EXHIBIT 99.3
PARTNERRE LTD.
and
JPMORGAN CHASE BANK, as Collateral Agent
and
JPMORGAN CHASE BANK, as Securities Intermediary
and
JPMORGAN CHASE BANK, as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of November o, 2001
TABLE OF CONTENTS
----------
Page
----
ARTICLE 1
- ---------
Definitions
-----------
Section 1.01. Definitions .......................................... 2
ARTICLE 2
- ---------
Pledge
------
Section 2.01. Pledge ............................................... 5
Section 2.02. Control; Financing Statement ......................... 6
Section 2.03. Termination .......................................... 6
ARTICLE 3
- ---------
Distributions on Pledged Collateral
-----------------------------------
Section 3.01. Income Distributions ................................. 6
Section 3.02. Principal Payments Following Termination Event ....... 6
Section 3.03. Principal Payments Prior to or on Purchase Contract
Settlement Date ..................................... 6
Section 3.04. Payments to Purchase Contract Agent .................. 7
Section 3.05. Assets Not Property Released ......................... 7
ARTICLE 4
- ---------
Control
-------
Section 4.01. Establishment of Collateral Account .................. 8
Section 4.02. Treatment as Financial Assets ........................ 8
Section 4.03. Sole Control by Collateral Agent ..................... 8
Section 4.04. Securities Intermediary's Location ................... 9
Section 4.05. No Other Claims ...................................... 9
Section 4.06. Investment and Release ............................... 9
Section 4.07. Statements and Confirmations ......................... 9
Section 4.08. Tax Allocations ...................................... 9
Section 4.09. No Other Agreements .................................. 9
Section 4.10. Powers Coupled with an Interest ...................... 10
ARTICLE 5
- ---------
Initial Deposit
---------------
Section 5.01. Initial Deposit of Preferred Shares .................. 10
Section 5.02. Termination Event .................................... 10
Section 5.03. Cash Settlement ...................................... 11
Section 5.04. Early Settlement ..................................... 12
Page
----
Section 5.05. Application of Proceeds in Settlement of Purchase
Contracts ............................................ 13
ARTICLE 6
- ---------
Voting Rights
-------------
Section 6.01. Voting Rights-Pledged Preferred Shares ................ 14
ARTICLE 7
- ---------
Further Actions
---------------
Section 7.01. Further Actions ....................................... 14
ARTICLE 8
- ---------
Representations and Warranties; Covenants
-----------------------------------------
Section 8.01. Representations and Warranties ........................ 15
Section 8.02. Covenants ............................................. 16
ARTICLE 9
- ---------
The Collateral Agent and the Securities Intermediary
----------------------------------------------------
Section 9.01. Appointment, Powers and Immunities .................... 16
Section 9.02. Instructions of the Company ........................... 18
Section 9.03. Reliance by Collateral Agent and Securities
Intermediary ......................................... 18
Section 9.04. Rights in Other Capacities ............................ 18
Section 9.05. Non-reliance on Collateral Agent and Securities
Intermediary ......................................... 19
Section 9.06. Compensation and Indemnity ............................ 19
Section 9.07. Failure to Act ........................................ 20
Section 9.08. Resignation of Collateral Agent and Securities
Intermediary ......................................... 20
Section 9.09. Conflict of Interest .................................. 22
Section 9.10. Right to Appoint Agent or Advisor ..................... 23
Section 9.11. Survival .............................................. 23
Section 9.12. Exculpation ........................................... 24
ARTICLE 10
- ----------
Amendment
---------
Section 10.01. Amendment Without Consent of Holders ................. 24
Section 10.02. Amendment with Consent of Holders .................... 24
Section 10.03. Execution of Amendments .............................. 25
