Units
set forth above [For inclusion in Global Certificates only - or such other
number of Treasury Units as is reflected in the Schedule of Increases or
Decreases in Global Certificate attached hereto]. Each Treasury Unit represents
(i) a 1/40 undivided beneficial ownership interest of a Treasury Security having
a principal amount at maturity equal to $1,000, subject to the Pledge of such
Treasury Security by such Holder pursuant to the Pledge Agreement, and (ii) the
rights and obligations of the Holder under one Warrant with The Chubb
Corporation, a New Jersey corporation (the "COMPANY"). All
capitalized terms used herein which are defined in the Warrant Agreement (as
defined on the reverse hereof) have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Securities represented
by each Treasury Unit evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Warrant represented by such Treasury Unit. Each Warrant evidenced
hereby shall have an exercise price of $0.00 and shall be subject to automatic
exercise on November 16, 2005 (the "WARRANT SETTLEMENT DATE"), unless a
Termination Event shall occur on or prior the Warrant Settlement Date. The
premium payable by the Holder in consideration for the issuance of the Warrant
evidenced hereby shall be $25.00. Such amount shall not be payable on the issue
date of such Warrant but shall be deferred and payable as the settlement price
of the Warrant (the "SETTLEMENT PRICE") on the earlier of the Warrant Settlement
Date and any Early Settlement Date or Cash Merger Early Settlement Date, unless
a Termination Event shall occur on or prior to any such date. Accordingly, each
Warrant evidenced hereby shall obligate the Holder of this Corporate Units
Certificate to purchase, and the Company to sell, on the Warrant Settlement
Date, at a price equal to the Settlement Price, a number of newly issued shares
of common stock, par value $1.00 per share ("COMMON STOCK"), of the Company,
equal to the Settlement Rate, unless on or prior to the Warrant Settlement Date
there shall have occurred a Termination Event or an Early Settlement or Cash
Merger Early Settlement with respect to such Warrant, all as provided in the
Warrant Agreement and more fully described on the reverse hereof. The Settlement
Price for the shares of Common Stock purchased pursuant to each Warrant
evidenced hereby, if not paid earlier, shall be paid on the Warrant Settlement
Date by application of the proceeds from the Treasury Securities at maturity
pledged to secure the obligations of the Holder under such Warrant of the
Treasury Units of which such Warrant is a part.
Each Warrant evidenced hereby obligates the holder to agree, for United
States federal, state and local income and franchise tax purposes, to (i) treat
an acquisition of the Treasury Units as an acquisition of the Treasury
Securities and Warrants represented by the Treasury Units, (ii) treat itself as
owner of the applicable interest in the Collateral Account, including the
Treasury Securities and (iii) treat each Warrant as a forward purchase contract
for the purchase of Common Stock.
The Company shall pay, on each Payment Date, in respect of each Warrant
represented by a Treasury Unit evidenced hereby, an amount (the "WARRANT FEES")
equal to 3.00% per year of the Stated Amount. Such Warrant Fees shall be payable
to the Person in whose name this Treasury Units Certificate is registered at the
close of business on the Record Date for such Payment Date. The Company may, at
its option, defer such Warrant Fees.
Warrant Fees will be payable at the office of the Warrant Agent in New
York City. If the book-entry system for the Corporate Units has been terminated,
the Warrant Fees will be payable, at the option of the Company, by check mailed
to the address of the Person entitled thereto at such Person's address as it
appears on the Security Register, or by wire transfer to the account designated
by such Person by a prior written notice to the Warrant Agent.
B-2
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Warrant Agent by manual signature, this Treasury Units Certificate shall not
be entitled to any benefit under the Pledge Agreement or the Warrant Agreement
or be valid or obligatory for any purpose.
B-3
IN WITNESS WHEREOF, the Company and the Holder specified above have
caused this instrument to be duly executed.
The Chubb Corporation
By:
----------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Warrants)
By: BANK ONE TRUST COMPANY,
N.A., not individually but solely as
Attorney-in-Fact of such Holder
By:
----------------------------------
Authorized Officer
Dated:
-----------------------
B-4
CERTIFICATE OF AUTHENTICATION OF
WARRANT AGENT
This is one of the Treasury Units referred to in the
within-mentioned Warrant Agreement.
By:BANK ONE TRUST COMPANY, N.A.,
as Warrant Agent
By:
-----------------------------
Authorized Officer
Dated:
--------------------
B-5
(REVERSE OF TREASURY UNIT CERTIFICATE)
Each Warrant evidenced hereby is governed by a Warrant Agreement, dated
as of December 2, 2002 (as may be supplemented from time to time, the "WARRANT
AGREEMENT") between the Company and Bank One Trust Company, N.A., asWarrant
Agent (including its successors thereunder, herein called the "WARRANT AGENT"),
to which the Warrant Agreement and supplemental agreements thereto reference is
hereby made for a description of the respective rights, limitations of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the Holders and of the terms upon which the Treasury Units Certificates are,
and are to be, executed and delivered.
Each Warrant evidenced hereby shall have an exercise price of $0.00 and
shall be subject to automatic exercise on November 16, 2005 (the "WARRANT
SETTLEMENT DATE"), unless a Termination Event shall occur on or prior to such
date. The premium payable by the Holder in consideration for the issuance of the
Warrant evidenced hereby shall be $25.00. Such amount shall not be payable on
the issue date of such Warrant but shall be deferred and payable as the
settlement price of the Warrant (the "SETTLEMENT PRICE") on the earlier of the
Warrant Settlement Date and any Early Settlement Date or Cash Merger Early
Settlement Date, unless a Termination Event shall occur on or prior to any such
date. Accordingly, each Warrant evidenced hereby shall obligate the Holder of
this Corporate Units Certificate to purchase, and the Company to sell, on the
Warrant Settlement Date, at a price equal to the Settlement Price, a number of
newly issued shares of common stock, par value $1.00 per share ("COMMON STOCK"),
of the Company, equal to the Settlement Rate, unless on or prior to the Warrant
Settlement Date there shall have occurred a Termination Event or an Early
Settlement or Cash Merger Early Settlement with respect to such Warrant. The
"SETTLEMENT RATE" is equal to:
(1) if the Adjusted Applicable Market Value (as defined below)
is greater than $69.10 (the "THRESHOLD APPRECIATION PRICE"), 0.3619
shares of Common Stock per Warrant;
(2) if the Adjusted Applicable Market Value is less than or
equal to the Threshold Appreciation Price but greater than or equal to
$56.64 (the "REFERENCE PRICE"), the number of shares of Common Stock
per Warrant having a value equal to the Stated Amount divided by the
Adjusted Applicable Market Value; and
(3) if the Adjusted Applicable Market Value is less than the
Reference Price, 0.4414 shares of Common Stock per Warrant;
in each case subject to adjustment as provided in the Warrant Agreement
(and in each case rounded upward or downward to the nearest 1/10,000th of a
share).
No fractional shares of Common Stock will be issued upon settlement of
Warrants, as provided in Section of the Warrant Agreement.
B-6
Each Warrant evidenced hereby, which is settled through Early
Settlement or Cash Merger Early Settlement shall obligate the Holder of the
related Treasury Units to purchase at the Settlement Price, and the Company to
sell, a number of newly issued shares of Common Stock equal to the Early
Settlement Rate (in the case of an Early Settlement) or applicable Settlement
Rate (in the case of a Cash Merger Early Settlement).
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Warrant Settlement Date, subject
to adjustments set forth under Section 5.04 hereof.