Section 10.04. Effect of Amendments ................................. 26
Section 10.05. Reference to Amendments .............................. 26
ii
ARTICLE 11
- ----------
Miscellaneous
-------------
Section 11.01. No Waiver ................................... 26
Section 11.02. Governing Law ............................... 26
Section 11.03. Notices ..................................... 27
Section 11.04. Successors and Assigns ...................... 27
Section 11.05. Counterparts ................................ 27
Section 11.06. Severability ................................ 27
Section 11.07. Expenses, Etc. .............................. 27
Section 11.08. Security Interest Absolute .................. 28
EXHIBIT A-- NOTICE OF CASH SETTLEMENT FROM SECURITIES
INTERMEDIARY TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts) ......................... A-1
PLEDGE AGREEMENT
----------------
PLEDGE AGREEMENT, dated as of November ., 2001, among PARTNERRE LTD., a
Bermuda company (the "Company"), JPMORGAN CHASE BANK, a New York banking
corporation, as collateral agent (in such capacity, together with its successors
in such capacity, the "Collateral Agent"), JPMORGAN CHASE BANK, a New York
banking corporation, as securities intermediary with respect to the Collateral
Account (in such capacity, together with its successors in such capacity, the
"Securities Intermediary"), and JPMORGAN CHASE BANK, a New York banking
corporation, as purchase contract agent and as attorney-in-fact of the Holders
from time to time of the Securities under the Purchase Contract Agreement (in
such capacity, together with its successors in such capacity, the "Purchase
Contract Agent").
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as modified and supplemented and
in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to 3,450,000 Premium Equity Participating Security
Units-PEPS Units (the "Securities").
Each PEPS Unit, at issuance, consists of a unit comprised of (a) a
stock purchase contract (the "Purchase Contract") under which the Holder will
purchase from the Company on the Purchase Contract Settlement Date, for an
amount equal to $50 (the "Stated Amount"), a number of PartnerRe Ltd. common
shares, par value $1.00 ("Common Shares"), equal to the Settlement Rate, and (b)
beneficial ownership of a PartnerRe Ltd. .% Series B cumulative redeemable
preferred share, par value $1.00 per share (a "Preferred Share"), having a
liquidation preference equal to the Stated Amount and subject to mandatory
redemption on ..
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders of the Securities have irrevocably authorized
the Purchase Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such Holders and to
grant the pledge provided herein of the Collateral Account to secure the
Obligations.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
ARTICLE 1
Definitions
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 1 and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular Article,
Section, Exhibit or other subdivision;
(c) the following terms which are defined in the UCC shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account" and "security entitlement;"
(d) the following terms have the meanings assigned to them in the Purchase
Contract Agreement: "Act," "Bankruptcy Code," "Bankruptcy Laws," "Board of
Directors," "Board Resolution," "Business Day," "Cash Settlement,"
"Certificate," "Early Settlement," "Early Settlement Amount," "Early Settlement
Date," "Failed Remarketing;" "Holder," "Officers' Certificate," "Opinion of
Counsel," "Outstanding Securities," "PEPS Unit," "Purchase Contract," "Purchase
Contract Settlement Date," "Purchase Price," "Remarketing Agent," "Remarketing
Agreement," "Settlement Rate," "Termination Event," and "Underwriting
Agreement;"
(e) the following terms have the meanings given to them in this Section
1.01(e):
- -------
"Agreement" means this Pledge Agreement, as the same may be amended,
modified or supplemented from time to time.
"Cash" means any coin or currency of the United States as at the time shall
be legal tender for payment of public and private debts.
"Certificate of Designation" means the certificate of designation, rights
and preferences of the Preferred Shares approved as of November ., 2001 by the
Board of Directors.
"Collateral Account" means the collective reference to:
(1) the securities account of JPMorgan Chase Bank, as Collateral Agent,
maintained by the Securities Intermediary and designated "JPMorgan Chase
2
Bank, as Collateral Agent of PartnerRe Ltd., as pledgee of JPMorgan Chase Bank,
as the Purchase Contract Agent on behalf of and as attorney-in-fact for the
Holders";
(2) all investment property and other financial assets from time to time
credited to the Collateral Account, including, without limitation, (A) the
Preferred Shares and security entitlements relating thereto which are a
component of the PEPS Units from time to time and (B) payments made by Holders
pursuant to Section 5.05 hereof;
----
(3) all Proceeds of any of the foregoing (whether such Proceeds arise
before or after the commencement of any proceeding under any applicable
bankruptcy, insolvency or other similar law, by or against the pledgor or with
respect to the pledgor); and
(4) all powers and rights now owned or hereafter acquired under or with
respect to the Collateral Account ((2), (3) and (4), being collectively referred
to as the "Collateral").
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"Obligations" means, with respect to each Holder, the collective reference
to all obligations and liabilities of such Holder under such Holder's Purchase
Contract, the Purchase Contract Agreement and this Agreement or any other
document made, delivered or given in connection herewith or therewith, in each
case whether on account of principal, interest (including, without limitation,
interest accruing before and after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to such Holder, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Company or the Collateral Agent or the Securities Intermediary that are required
to be paid by the Holder pursuant to the terms of any of the foregoing
agreements).
"Permitted Investments" means any one of the following which shall mature
not later than the next succeeding Business Day:
(1) any evidence of indebtedness with an original maturity of 365 days or
less issued, or directly and fully guaranteed or insured, by the United States
of America or any agency or instrumentality thereof (provided that the full
faith and
3
credit of the United States of America is pledged in support of the timely
payment thereof or such indebtedness constitutes a general obligation of it);
(2) deposits, certificates of deposit or acceptances with an original
maturity of 365 days or less of any institution which is a member of the Federal
Reserve System having combined capital and surplus and undivided profits of not
less than $200.0 million at the time of deposit (and which may include the
Collateral Agent);
(3) investments with an original maturity of 365 days or less of any Person
that is fully and unconditionally guaranteed by a bank referred to in clause
(2);
(4) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed as to timely
payment by the full faith and credit of the United States Government;
(5) investments in commercial paper, other than commercial paper issued by
the Company or its affiliates, of any corporation incorporated under the laws of
the United States or any State thereof, which commercial paper has a rating at
the time of purchase at least equal to "A-1" by Standard & Poor's Ratings
Services ("S&P") or at least equal to "P-1" by Moody's Investors Service, Inc.
("Moody's");
(6) investments in money market funds (including, but not limited to, money
market funds managed by the Collateral Agent or an affiliate of the Collateral
Agent) registered under the Investment Company Act of 1940, as amended, rated in
the highest applicable rating category by S&P or Moody's; and
(7) a cash escrow product offered by the Collateral Agent, which may
consist of trust funds, trust accounts or interest-bearing demand or time
deposits, including certificates of deposit, which are held by any commercial
bank having a short term deposit rating at the time of purchase of at least
"A-2" or the equivalent thereof by S&P or at least "P-2" or the equivalent
thereof by Moody's.
"Person" means any 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.
"Pledge" means the lien and security interest created by this Agreement.
4
"Pledged Preferred Shares" means the Preferred Shares and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.
"Proceeds" has the meaning ascribed thereto in the UCC and includes,
without limitation, all interest, dividends, cash, instruments, securities,
financial assets (as defined in (S) 8-102(a)(9) of the UCC) and other property
received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of any financial assets from time to time held in the
Collateral Account.
"Purchase Contract Agent" has the meaning specified in the paragraph
preceding the recitals of this Agreement.
"Transfer" means in the case of certificated securities in registered form,
delivery as provided in (S) 8-301(a) of the UCC, indorsed to the transferee or
in blank by an effective endorsement; and in the case of security entitlements,
a securities intermediary indicating by book entry that such security
entitlement has been credited to the transferee's securities account.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York from time to time.
"Value" means, with respect to any item of Collateral on any date, as to
(1) Cash, the face amount thereof and (2) the Preferred Shares, the liquidation
preference thereof.