The "ADJUSTED APPLICABLE MARKET VALUE" means (i) prior to any
adjustment of the Settlement Rate pursuant to paragraph (1), (2), (3), (4), (5),
(6), (7) or (10) of Section 5.04(a) of the Warrant Agreement, the Applicable
Market Value, and (ii) at the time of and after any adjustment of the Settlement
Rate pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of Section
5.04(a) of the Warrant Agreement, the Applicable Market Value multiplied by a
fraction, the numerator of which shall be the Settlement Rate immediately after
such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of Section 5.04(a) of the Warrant Agreement and the denominator of which shall
be the Settlement Rate immediately prior to such adjustment; provided, however,
that if such adjustment to the Settlement Rate is required to be made pursuant
to the occurrence of any of the events contemplated by paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of Section 5.04(a) of the Warrant Agreement during
the period taken into consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the Settlement Rate.
The "CLOSING PRICE" per share of Common Stock on any date of
determination means the:
(1) closing sale price as of the close of the principal
trading session (or, if no closing price is reported, the last reported
sale price) per share on the New York Stock Exchange, Inc. (the "NYSE")
on such date;
(2) if the Common Stock is not listed for trading on the NYSE
on any such date, the closing sale price (or, if no closing price is
reported, the last reported sale price) per share as reported in the
composite transactions for the principal United States national or
regional securities exchange on which the Common Stock is so listed;
(3) if the Common Stock is not so listed on a United States
national or regional securities exchange, the last reported sale price
per share as reported by The Nasdaq Stock Market, Inc.;
(4) if the Common Stock is not so reported, the last quoted
bid price for the Common Stock in the over-the-counter market as
reported by the National Quotation Bureau or similar organization; or
B-7
(5) if such bid price is not available, the market value of
the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Company.
A "TRADING DAY" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Warrant Agreement, the Holder of
this Treasury Unit shall pay the Settlement Price for the shares of the Common
Stock purchased pursuant to each Warrant evidenced hereby either by effecting a
Cash Settlement, an Early Settlement or, if applicable, a Cash Merger Early
Settlement of each such Warrant or by applying a principal amount of the Pledged
Treasury Securities represented by such Holder's Treasury Unit equal to the
Stated Amount of such Warrant to the purchase of the Common Stock. A Holder of
Treasury Units who (1) does not on or prior to 5:00 p.m. (New York City time) on
the fifth Business Day immediately preceding the Warrant Settlement Date, notify
the Warrant Agent of its intention to effect a Cash Settlement, or who does so
notify the Warrant Agent but fails to make an effective Cash Settlement prior to
5:00 p.m. (New York City time) on the fourth Business Day immediately preceding
the Warrant Settlement Date, (2) on or prior to 5:00 p.m. (New York City time)
on the fifth Business Day prior to the Warrant Settlement Date, does not make an
effective Early Settlement, or (3) on or prior to 5:00 p.m. (New York City time)
on the fifth Business Day prior to the Warrant Settlement Date, does not make an
effective Cash Merger Early Settlement, shall pay the Settlement Price for the
shares of Common Stock to be issued under the related Warrant from the proceeds
of the Pledged Treasury Securities.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Warrant or deliver any certificates therefor to the Holder
unless it shall have received payment of the aggregate settlement price for the
shares of Common Stock to be purchased thereunder in the manner set forth in the
Warrant Agreement.
The Company has the right to defer payment of all or part of the
Warrant Fees in respect of each Warrant until no later than the Warrant
Settlement Date (or in the event of an effective Early Settlement or Cash Merger
Early Settlement, the Early Settlement Date or Cash Merger Early Settlement
Date, as the case may be). If the Company so elects to defer Warrant Fees, the
Company shall pay additional Warrant Fees on such deferred installments of
Warrant Payments at a rate equal to 7.00% per annum, compounding on each
succeeding Payment Date, until such deferred installments are paid. In the event
that the Company elects to defer the payment of Warrant Fees on the Warrants
until the Warrant Settlement Date (or, in the event of an effective Early
Settlement or Cash Merger Early Settlement, the Early Settlement Date or Cash
Merger Early Settlement, as the case may be), each Holder will receive on the
Warrant Settlement Date or Early Settlement Date, as applicable, the aggregate
amount of Deferred Warrant Fees to the
B-8
extent such fees are not deducted from the Settlement Price in the case of a
Cash Settlement or any Early Settlement or Cash Merger Early Settlement.
The Warrants and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Warrant Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Warrant Agent or the Company, if, on or prior to the
Warrant Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Warrant
Agent, the Collateral Agent and the Holders, at their addresses as they appear
in the Security Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Pledged Treasury Securities (as defined
in the Pledge Agreement) represented by each Treasury Unit. A Treasury Unit
shall thereafter represent the right to receive the Proceeds of the Treasury
Security represented by such Treasury Unit, in accordance with the terms of the
Warrant Agreement and the Pledge Agreement.
The Treasury Units Certificates are issuable only in registered form
and only in denominations of a single Treasury Unit and any integral multiple
thereof. The transfer of any Treasury Units Certificate will be registered and
Treasury Units Certificates may be exchanged as provided in the Warrant
Agreement. The Security Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the Warrant
Agreement. No service charge shall be required for any such registration of
transfer or exchange, but the Company and the Warrant Agent may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. A Holder who elects to substitute Senior Notes, for
Treasury Securities, thereby recreating Corporate Units, shall be responsible
for any fees or expenses associated therewith. Except as provided in the Warrant
Agreement, for so long as the Warrant represented by a Treasury Unit remains in
effect, such Treasury Unit shall not be separable into its constituent parts,
and the rights and obligations of the Holder of such Treasury Unit in respect of
the Treasury Security and the Warrant represented by such Treasury Unit may be
transferred and exchanged only as a Treasury Unit.
Unless the Treasury Portfolio has replaced the Senior Notes represented
by the Corporate Units and subject to the conditions set forth in the Warrant
Agreement, a Holder of Treasury Units may recreate, at any time prior to 5:00
p.m. (New York City time) on the fifth Business Day immediately preceding the
Warrant Settlement Date, Corporate Units by delivering to the Securities
Intermediary Senior Notes with an aggregate principal amount, equal to the
aggregate principal amount at maturity of the Pledged Treasury Securities in
exchange for the release of such Pledged Treasury Securities in accordance with
the terms of the Warrant Agreement and the Pledge Agreement. From and after such
substitution, the Holder's Units shall be referred to as a "CORPORATE UNIT". Any
such creation of Corporate Units may be effected only in multiples of 40
Treasury Units for 40 Corporate Units.
B-9
The Company shall pay, on each Payment Date, the Warrant Fees payable
in respect of each Warrant to the Person in whose name the Treasury Units
Certificate evidencing such Warrant is registered at the close of business on
the Record Date for such Payment Date. Warrant Fees will be payable at the
office of the Warrant Agent in New York City or, at the option of the Holder, by
check mailed to the address of the Person entitled thereto at such address as it
appears on the Security Register.
The Warrants and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Warrant Fees, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Warrant Agent or the Company, if, on or prior to the
Warrant Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to the Warrant
Agent, the Collateral Agent and the Holders, at their addresses as they appear
in the Security Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Treasury Securities from the Pledge in
accordance with the provisions of the Pledge Agreement. A Treasury Unit shall
thereafter represent the right to receive the interest in the Treasury Security
represented by such Treasury Unit, in accordance with the terms of the Warrant
Agreement and the Pledge Agreement.
Subject to and upon compliance with the provisions of the Warrant
Agreement, at the option of the Holder thereof, Warrants represented by Units
may be settled early ("EARLY SETTLEMENT") as provided in the Warrant Agreement.
In order to exercise the right to effect Early Settlement with respect to any
Warrant evidenced by this Certificate, the Holder of this Treasury Units
Certificate shall deliver to the Warrant Agent at the Corporate Trust Office an
Election to Settle Early form set forth below duly completed and accompanied by
payment in the form of immediately available funds payable to the order of the
Company in an amount (the "EARLY SETTLEMENT AMOUNT") equal to:
(i) (A) the product of (I) the Stated Amount, times (II) the
number of Warrants with respect to which the Holder has elected to
effect Early Settlement, plus (B) if such delivery is made with respect
to any Warrants during the period from the close of business on any
Record Date next preceding any Payment Date to the opening of business
on such Payment Date, an amount equal to the Contract Adjustment
Payments payable on such Payment Date with respect to such Warrants
(ii) the amount of any Deferred Warrant Fees payable to such
Holder as a result of such Early Settlement.