ARTICLE 2
Pledge
Section 2.01. Pledge. Each Holder, acting through the Purchase Contract
Agent as such Holder's attorney-in-fact, hereby pledges and grants to the
Collateral Agent, as agent of and for the benefit of the Company, a continuing
first priority security interest in and to, and a lien upon and right of set-off
against, all of such Holder's right, title and interest in and to the Collateral
Account to secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations.
The Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the UCC, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
5
Section 2.02. Control; Financing Statement. (a) The Collateral Agent shall
have control of the Collateral Account pursuant to the provisions of Article 4
of this Agreement.
(b) Within thirty days of the date of initial issuance of the Securities,
the Company shall deliver to the Collateral Agent a financing statement prepared
by the Company for filing in the Office of the Secretary of State of the State
of New York and any other jurisdictions which the Company deems necessary,
signed by the Purchase Contract Agent, as attorney-in-fact for the Holders, as
Debtors, and describing the Collateral.
Section 2.03. Termination. As to each Holder, this Agreement and the Pledge
created hereby shall terminate upon the satisfaction of such Holder's
Obligations. Upon such termination, the Securities Intermediary shall Transfer
such Holder's portion of the Collateral to the Purchase Contract Agent for
distribution to such Holder in accordance with his interest, free and clear of
any lien, pledge or security interest created hereby.
ARTICLE 3
Distributions on Pledged Collateral
Section 3.01. Income Distributions. All income distributions received by
the Securities Intermediary on account of the Preferred Shares or Permitted
Investments from time to time held in the Collateral Account shall be
distributed to the Purchase Contract Agent [(ABA No. ., GLA No. ., A/C No. .,
Re: PartnerRe Ltd.)] for the benefit of the applicable Holders as provided in
the Purchase Contracts or Purchase Contract Agreement.
Section 3.02. Principal Payments Following Termination Event. All payments
received by the Securities Intermediary following a Termination Event of the
liquidation preference of Pledged Preferred Shares or securities entitlements
thereto shall be distributed to the Purchase Contract Agent for the benefit of
the applicable Holders for distribution to such Holders in accordance with their
respective interests.
Section 3.03. Principal Payments Prior to or on Purchase Contract
Settlement Date. (a) Except as provided in Section 3.03(b) below, if no
-------
Termination Event shall have occurred, all payments received by the Securities
Intermediary of the liquidation preference with respect to the Pledged Preferred
Shares or security entitlements with respect thereto, shall be held and invested
in Permitted Investments until the Purchase Contract Settlement Date and on the
Purchase Contract Settlement Date distributed to the Company as provided in
6
Section 5.05 hereof. Any balance remaining in the Collateral Account shall be
distributed to the Purchase Contract Agent for the benefit of the applicable
Holders for distribution to such Holders in accordance with their respective
interests. The Company shall instruct the Securities Intermediary as to the type
of Permitted Investments in which any payments made under this Section shall be
invested, provided, however, that if the Company fails to deliver such
instructions by 10:30 a.m. (New York City time) on any Business Day, the
Securities Intermediary shall invest such payments in the Permitted Investments
described in clause 7 of the definition of Permitted Investments.
(b) All payments received by the Securities Intermediary of the liquidation
preference of Preferred Shares or security entitlements with respect thereto
that have been released from the Pledge shall be distributed to the Purchase
Contract Agent for the benefit of the applicable Holders for distribution to
such Holders in accordance with their respective interests.
Section 3.04. Payments to Purchase Contract Agent. The Securities
Intermediary shall use all commercially reasonable efforts to deliver payments
to the Purchase Contract Agent hereunder to the account designated by the
Purchase Contract Agent for such purpose not later than 12:00 p.m. (New York
City time) on the Business Day such payment is received by the Securities
Intermediary; provided, however, that if such payment is received on a day that
is not a Business Day or after 11:00 a.m. (New York City time) on a Business
Day, then the Securities Intermediary shall use all commercially reasonable
efforts to deliver such payment no later than 10:30 a.m. (New York City time) on
the next succeeding Business Day.
Section 3.05. Assets Not Property Released. If the Purchase Contract Agent
or any Holder shall receive any principal payments on account of financial
assets credited to the Collateral Account and not released therefrom in
accordance with this Agreement, the Purchase Contract Agent or such Holder shall
hold the same as trustee of an express trust for the benefit of the Company and,
upon receipt of an Officers' Certificate of the Company so directing, promptly
deliver the same to the Securities Intermediary for credit to the Collateral
Account or to the Company for application to the Obligations of the Holders, and
the Purchase Contract Agent and Holders shall acquire no right, title or
interest in any such payments of principal amounts so received.
7
ARTICLE 4
Control
Section 4.01. Establishment of Collateral Account. The Securities
Intermediary hereby confirms that:
(1) the Securities Intermediary has established the Collateral Account;
(2) the Collateral Account is a securities account;
(3) subject to the terms of this Agreement, the Securities Intermediary
shall identify in its records the Purchase Contract Agent as the entitlement
holder entitled to exercise the rights that comprise any financial asset
credited to the Collateral Account;
(4) all property delivered to the Securities Intermediary pursuant to this
Agreement or the Purchase Contract Agreement will be credited promptly to the
Collateral Account;
(5) all securities or other property underlying any financial assets
credited to the Collateral Account shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in blank, or
credited to another securities account maintained in the name of the Securities
Intermediary, and in no case will any financial asset credited to the Collateral
Account be registered in the name of the Purchase Contract Agent or any Holder,
payable to the order of the Purchase Contract Agent or any Holder or specially
indorsed to the Purchase Contract Agent or any Holder.
Section 4.02. Treatment as Financial Assets. Each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a financial asset.
Section 4.03. Sole Control by Collateral Agent. Except as provided in
Article 6, at all times prior to the termination of the Pledge, the Collateral
-
Agent shall have sole control of the Collateral Account, and the Securities
Intermediary shall take instructions and directions with respect to the
Collateral Account solely from the Collateral Agent. If at any time the
Securities Intermediary shall receive an entitlement order issued by the
Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Purchase Contract Agent or any Holder or any other Person. Until termination
of the Pledge, the Securities Intermediary will not comply with any entitlement
orders issued by the Purchase Contract Agent or any Holder.
8
Section 4.04. Securities Intermediary's Location. The Collateral
Account, and the rights and obligations of the Securities Intermediary, the
Collateral Agent, the Purchase Contract Agent and the Holders with respect
thereto, shall be governed by the laws of the State of New York. Regardless of
any provision in any other agreement, for purposes of the UCC, New York shall be
deemed to be the Securities Intermediary's location.
Section 4.05. No Other Claims. Except for the claims and interest of
the Collateral Agent and of the Purchase Contract Agent and the Holders in the
Collateral Account, the Securities Intermediary (without making any
investigation) does not know of any claim to, or interest in, the Collateral
Account or in any financial asset credited thereto. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against the Collateral
Account or in any financial asset carried therein, the Securities Intermediary
will promptly notify the Collateral Agent and the Purchase Contract Agent.
Section 4.06. Investment and Release. All proceeds of financial assets
from time to time deposited in the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination of
the Pledge, no property shall be released from the Collateral Account except in
accordance with this Agreement or upon written instructions of the Collateral
Agent.
Section 4.07. Statements and Confirmations. The Securities Intermediary
will promptly send copies of all statements, confirmations and other
correspondence concerning the Collateral Account and any financial assets
credited thereto simultaneously to each of the Purchase Contract Agent and the
Collateral Agent at their addresses for notices under this Agreement.
Section 4.08. Tax Allocations. The Purchase Contract Agent shall report
all items of income, gain, expense and loss recognized in the Collateral
Account, to the extent such reporting is required by law, to the Internal
Revenue Service and all state and local taxing authorities under the names and
taxpayer identification numbers of the Holders which are the beneficial owners
thereof. Neither the Securities Intermediary nor the Collateral Agent shall have
any tax reporting duties hereunder.