Upon Early Settlement of Warrants by a Holder of the related Units, the
Pledged Treasury Securities represented by such Units shall be released from the
Pledge as provided in the Pledge Agreement and the Holder shall be entitled to
receive a number of shares of Common Stock on account of each Warrant
represented by a Treasury Unit as to which Early Settlement is effected
B-10
equal to 0.3618 shares of Common Stock per Warrant (the "EARLY SETTLEMENT
RATE"). The Early Settlement Rate shall be adjusted in the same manner and at
the same time as the Settlement Rate is adjusted as provided in Section 5.04 of
the Warrant Agreement.
Upon the occurrence of a Cash Merger, a Holder of Treasury Units may
effect Cash Merger Early Settlement of the Warrant represented by such Treasury
Units pursuant to the terms of Section 5.04(b)(2) of the Warrant Agreement. Upon
Cash Merger Early Settlement of Warrants by a Holder of the related Treasury
Units, the Pledged Treasury Securities represented by such Treasury Units shall
be released from the Pledge as provided in the Pledge Agreement.
Upon registration of transfer of this Treasury Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Warrant Agent pursuant to
the Warrant Agreement), under the terms of the Warrant Agreement and the
Warrants evidenced hereby and the transferor shall be released from the
obligations under the Warrants evidenced by this Treasury Units Certificate. The
Company covenants and agrees, and the Holder, by its acceptance hereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Treasury Units Certificate, by its acceptance
hereof, authorizes the Warrant Agent to enter into and perform the related
Warrants represented by the Treasury Units evidenced hereby on its behalf as its
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Warrants by the Company or its trustee in the event that the
Company becomes the subject of a case under the Bankruptcy Code, agrees to be
bound by the terms and provisions thereof, covenants and agrees to perform its
obligations under such Warrants, consents to the provisions of the Warrant
Agreement, authorizes the Warrant Agent to enter into and perform the Warrant
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities represented by this Treasury
Units Certificate pursuant to the Pledge Agreement. The Holder further covenants
and agrees, that, to the extent and in the manner provided in the Warrant
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the aggregate principal amount of the Pledged Treasury Securities
on the Warrant Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Warrant and such
Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Warrant Agreement
may be amended with the consent of the Holders of a majority of the Warrants.
The Warrants shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
Prior to due presentment of this Certificate for registration or
transfer, the Company, the Warrant Agent and its Affiliates and any agent of the
Company or the Warrant Agent may treat the Person in whose name this Treasury
Units Certificate is registered as the owner of the Treasury Units evidenced
hereby for the purpose of receiving payments of interest on the
B-11
Treasury Securities, receiving payments of Warrant Fees (subject to any
applicable record date), performance of the Warrants and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Warrant
Agent nor any such agent shall be affected by notice to the contrary.
The Warrants shall not, prior to the settlement thereof, entitle the
Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Warrant Agreement is available for inspection at the
offices of the Warrant Agent.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM: as tenants in common
UNIF GIFT MIN ACT: Custodian
-------------------- ---------------------
(cust) (minor)
Under Uniform Gifts to Minors Act of
---------------
----------------------------------------------------
TENANT: as tenants by the entireties
JT TEN: as joint tenants with right of survivorship and not
as tenants in common
Additional abbreviations may also be used though not in the above list.
--------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
---------------------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other Identifying Number
of Assignee)
---------------------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip Code of
Assignee)
the within Treasury Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing ----------------- attorney to transfer
said Treasury Units Certificates on the books of The Chubb Corporation, with
full power of substitution in the premises.
Dated:
-------------------- --------------------------------------------
B-12
Signature
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Treasury Units
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee:
-----------------------------------------------------
B-13
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Warrant Settlement Date of the
Warrants represented by the number of Treasury Units evidenced by this Treasury
Units Certificate be registered in the name of, and delivered, together with a
check in payment for any fractional share, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.
Dated:
-------------------- --------------------------------------------
Signature
Signature Guarantee:
(if assigned to another person)
If shares are to be registered in the name
of and delivered to a Person other than the
Holder, please (i) print such Person's name REGISTERED HOLDER
and address and (ii) provide a guarantee of
your signature:
Please print name and address of
Registered Holder:
- ------------------------------------- ----------------------------------
Name Name
- ------------------------------------- ----------------------------------
Address Address
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
Social Security or other
Taxpayer Identification
Number, if any ----------------------------------
B-14
ELECTION TO SETTLE EARLY/CASH MERGER EARLY SETTLEMENT
The undersigned Holder of this Treasury Units Certificate hereby
irrevocably exercises the option to effect [Early Settlement] [Cash Merger Early
Settlement upon a Cash Merger] in accordance with the terms of the Warrant
Agreement with respect to the Warrants represented by the number of Treasury
Units evidenced by this Treasury Units Certificate specified below. The option
to effect [Early Settlement] [Cash Merger Early Settlement] may be exercised
only with respect to Warrants represented by Treasury Units with an aggregate
Stated Amount equal to $1,000 or an integral multiple thereof. The undersigned
Holder directs that a certificate for shares of Common Stock or other securities
deliverable upon such [Early Settlement] [Cash Merger Early Settlement] be
registered in the name of, and delivered, together with a check in payment for
any fractional share and any Treasury Units Certificate representing any
Treasury Units evidenced hereby as to which Cash Merger Early Settlement of the
related Warrants is not effected, to the undersigned at the address indicated
below unless a different name and address have been indicated below. Pledged
Treasury Securities deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] will be transferred in accordance with the transfer instructions set
forth below. If shares are to be registered in the name of a Person other than
the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
---------------------- -----------------------------------------
Signature
Signature Guarantee:
------------------------------------
B-15
Number of Units evidenced hereby as to which [Early Settlement] [Cash
Merger Early Settlement] of the related Warrants is being elected:
If shares of Common Stock or Treasury Units REGISTERED HOLDER
Certificates are to be registered in the
name of and delivered to and Pledged
Treasury Securities are to be transferred to
a Person other than the Holder, please print Please print name and address of
such Person's name and address: Registered Holder:
- ------------------------------------
Name
------------------------------------
Name
- ------------------------------------
Address
------------------------------------
Address
- ------------------------------------
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
------------------------------------
Social Security or other
Taxpayer Identification
Number, if any
------------------------------------
B-16
Transfer Instructions for Pledged Treasury Securities Transferable upon [Early
Settlement] [Cash Merger Early Settlement] or a Termination Event:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-17
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
Date Amount of increase in Amount of decrease in Number of Treasury Signature of
Number of Treasury Number of Treasury Units evidenced by authorized signatory
Units evidenced by Units evidenced by this Global of Warrant Agent
the Global Certificate the Global Certificate Certificate following such
decrease or increase
B-18
EXHIBIT C
INSTRUCTION TO WARRANT AGENT
Bank One Trust Company, N.A.
The Warrant Agent
153 West 51st Street
New York, New York 10019
Fax: (212) 373-1383
Attention: Corporate Trust Administration
Re: [_______ Corporate Units] [_______ Treasury Units] of The Chubb
Corporation, a New Jersey corporation (the "COMPANY").