Section 4.09. No Other Agreements. The Securities Intermediary has not
entered into, and prior to the termination of the Pledge will not enter into,
any agreement with any other Person relating to the Collateral Account or any
financial assets credited thereto, including, without limitation, any agreement
to comply with entitlement orders of any Person other than the Collateral Agent.
9
Section 4.10. Powers Coupled with an Interest. The rights and powers
granted in this Article 4 to the Collateral Agent have been granted in order to
-
perfect its security interests in the Collateral Account, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Purchase
Contract Agent or any Holder nor by the lapse of time. The obligations of the
Securities Intermediary under this Article 4 shall continue in effect until the
-
termination of the Pledge.
ARTICLE 5
Initial Deposit
Section 5.01. Initial Deposit of Preferred Shares. Prior to or
concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Holders of the PEPS Units, shall
Transfer to the Securities Intermediary, for credit to the Collateral Account,
the Preferred Shares or security entitlements relating thereto, and the
Securities Intermediary shall indicate by book-entry that a securities
entitlement to such Preferred Shares has been credited to the Collateral
Account.
Section 5.02. Termination Event. (a) Upon receipt by the Collateral
Agent of written notice from the Company or the Purchase Contract Agent that a
Termination Event has occurred, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer:
(i) any Pledged Preferred Shares or security entitlements with
respect thereto; and
(ii) payments by Holders (or the Permitted Investments of such
payments) pursuant to Section 5.03 hereof,
----
to the Purchase Contract Agent for the benefit of the Holders for distribution
to such Holders in accordance with their respective interests, free and clear of
any lien, pledge or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's
becoming a debtor under any Bankruptcy Laws, and if the Collateral Agent shall
for any reason fail promptly to effectuate the release and Transfer of all
Pledged Preferred Shares or payments by Holders (or the Permitted Investments of
such payments) pursuant to Section 5.03 hereof, as the case may be, as provided
----
by this Section 5.02, the Purchase Contract Agent shall:
----
10
(i) use its best efforts to obtain an opinion of a law firm
reasonably acceptable to the Collateral Agent to the effect that, as a
result of the Company's being the debtor in such a bankruptcy case,
the Collateral Agent will not be prohibited from releasing or
Transferring the Collateral as provided in this Section 5.04, and
----
shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (A) the
Purchase Contract Agent shall be unable to obtain such opinion within
ten days after the occurrence of such Termination Event or (B) the
Collateral Agent shall continue, after delivery of such opinion, to
refuse to effectuate the release and Transfer of all Pledged Preferred
Shares, the payments by Holders or the Permitted Investments of such
payments pursuant to Section 5.03 hereof or the Proceeds of any of the
----
foregoing, as the case may be, as provided in this Section 5.02, then
----
the Purchase Contract Agent shall within fifteen days after receiving
written notice from the Company or any Holder of the occurrence of
such Termination Event commence an action or proceeding in the court
having jurisdiction of the Company's case under any Bankruptcy Laws
seeking an order requiring the Collateral Agent to effectuate the
release and transfer of all Pledged Preferred Shares, or the payments
by Holders or the Permitted Investments of such payments pursuant to
Section 5.03 hereof, as the case may be, as provided by this Section
----
5.02; or
----
(ii) commence an action or proceeding like that described in
Section 5.02(b)(i) hereof within ten days after receiving written
----------
notice from the Company or any Holder of the occurrence of such
Termination Event.
Section 5.03. Cash Settlement. (a) Upon receipt by the Collateral
Agent of (1) a notice from the Purchase Contract Agent promptly after the
receipt by the Purchase Contract Agent of a notice from a Holder of PEPS Units
that such Holder has elected, in accordance with the procedures specified in
Section 5.02(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively,
to effect a Cash Settlement and (2) payment by such Holder by deposit in the
Collateral Account prior to 11:00 a.m. (New York City time) on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, in the
case of a PEPS Unit, of the Purchase Price in lawful money of the United States
by certified or cashier's check or wire transfer of immediately available funds
payable to or upon the order of the Securities Intermediary, then the Collateral
Agent shall:
(i) in accordance with the written instructions of the Company,
instruct the Securities Intermediary promptly to invest any such Cash
in Permitted Investments;
11
(ii) release from the Pledge the PEPS Unit holder's related
Pledged Preferred Shares as to which such Holder has elected to effect
a Cash Settlement pursuant to this Section 5.03(a); and
(iii) instruct the Securities Intermediary to Transfer all such
Pledged Preferred Shares to the Purchase Contract Agent for the
benefit of such Holder, in each case free and clear of the Pledge
created hereby, for distribution to such Holder.
The Company shall instruct the Securities Intermediary in writing as
to the type of Permitted Investments in which any such Cash shall be invested;
provided, however, that if the Company fails to deliver such written
instructions by 10:30 a.m. (New York City time) on any Business Day, the
Securities Intermediary shall invest such Cash in the Permitted Investments
described in clause 7 of the definition of Permitted Investments.
Upon receipt of the proceeds upon the maturity of the Permitted
Investments on the Purchase Contract Settlement Date, the Collateral Agent shall
(A) instruct the Securities Intermediary to pay the portion of such proceeds and
deliver any certified or cashier's checks received, in an aggregate amount equal
to the Purchase Price, to the Company on the Purchase Contract Settlement Date,
and (B) instruct the Securities Intermediary to release any amounts in excess of
the Purchase Price earned from such Permitted Investments to the Purchase
Contract Agent for distribution to such Holder.
(b) If a Holder of PEPS Units notifies the Purchase Contract Agent as
provided in paragraph 5.02(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph 5.02(a)(ii) of the Purchase Contract Agreement, such
Holder shall be deemed to have consented to the disposition of such Holder's
Pledged Preferred Shares in accordance with paragraph 5.02(a)(iii) of the
Purchase Contract Agreement.
(c) As soon as practicable after 11:00 a.m. (New York City time) on
the fifth Business Day immediately preceding the Purchase Contract Settlement
Date, the Securities Intermediary shall deliver to the Purchase Contract Agent a
notice, substantially in the form of Exhibit A hereto, stating the amount of
cash that it has received with respect to the Cash Settlement of PEPS Units.
Section 5.04. Early Settlement. Upon receipt by the Collateral Agent
of a notice from the Purchase Contract Agent that a Holder of Securities has
elected to effect Early Settlement of its obligations under the Purchase
Contracts forming a part of such Securities in accordance with the terms of the
Purchase Contracts
12
and Section 5.07 of the Purchase Contract Agreement (which notice shall set
forth the number of such Purchase Contracts as to which such Holder has elected
to effect Early Settlement), and that the Purchase Contract Agent has received
from such Holder, and paid to the Company as confirmed in writing by the
Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge the Pledged Preferred Shares with a Value equal to the
product of (x) the Stated Amount times (y) the number of Purchase Contracts as
to which such Holder has elected to effect Early Settlement, and shall instruct
the Securities Intermediary to Transfer all such Pledged Preferred Shares to the
Purchase Contract Agent for the benefit of such Holder, in each case free and
clear of the Pledge created hereby, for distribution to such Holder.