The undersigned Holder hereby notifies you that it has delivered to BNY
Midwest Trust Compant, as Securities Intermediary, for credit to the Collateral
Account, $______ aggregate principal amount of [Senior Notes] [Treasury
Securities] in exchange for the [Pledged Senior Notes] [Pledged Treasury
Securities] held in the Collateral Account, in accordance with the Pledge
Agreement, dated as of December 2, 2002 (the "PLEDGE AGREEMENT"; unless
otherwise defined herein, terms defined in the Pledge Agreement are used herein
as defined therein), between you, the Company, the Collateral Agent, the
Custodial Agent and the Securities Intermediary. The undersigned Holder has paid
all applicable fees and expenses relating to such exchange. The undersigned
Holder hereby instructs you to instruct the Collateral Agent to release to you
on behalf of the undersigned Holder the [Pledged Senior Notes] [Pledged Treasury
Securities] related to such [Corporate Units] [Treasury Units].
Date:
----------------------------- ---------------------------------
Signature
Signature Guarantee:
------------------
Please print name and address of Registered Holder:
---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
- -------------------------------------
- -------------------------------------
- -------------------------------------
- -------------------------------------
C-2
EXHIBIT D
NOTICE FROM WARRANT AGENT
TO HOLDERS
(Transfer of Collateral upon Occurrence of a Termination Event)
[HOLDER]
Attention:
Telecopy: __________
Re: [__________ Corporate Units] [______ Treasury Units] of The Chubb
Corporation, a New Jersey corporation (the "COMPANY")
Please refer to the Warrant Agreement, dated as of December 2, 2002
(the "WARRANT AGREEMENT"; unless otherwise defined herein, terms defined in the
Warrant Agreement are used herein as defined therein), between the Company and
the undersigned, as Warrant Agent and as attorney-in-fact for the holders of
Corporate Units and [Applicable Ownership Interests (as specified in clause (i)
of the definition of such term) and] Treasury Units from time to time.
We hereby notify you that a Termination Event has occurred and that
[the Senior Notes] [Applicable Ownership Interests (as specified in clause (i)
of the definition of such term) in the Treasury Portfolio] [the Treasury
Securities] compromising a portion of your ownership interest in _____
[Corporate Units] [Treasury Units] have been released and are being held by us
for your account pending receipt of transfer instructions with respect to such
[Senior Notes][Treasury Securities] (the "RELEASED SECURITIES").
Pursuant to Section 3.15 of the Warrant Agreement, we hereby request
written transfer instructions with respect to the Released Securities. Upon
receipt of your instructions and upon transfer to us of your [Corporate
Units][Treasury Units] effected through book-entry or by delivery to us of your
[Corporate Units Certificate][Treasury Units Certificate], we shall transfer the
Released Securities by book-entry transfer or other appropriate procedures, in
accordance with your instructions. In the event you fail to effect such transfer
or delivery, the Released Securities and any distributions thereon, shall be
held in our name, or a nominee in trust for your benefit, until such time as
such [Corporate Units][Treasury Units] are transferred or your [Corporate Units
Certificate] [Treasury Units Certificate] is surrendered or satisfactory
evidence is provided that such [Corporate Units Certificate][Treasury Units
Certificate] has been destroyed, lost or stolen, together with any
indemnification that we or the Company may require.
Date: By: BANK ONE TRUST COMPANY, N.A.,
as the Warrant Agent
------------------------------------
Name:
Title: Authorized Signatory
D-2
EXHIBIT E
NOTICE TO SETTLE BY CASH
Bank One Trust Company, N.A.
The Warrant Agent
153 West 51st Street
New York, New York 10019
Fax: (212) 373-1383
Attention: Corporate Trust Administration
Re: [_______ Corporate Units] [Treasury Units] of The Chubb
Corporation, a New Jersey corporation (the "COMPANY")
The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.02 of the Warrant Agreement, dated as of December 2, 2002 (the
"WARRANT AGREEMENT"; unless otherwise defined herein, terms defined in the
Warrant Agreement are used herein as defined therein), between the Company and
you, as Warrant Agent and as Attorney-in-Fact for the Holders of the Warrants,
that such Holder has elected to pay to the Securities Intermediary for deposit
in the Collateral Account, prior to or on 11:00 a.m. (New York City time) on the
fourth Business Day immediately preceding the Warrant Settlement Date (in lawful
money of the United States by certified or cashiers' check or wire transfer, in
immediately available funds), $______ as the Settlement Price for the shares of
Common Stock issuable to such Holder by the Company with respect to _____
Warrants on the Warrant Settlement Date. The undersigned Holder hereby instructs
you to notify promptly the Collateral Agent of the undersigned Holders' election
to make such Cash Settlement with respect to the Warrants related to such
Holder's [Corporate Units] [Treasury Units].
Date:
------------------------------ -----------------------------------
Signature
Signature Guarantee:
---------------
Please print name and address of Registered Holder:
E-1
EXHIBIT F
NOTICE FROM WARRANT AGENT
TO COLLATERAL AGENT
(Settlement of Warrant through Remarketing)
BNY Midwest Trust Company
The Collateral Agent
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Attention: Corporate Finance
Fax: (312) 827-8542
Re: __________ Corporate Units of The Chubb Corporation, a New Jersey
corporation (the "COMPANY")
Please refer to the Warrant Agreement, dated as of December 2, 2002
(the "WARRANT AGREEMENT"; unless otherwise defined herein, terms defined in the
Warrant Agreement are used herein as defined therein), between the Company and
the undersigned, as Warrant Agent and as attorney-in-fact for the Holders of
Corporate Units from time to time.
In accordance with Section 5.02 of the Warrant Agreement and, based on
notices of [Early Settlements][Cash Settlements] received from Holders of
Corporate Units as of 5:00 p.m. (New York City time), on the fifth Business Day
immediately preceding the ______ Remarketing Date, we hereby notify you that an
aggregate principal amount of $______ Senior Notes are to be tendered for
purchase in the Remarketing.
Date: By: BANK ONE TRUST COMPANY, N.A.,
as the Warrant Agent
--------------------------------------
Name:
Title: Authorized Signatory
F-1
EXHIBIT G
FORM OF REMARKETING AGREEMENT
[Insert Date]
[Insert Name/Address
of Remarketing Agent]
Ladies and Gentlemen:
This Agreement is dated [Insert Date] (the "AGREEMENT") by and between
The Chubb Corporation, a New Jersey corporation (the "COMPANY"), [Insert Name of
Remarketing Agent], as the remarketing agent (the "REMARKETING AGENT"), and Bank
One Trust Company, N.A., not individually but solely as Warrant Agent (the
"WARRANT AGENT") and attorney-in-fact of the holders of Units (as defined in the
Warrant Agreement referred to below).
Section 1. Definitions.
(a) Capitalized terms used and not defined in this Agreement shall have
the meanings set forth in the Warrant Agreement, dated as of December 2, 2002,
between the Company and Bank One Trust Company, N.A., as Warrant Agent, as
amended from time to time (the "WARRANT AGREEMENT").
(b) As used in this Agreement, the following terms have the following
meanings
"PRELIMINARY PROSPECTUS" means any preliminary prospectus relating to
the Remarketed Senior Notes included in the Registration Statement, including
the documents incorporated by reference therein as of the date of such
Preliminary Prospectus; and any reference to any amendment or supplement to such
Preliminary Prospectus shall be deemed to refer to and include any documents
filed after the date of such Preliminary Prospectus, under the Exchange Act, and
incorporated by reference in such Preliminary Prospectus.
"PROSPECTUS" means the prospectus, if required, relating to the
Remarketed Senior Notes, in the form in which first filed, or transmitted for
filing, with the Commission after the effective date of the Registration
Statement pursuant to Rule 424(b), including the documents incorporated by
reference therein as of the date of such Prospectus; and any reference to any
amendment or supplement to such Prospectus shall be deemed to refer to and
include any documents filed after the date of such Prospectus, under the
Exchange Act, and incorporated by reference in such Prospectus.
"REGISTRATION STATEMENT" means a registration statement under the
Securities Act prepared by the Company covering, inter alia, the Remarketing of
the Remarketed Senior Notes pursuant to Section 5(a) hereunder, including all
exhibits thereto and the documents incorporated
G-1
by reference in the prospectus contained in such registration statement, and any
post-effective amendments thereto.
"REMARKETED SENIOR NOTES" means the Pledged Senior Notes and the
Separate Senior Notes, if any, subject to Remarketing as identified to the
Remarketing Agent by the Warrant Agent and the Custodial Agent, respectively,
after 1100 a.m., New York City time, on the Business Day immediately preceding
the applicable Remarketing Date, and shall include(a) (i) in the case of the
Initial Remarketing, the Second Remarketing and the Third Remarketing, the
Pledged Senior Notes and (ii) in the case of the Final Remarketing, the Senior
Notes of the Holders of Corporate Units who have not notified the Warrant Agent
prior to 500 p.m. on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date of their intention to effect a Cash Settlement of the
related Warrants pursuant to the terms of the Warrant Agreement or who have so
notified the Warrant Agent but failed to make the required cash payment on the
fourth Business Day immediately preceding the Purchase Contract Settlement Date
pursuant to the terms of the Warrant Agreement, and (b) the Separate Senior
Notes of the holders of Separate Senior Notes, if any, who have elected to have
their Separate Senior Notes be remarketed in such Remarketing pursuant to the
terms of the Warrant Agreement.
"REMARKETING" means the remarketing of the Remarketed Senior Notes
pursuant to this Remarketing Agreement.
"REMARKETING MATERIALS" means the Preliminary Prospectus, the
Prospectus or any other information furnished by the Company to the Remarketing
Agent for distribution to investors in connection with the Remarketing.
"SENIOR NOTES" means the senior notes due November 16, 2007 of the
Company.
"TRANSACTION DOCUMENTS" means this Agreement, the Warrant Agreement,
the Pledge Agreement and the Indenture, in each case as amended or supplemented
from time to time.
Section 2. Appointment and Obligations of the Remarketing Agent.
(a) The Company hereby appoints [Insert Name of Remarketing Agent] as
the exclusive Remarketing Agent, and, subject to the terms and conditions set
forth herein, [Insert Name of Remarketing Agent] hereby accepts appointment as
Remarketing Agent, for the purpose of (i) remarketing the Remarketed Senior
Notes on behalf of the holders thereof, (ii) determining, in consultation with
the Company, in the manner provided for herein and in the Warrant Agreement and
the Indenture, the Reset Rate for the Senior Notes, and (iii) performing such
other duties as are assigned to the Remarketing Agent in the Transaction
Documents.
(b) Unless a Special Event Redemption has occurred prior to such date,
on the third Business Day immediately preceding August 16, 2005 (the "INITIAL
REMARKETING DATE"), the Remarketing Agent shall use its reasonable efforts to
remarket ("INITIAL REMARKETING") the Remarketed Senior Notes, at a price (the
"REMARKETING PRICE"), based on the Reset Rate, equal
G-2
to approximately (but not less than) 100.50% of the sum of the Treasury
Portfolio Purchase Price and the Separate Senior Notes Purchase Price.
(c) In the case of a Failed Initial Remarketing and unless a Special
Event Redemption has occurred prior to such date, on the third Business Day
immediately preceding September 16, 2005 (the "SECOND REMARKETING DATE"), the
Remarketing Agent shall use its reasonable efforts to remarket (the "SECOND
REMARKETING") the Remarketed Senior Notes at the Remarketing Price. In the case
of a Failed Second Remarketing and unless a Special Event Redemption has
occurred prior to such date, on the third Business Day immediately preceding
October 16, 2005 (the "THIRD REMARKETING DATE"), the Remarketing Agent shall use
its reasonable efforts to remarket (the "THIRD REMARKETING") the Remarketed
Senior Notes at the Remarketing Price. In the case of a Failed Third Remarketing
and unless a Special Event Redemption has occurred prior to such date, on the
third Business Day immediately preceding the Purchase Contract Settlement Date
(the "FINAL REMARKETING DATE"), the Remarketing Agent shall use its reasonable
efforts to remarket (the "FINAL REMARKETING") the Remarketed Senior Notes at a
price (the "FINAL REMARKETING PRICE"), based on the Reset Rate, equal to
approximately 100.50% (or, if the Remarketing Agent is unable to remarket the
Remarketed Senior Notes at such price, at a price below 100.50%, but in no event
less than 100%, net of the Remarketing Fee) of the aggregate principal amount of
the Remarketed Senior Notes being remarketed in such Final Remarketing. It is
understood and agreed that the Remarketing on any Remarketing Date, other than
the Final Remarketing Date, will be considered successful and no further
attempts will be made if the resulting proceeds are at least 100.25% (net of the
Remarketing Fee) of the sum of the Treasury Portfolio Purchase Price and the
Separate Senior Notes Purchase Price. It is further understood and agreed that
the Final Remarketing will be considered successful if the resulting proceeds
are at least 100% (net of the Remarketing Fee) of the aggregate principal amount
of the Remarketed Senior Notes.
(d) In connection with each Remarketing, the Remarketing Agent shall
determine, in consultation with the Company, the rate per annum, rounded to the
nearest one-thousandth (0.001) of one percent per annum, that the Senior Notes
should bear (the "RESET RATE") in order for the Senior Notes of the Corporate
Unit holders to have an aggregate market value equal to the Remarketing Price or
the Final Remarketing Price, as the case may be, and that in the sole reasonable
discretion of the Remarketing Agent will enable it to remarket all of the
Remarketed Senior Notes at the Remarketing Price or Final Remarketing Price, as
the case may be, in such Remarketing, provided that such rate shall not exceed
the maximum interest rate permitted by law.
(e) In the event of a Failed Remarketing or if no Senior Notes are
included in Corporate Units, and if none of the holders of the Separate Senior
Notes elect to have Senior Notes be remarketed in such Remarketing, the
applicable interest rate on the Senior Notes will not be reset and will continue
to be the Coupon Rate set forth in the Indenture, as supplemented from time to
time.
G-3
(f) If, by 4:00 p.m. (New York City time) on the applicable Remarketing
Date, the Remarketing Agent is unable to remarket all of the Remarketed Senior
Notes at the Remarketing Price or the Final Remarketing Price, as the case may
be, pursuant to the terms and conditions hereof, a Failed Remarketing shall be
deemed to have occurred, and the Remarketing Agent shall advise, by telephone
the Depositary, the Warrant Agent and the Company, and return the Remarketed
Senior Notes to the Collateral Agent or the Custodial Agent, as the case may be.
Whether or not there has been a Failed Remarketing will be determined in the
sole reasonable discretion of the Remarketing Agent.
(g) In the event of a Successful Remarketing, by approximately 430 p.m.
(New York City time) on the applicable Remarketing Date, the Remarketing Agent
shall advise, by telephone
(1) the Depositary, the Warrant Agent and the Company of the
Reset Rate determined by the Remarketing Agent in such Remarketing and
the number of Remarketed Senior Notes sold in such Remarketing;
(2) each purchaser (or the Depositary Participant thereof) of
Remarketed Senior Notes of the Reset Rate and the number of Remarketed
Senior Notes such purchaser is to purchase; and
(3) each such purchaser to give instructions to its Depositary
Participant to pay the purchase price on the third business day
immediately following the date of such Successful Remarketing in same
day funds against delivery of the Remarketed Senior Notes purchased
through the facilities of the Depositary.
The Remarketing Agent shall also, if required by the Securities Act or
the rules and regulations promulgated thereunder, deliver to each purchaser a
Prospectus in connection with the Remarketing.
(h) After deducting any fees specified in Section 4 below, the proceeds
from a Successful Remarketing (i) with respect to the Senior Notes that are
components of the Corporate Units, shall be paid to the Collateral Agent in
accordance with Sections 5.07 and 7.03 of the Pledge Agreement, as the case may
be, and Section 5.02 of the Warrant Agreement and (ii) with respect to the
Separate Senior Notes, shall be paid to the Custodial Agent for payment to the
holders of such Separate Senior Notes in accordance with Section 5.02 of the
Warrant Agreement and Section 7.03 of the Pledge Agreement.
(i) The right of each holder of Separate Senior Notes or Corporate
Units to have Remarketed Senior Notes remarketed and sold on any Remarketing
Date shall be subject to the conditions that (i) the Remarketing Agent conducts
an (A) Initial Remarketing, (B) a Second Remarketing in the event of a Failed
Initial Remarketing, (C) a Third Remarketing in the event of a Failed Second
Remarketing and (D) a Final Remarketing in the event of a Failed Third
Remarketing, each pursuant to the terms of this Agreement, (ii) a Special Event
Redemption has not occurred prior to such Remarketing Date, (iii) the
Remarketing Agent is able to find a purchaser or purchasers for Remarketed
Senior Notes at the Remarketing Price or the Final
G-4
Remarketing Price, as the case may be, based on the Reset Rate, and
(iv) such purchaser or purchasers deliver the purchase price therefor to the
Remarketing Agent as and when required.
(j) It is understood and agreed that the Remarketing Agent shall not
have any obligation whatsoever to purchase any Remarketed Senior Notes, whether
in the Remarketing or otherwise, and shall in no way be obligated to provide
funds to make payment upon tender of Remarketed Senior Notes for Remarketing or
to otherwise expend or risk its own funds or incur or to be exposed to financial
liability in the performance of its duties under this Agreement, and without
limitation of the foregoing, the Remarketing Agent shall not be deemed an
underwriter of the Remarketed Senior Notes. Neither the Company nor the
Remarketing Agent shall be obligated in any case to provide funds to make
payment upon tender of the Remarketed Senior Notes for Remarketing.
Section 3. Representations and Warranties of the Company.
The Company represents and warrants (i) on and as of the date any
Remarketing Materials are first distributed in connection with the Remarketing
(the "COMMENCEMENT DATE"), (ii) on and as of the applicable Remarketing Date and
(iii) on and as of the settlement date relating to such Remarketing Date, that
(a) Each of the representations and warranties of the Company as set
forth in Sections 1(a) through 1(x) of the Underwriting Agreement dated as of
November 25, 2002 (the "UNDERWRITING AGREEMENT") among the Company and the
Underwriters identified in Schedule I thereto, is true and correct as if made on
each of the dates specified above; provided that for purposes of this Section
3(a), any reference in such sections of the Underwriting Agreement to (i) the
"Registration Statement", the "Prospectus" or the "Preliminary Prospectus" shall
be deemed to refer to such terms as defined herein and (ii) the "Closing Date"
shall be deemed to refer to the applicable Remarketing Date.
(b) The Registration Statement, if any, in the form heretofore
delivered or to be delivered to the Remarketing Agent, has been declared
effective by the Commission in such form; and no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been initiated or threatened by the Commission.
(c) The documents incorporated by reference in the Prospectus, when
they were filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and will not contain an
untrue statement of a material fact or omit to state a material fact required
G-5
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information relating to
the Remarketing Agent furnished in writing to the Company by the Remarketing
Agent or its counsel expressly for use in the Prospectus.
(d) The Registration Statement, if any, conforms (and the Prospectus,
if any, and any further amendments or supplements to the Registration Statement
or the Prospectus, when they become effective or are filed with the Commission,
as the case may be, will conform) in all material respects to the requirements
of the Securities Act and the rules and regulations promulgated thereunder, and
the Registration Statement and the Remarketing Materials (and any amendment or
supplement thereto) as of their respective effective or filing dates and as of
the Commencement Date, applicable Remarketing Date and Purchase Contract
Settlement Date do not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided that no representation
and warranty is made as to any statement of eligibility on Form T-1 filed or
incorporated by reference as part of the Registration Statement, the Prospectus
or the Remarketing Materials, or as to information relating to the Remarketing
Agent contained in or omitted from the Registration Statement, the Prospectus or
the Remarketing Materials in reliance upon and in conformity with written
information furnished to the Company by the Remarketing Agent.
(e) This Agreement has been duly authorized, executed and delivered by
the Company.
Section 4. Fees.
(a) In the event of a Successful Remarketing of the Remarketed Senior
Notes prior to the Final Remarketing Date, the Remarketing Agent may retain as a
remarketing fee (the "REMARKETING FEE") an amount not exceeding 25 basis points
(0.25%) of the sum of the Treasury Portfolio Purchase Price and the Separate
Senior Note Purchase Price.
(b) In the event of a Successful Final Remarketing, the Remarketing
Agent may retain as the Remarketing Fee an amount not exceeding 25 basis points
(0.25%), of the principal amount of the Remarketed Senior Notes.
Section 5. Covenants of the Company.
The Company covenants and agrees as follows
(a) If and to the extent the Remarketed Senior Notes are required (in
the view of counsel for either the Remarketing Agent or the Company) to be
registered under the Securities Act as in effect at the time of the Remarketing,
G-6
(1) to prepare the Registration Statement and the Prospectus,
in a form approved by the Remarketing Agent, to file any such
Prospectus pursuant to the Securities Act within the period required by
the Securities Act and the rules and regulations thereunder and to use
commercially reasonable efforts to cause the Registration Statement to
be declared effective by the Commission prior to the second Business
Day immediately preceding the applicable Remarketing Date;
(2) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the reasonable judgment of the Company or the
Remarketing Agent, be required by the Securities Act or requested by
the Commission;
(3) to advise the Remarketing Agent, promptly after it
receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish the Remarketing Agent with copies thereof;
(4) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a Prospectus is required in connection with the
offering or sale of the Remarketed Senior Notes;
(5) to advise the Remarketing Agent, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of the
Prospectus, of the suspension of the qualification of any of the
Remarketed Senior Notes for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information, and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Prospectus or
suspending any such qualification, to use promptly its best efforts to
obtain its withdrawal;
(6) to furnish promptly to the Remarketing Agent such copies
of the following documents as the Remarketing Agent shall reasonably
request (A) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits); (B) the Preliminary Prospectus and any
amended or supplemented Preliminary Prospectus, (C) the Prospectus and
any amended or supplemented Prospectus; and (D) any document
incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if at any time when delivery of a prospectus is required
in connection with the Remarketing, any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made
G-7
when such Prospectus is delivered, not misleading, or if for any other
reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Securities Act or the Exchange Act, to notify the Remarketing
Agent and, upon its request, to file such document and to prepare and
furnish without charge to the Remarketing Agent and to any dealer in
securities as many copies as the Remarketing Agent may from time to
time reasonably request of an amended or supplemented Prospectus that
will correct such statement or omission or effect such compliance;
(7) prior to filing with the Commission (A) any amendment to
the Registration Statement or supplement to the Prospectus or (B) any
Prospectus pursuant to Rule 424 under the Securities Act, to furnish a
copy thereof to the Remarketing Agent and counsel to the Remarketing
Agent; and not to file any such amendment or supplement that shall be
reasonably disapproved by the Remarketing Agent promptly after
reasonable notice;
(8) as soon as practicable, but in any event not later than
eighteen months, after the effective date of the Registration
Statement, to make "generally available to its security holders" an
"earnings statement" of the Company and its subsidiaries complying with
(which need not be audited) Section 11(a) of the Securities Act and the
rules and regulations thereunder (including, at the option of the
Company, Rule 158). The terms "GENERALLY AVAILABLE TO ITS SECURITY
HOLDERS" and "EARNINGS STATEMENT" shall have the meanings set forth in
Rule 158; and
(9) to take such action as the Remarketing Agent may
reasonably request in order to qualify the Remarketed Senior Notes for
offer and sale under the securities or "blue sky" laws of such
jurisdictions as the Remarketing Agent may reasonably request; provided
that in no event shall the Company be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction.
(b) To pay (1) the costs incident to the preparation and printing of
the Registration Statement, if any, any Prospectus and any other Remarketing
Materials and any amendments or supplements thereto; (2) the costs of
distributing the Registration Statement, if any, any Prospectus and any other
Remarketing Materials and any amendments or supplements thereto; (3) any fees
and expenses of qualifying the Remarketed Senior Notes under the securities laws
of the several jurisdictions as provided in Section 5(a)(9) and of preparing,
printing and distributing a Blue Sky Memorandum, if any (including any related
fees and expenses of counsel to the Remarketing Agent); (4) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
and all other reasonable costs and expenses incident to the performance of the
obligations of the Remarketing Agent hereunder; and (5) the reasonable fees and
expenses of counsel to the Remarketing Agent in connection with their duties
hereunder.
G-8
(c) To furnish the Remarketing Agent with such information and
documents as the Remarketing Agent may reasonably request in connection with the
transactions contemplated hereby, and to make reasonably available to the
Remarketing Agent and any accountant, attorney or other advisor retained by the
Remarketing Agent such information that parties would customarily require in
connection with a due diligence investigation conducted in accordance with
applicable securities laws and to cause the Company's officers, directors,
employees and accountants to participate in all such discussions and to supply
all such information reasonably requested by any such Person in connection with
such investigation.
Section 6. Conditions to the Remarketing Agent's Obligations.
Id and to the extent that a registration statement is required, the
obligations of the Remarketing Agent hereunder shall be subject to the following
conditions:
(a) The Prospectus, if any, shall have been timely filed with the
Commission; no stop order suspending the effectiveness of the Registration
Statement, if any, or any part thereof shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the Commission; and
any request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been complied
with.
(b) (1) Trading generally shall not have been suspended or materially
limited on the New York Stock Exchange, (2) trading of any securities of the
Company shall not have been materially suspended or limited on the New York
Stock Exchange, (3) a general moratorium on commercial banking activities in New
York shall not have been declared by either Federal or New York State
authorities, or (4) there shall not have occurred a material adverse change in
the financial markets, any outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war or other calamity or crisis, if the effect of any such event specified in
this clause (4) in the judgment of the Remarketing Agent makes it impracticable
or inadvisable to proceed with the Remarketing or the delivery of the Remarketed
Senior Notes on the terms and in the manner contemplated in the Transaction
Documents.
(c) The representations and warranties of the Company contained herein
shall be true and correct in all material respects on and as of the applicable
Remarketing Date, and the Company, the Warrant Agent and the Collateral Agent
shall have performed in all material respects all covenants and agreements
contained herein or in the Warrant Agreement or Pledge Agreement to be performed
on their part at or prior to such Remarketing Date.
(d) The Company shall have furnished to the Remarketing Agent a
certificate, dated the applicable Remarketing Date, of the Chief Executive
Officer and the Treasurer satisfactory to the Remarketing Agent stating that (1)
no order suspending the effectiveness of the Registration Statement, if any, or
prohibiting the sale of the Remarketed Senior Notes is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of such
officers, threatened by the Commission; (2) the representations and warranties
of the Company in Section 3 are true
G-9
and correct on and as of the applicable Remarketing Date and the Company has
performed in all material respects all covenants and agreements contained herein
to be performed on its part at or prior to such Remarketing Date; and (3) the
Registration Statement, as of its effective date, and the Remarketing Materials,
as of their respective dates, did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and the Prospectus
did not contain any untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) On the applicable Remarketing Date, the Remarketing Agent shall
have received a letter addressed to the Remarketing Agent and dated such date,
in form and substance satisfactory to the Remarketing Agent, of Ernst & Young
LLP, the independent accountants of the Company, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
with respect to certain financial information contained in the Remarketing
Materials, if any.
(f) Each of (1) General Counsel to the Company, (2) Cleary, Gottlieb,
Steen & Hamilton, counsel for the Company, and (3) Drinker, Biddle & Shanley
LLP, shall have furnished to the Remarketing Agent its opinion, addressed to the
Remarketing Agent and dated the Remarketing Date, in form and substance
reasonably satisfactory to the applicable Remarketing Agent addressing such
matters as are set forth in such counsel's opinion furnished pursuant to
Sections 6(b), 6(c) and 6(d) of the Underwriting Agreement, adapted as necessary
to relate to the securities being remarketed hereunder and to the Remarketing
Materials, if any, or to any changed circumstances or events occurring
subsequent to the date of this Agreement, such adaptations being reasonably
acceple to counsel to the Remarketing Agent.
(g) Davis Polk & Wardwell, counsel for the Remarketing Agent, shall
have furnished to the Remarketing Agent its opinion, addressed to the
Remarketing Agent and dated the applicable Remarketing Date, in form and
substance satisfactory to the Remarketing Agent.
(h) Subsequent to the execution and delivery of this Agreement and
prior to the applicable Remarketing Date, there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate an
improvement, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act.
Section 7. Indemnification.
(a) The Company will indemnify and hold harmless the Remarketing Agent,
its partners, directors and officers and each person, if any, who controls the
Remarketing Agent within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Remarketing Agent may become subject, under the
G-10
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendments or supplement thereto,
or any related Preliminary Prospectus or preliminary prospectus supplement, or
any other Remarketing Materials, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Remarketing Agent for any legal or other expenses reasonably
incurred by the Remarketing Agent in connection with investigating or defending
any such losses, claims, damages, liabilities or action as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by the Remarketing Agent
specifically for use therein.
(b) The Remarketing Agent will indemnify and hold harmless the Company,
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
or any related Preliminary Prospectus or Preliminary Prospectus supplement, or
any other Remarketing Materials, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by the
Remarketing Agent specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In the case of parties
indemnified pursuant to subsection (a) above, counsel to the indemnified parties
shall be selected by the Remarketing Agent. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any
G-11
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
Section 8. Contribution.
(a) If the indemnification provided for in Section 7 is unavailable to
or insufficient to hold harmless an indemnified party under Sections 7(a) or
7(b), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Remarketing Agent on the other from the offering of the
Remarketed Senior Notes or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportions as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Remarketing Agent on the
other in connection with the statements of omissions which resulted in such
losses, claims, damages or liabilities as well as any relevant equile
considerations. The relative benefits received by the Company on one hand and
the Remarketing Agent on the other hand in connection with the Remarketing shall
be deemed to be in the same proportions as the aggregate principal amount of the
Remarketed Senior Notes less the fee paid to the Remarketing Agent on the one
hand and the fee paid to the Remarketing Agent on the other hand bear to the
aggregate principal amount of the Remarketed Senior Notes. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Remarketing Agent on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equile if contribution pursuant to this subsection (a) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equile considerations referred to above in this
subsection (a). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (a) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (a), the Remarketing Agent shall not be required
to contribute any amount in excess of the amount by which the fees received by
it under Section 4 exceeds the amount of any damages which the Remarketing Agent
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person
G-12
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(b) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the
Remarketing Agent and to each person, if any, who controls the Remarketing Agent
within the meaning of the Securities Act; and the obligations of the Remarketing
Agent under this Section 8 shall be in addition to any liability which the
Remarketing Agent may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
signed the Registration Statement and to each person, if any, who controls the
Company within the meaning of the Securities Act.
(c) The indemnity and contribution provisions contained in Section 7
and this Section 8 and the representations, warranties and other statements of
the Company contained in this Agreement shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of the Remarketing Agent or any person controlling the
Remarketing Agent, or the Company, its officers or director or any controlling
person of the Company, and the completion of the Remarketing.
Section 9. Resignation and Removal of the Remarketing Agent.
The Remarketing Agent may resign and be discharged from its duties and
obligations hereunder, and the Company may remove the Remarketing Agent, by
giving 30 days' prior written notice, in the case of a resignation, to the
Company and the Depositary and, in the case of a removal, to the removed
Remarketing Agent and the Depositary; provided, however, that
(a) the Remarketing Agent may not resign without reasonable cause; and
(b) no such resignation nor any such removal shall become effective
until the Company shall have appointed at least one nationally recognized
broker-dealer as successor Remarketing Agent and such successor Remarketing
Agent shall have entered into a remarketing agreement with the Company, in which
it shall have agreed to conduct the Remarketing in accordance with the
Transaction Documents in all material respects.
In any such case, the Company will use commercially reasonable efforts
to appoint a successor Remarketing Agent and enter into such a remarketing
agreement with such person as soon as reasonably practicable. The provisions of
Section 7 and Section 8 shall survive the resignation or removal of any
Remarketing Agent pursuant to this Agreement.
Section 10. Dealing in Securities.
The Remarketing Agent, when acting as a Remarketing Agent or in its
individual or any other capacity, may, to the extent permitted by law, buy,
sell, hold and deal in any of the
G-13
Remarketed Senior Notes, Corporate Units, Treasury Units or any of the
securities of the Company (together, the "SECURITIES"). The Remarketing Agent
may exercise any vote or join in any action which any beneficial owner of such
Securities may be entitled to exercise or take pursuant to the Indenture with
like effect as if it did not act in any capacity hereunder. The Remarketing
Agent, in its individual capacity, either as principal or agent, may also engage
in or have an interest in any financial or other transaction with the Company as
freely as if it did not act in any capacity hereunder.
Section 11. Remarketing Agent's Performance; Duty of Care.
The duties and obligations of the Remarketing Agent shall be determined
solely by the express provisions of this Agreement and the Transaction
Documents. No implied covenants or obligations of or against the Remarketing
Agent shall be read into this Agreement or any of the Transaction Documents. In
the absence of bad faith on the part of the Remarketing Agent, the Remarketing
Agent may conclusively rely upon any document furnished to it, as to the truth
of the statements expressed in any of such documents. The Remarketing Agent
shall be protected in acting upon any document or communication reasonably
believed by it to have been signed, presented or made by the proper party or
parties except as otherwise set forth herein. The Remarketing Agent, acting
under this Agreement, shall incur no liability to the Company or to any holder
of Remarketed Senior Notes in its individual capacity or as Remarketing Agent
for any action or failure to act, on its part in connection with a Remarketing
or otherwise, except if such liability is judicially determined to have resulted
from its failure to comply with the material terms of this Agreement or the
gross negligence or willful misconduct on its part. The provisions of this
Section 11 shall survive the termination of this Agreement and shall survive the
resignation or removal of any Remarketing Agent pursuant to this Agreement.
Section 12. Termination.
This Agreement shall automatically terminate (i) as to the Remarketing
Agent on the effective date of the resignation or removal of the Remarketing
Agent pursuant to Section 9 and (ii) on the earlier of (x) any Special Event
Redemption Date and (y) the Purchase Contract Settlement Date. If this Agreement
is terminated pursuant to any of the other provisions hereof, except as
otherwise provided herein, the Company shall not be under any liability to the
Remarketing Agent and the Remarketing Agent shall not be under any liability to
the Company, except that if this Agreement is terminated by the Remarketing
Agent because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, the
Company will reimburse the Remarketing Agent for all of its out-of-pocket
expenses (including the fees and disbursements of its counsel) reasonably
incurred by it. Section 7, Section 8 and Section 11 hereof shall survive the
termination of this Agreement or the resignation or removal of the Remarketing
Agent.
Section 13. Notices.
All statements, requests, notices and agreements hereunder shall be in
writing, and
G-14
(a) if to the Remarketing Agent, shall be delivered or sent by mail,
telex or facsimile transmission to [Insert Name/Address of Remarketing Agent]
Attention [-];
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to The Chubb Corporation, 15 Mountain View Road, Warren,
New Jersey 07061-1615, Attention General Counsel (Fax: (908) 903-3607); and
(c) if to the Warrant Agent, shall be delivered or sent by mail, telex
or facsimile transmission to Bank One Trust Company, N.A., 153 West 51st
Street, New York, New York, 10019, Attention: Corporate Trust Administration.
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.
Section 14. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon each
party hereto and its respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(x) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
Remarketing Agent and the person or persons, if any, who control the Remarketing
Agent within the meaning of Section 15 of the Securities Act and (y) the
indemnity agreement of the Remarketing Agent contained in Section 7(b) of this
Agreement shall be deemed to be for the benefit of the Company's directors and
officers who sign the Registration Statement, if any, and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing
contained in this Agreement is intended or shall be construed to give any
person, other than the persons referred to herein, any legal or equile right,
remedy or claim under or in respect of this Agreement or any provision contained
herein.
Section 15. Survival.
The respective indemnities, representations, warranties and agreements
of the Company and the Remarketing Agent contained in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement, shall survive
any Remarketing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
Section 16. Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of New York, without regard to conflicts of laws principles.
Section 17. Judicial Proceedings.
G-15
(a) Each party hereto expressly accepts and irrevocably submits to the
non-exclusive jurisdiction of the United States Federal or New York State court
sitting in the Borough of Manhattan, The City of New York, New York, over any
suit, action or proceeding arising out of or relating to this Agreement or the
Securities. To the fullest extent it may effectively do so under applicable law,
each party hereto irrevocably waives and agrees not to assert, by way of motion,
as a defense or otherwise, any claim that it is not subject to the jurisdiction
of any such court, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
(b) Each party hereto agrees, to the fullest extent that it may
effectively do so under applicable law, that a judgment in any suit, action or
proceeding of the nature referred to in Section 17(a) brought in any such court
shall be conclusive and binding upon such party, subject to rights of appeal and
may be enforced in the courts of the United States of America or the State of
New York (or any other court the jurisdiction to which the Company is or may be
subject) by a suit upon such judgment.
Section 18. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute one
and the same instrument.
Section 19. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
Section 20. Severability.
If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be invalid, inoperative or unenforceable as applied in any
particular case in any or all jurisdictions because it conflicts with any
provisions of any constitution, statute, rule or public policy or for any other
reason, then, to the extent permitted by law, such circumstances shall not have
the effect of rendering the provision in question invalid, inoperative or
unenforceable in any other case, circumstance or jurisdiction, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
Section 21. Amendments.
This Agreement may be amended by an instrument in writing signed by the
parties hereto. The Company agrees that it will not enter into, cause or permit
any amendment or modification of the Transaction Documents or any other
instruments or agreements relating to the Senior Notes or the Corporate Units
that would in any way adversely affect the rights, duties and
G-16
obligations of the Remarketing Agent, without the prior written consent of the
Remarketing Agent.
Section 22. Successors and Assigns.
The rights and obligations of the Company hereunder may not be assigned
or delegated to any other Person without the prior written consent of the
Remarketing Agent. The rights and obligations of the Remarketing Agent hereunder
may not be assigned or delegated to any other Person (other than an affiliate of
the Remarketing Agent) without the prior written consent of the Company.
If the foregoing correctly sets forth the agreement by and between the
Company, the Remarketing Agent and the Warrant Agent, please indicate your
acceptance in the space provided for that purpose below.
[SIGNATURES ON THE FOLLOWING PAGE]
G-17
Very truly yours,
THE CHUBB CORPORATION
By
----------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED
[INSERT NAME OF THE
REMARKETING AGENT],
as Remarketing Agent
By
-----------------------------------
Name:
Title:
BANK ONE TRUST COMPANY, N.A.
not individually but solely as Warrant Agent
and as attorney-in-fact for the Holders of the Units
By
-----------------------------------
Name:
Title:
G-18