Section 5.05. Application of Proceeds in Settlement of Purchase
Contracts. If a Holder of PEPS Units has not elected to make an effective Cash
Settlement by notifying the Purchase Contract Agent in the manner provided for
in Section 5.02(a)(i) of the Purchase Contract Agreement, or has given such
notice but failed to deliver the required Cash prior to 11:00 a.m. (New York
City time) on the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, such Holder shall be deemed to have elected to pay for the
Common Shares to be issued under such Purchase Contracts from the Proceeds of
the remarketing of the related Pledged Preferred Shares. Upon written notice of
such event from the Purchase Contract Agent, the Collateral Agent shall instruct
the Securities Intermediary to Transfer the related Pledged Preferred Shares to
the Remarketing Agent for remarketing. Upon receiving such Pledged Preferred
Shares, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement, will use reasonable efforts to remarket such Pledged Preferred
Shares. The Remarketing Agent will deposit the Proceeds of such remarketing
(less $0.125 per each Preferred Share remarketed, which shall be retained by the
Remarketing Agent as a fee for its services in the Remarketing) in the
Collateral Account, and the Collateral Agent shall, at the written direction of
the Company, instruct the Securities Intermediary to invest the Proceeds of the
remarketing in Permitted Investments in clause 6 of the definition of Permitted
Investments. On the Purchase Contract Settlement Date, the Purchase Contract
Agent shall give written direction to the Collateral Agent specifying the
instruction the Collateral Agent shall give to the Securities Intermediary in
order to apply a portion of the Proceeds from such remarketing equal to the
aggregate liquidation preference of the Preferred Shares to satisfy in full such
Holder's obligations to pay the Purchase Price to purchase the Common Shares
under the related Purchase Contracts and the balance of the Proceeds from the
remarketing, if any, that shall be transferred to the Purchase Contract Agent
for the benefit of such Holder for distribution to such Holder.
13
If the Remarketing Agent advises the Collateral Agent in writing that
there has been a Failed Remarketing that does not fall within clause (iv) of the
defintion of "Termination Event," thus resulting in an event of default under
the Purchase Contract Agreement, the Collateral Agent, for the benefit of the
Company shall, at the written direction of the Company, use commercially
reasonable efforts to dispose of the Pledged Preferred Shares in accordance with
applicable law and apply the proceeds from such disposition in full satisfaction
such Holder's obligations to pay the Purchase Price for the Common Shares.
ARTICLE 6
Voting Rights
Section 6.01. Voting Rights-Pledged Preferred Shares. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Preferred Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement and in
accordance with the terms of the Purchase Contract Agreement. Upon receipt of
any notices and other communications in respect of any Pledged Preferred Shares,
including notice of any meeting at which holders of the Preferred Shares are
entitled to vote or solicitation of consents, waivers or proxies of holders of
the Preferred Shares, the Collateral Agent shall use reasonable efforts to send
promptly to the Purchase Contract Agent such notice or communication, and as
soon as reasonably practicable after receipt of a written request therefor from
the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Preferred Shares
(in form and substance satisfactory to the Collateral Agent and the Purchase
Contract Agent) as are prepared by the Company with respect to the Pledged
Preferred Shares.
ARTICLE 7
Further Actions
Section 7.01. Further Actions. The Purchase Contract Agent and each
Holder of Securities agrees that, from time to time, upon the written request of
the Company, the Collateral Agent or the Purchase Contract Agent, such Holder
shall execute and deliver such further documents and do such other acts and
things as the Company may reasonably request in order to maintain the Pledge,
and the perfection and priority thereof, and to confirm the rights of the
Collateral Agent hereunder. The Purchase Contract Agent shall have no liability
to any Holder for executing any documents or taking any such acts requested by
the Company
14
hereunder, except for liability for its own negligent acts, its own negligent
failure to act, or its own willful misconduct or its own bad faith.
ARTICLE 8
Representations and Warranties; Covenants
Section 8.01. Representations and Warranties. Each Holder from time to
time, acting through the Purchase Contract Agent as attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represents
and warrants to the Collateral Agent (with respect to such Holder's interest in
the Collateral), which representations and warranties shall be deemed repeated
on each day a Holder Transfers Collateral that:
(i) such Holder has the power to grant a security interest in
and lien on the Collateral;
(ii) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form, is the sole
holder of such Collateral and is the sole beneficial owner of, or has
the right to Transfer, the Collateral it Transfers to the Securities
Intermediary for credit to the Collateral Account, free and clear of
any security interest, lien, encumbrance, call, liability to pay money
or other restriction other than the security interest and lien granted
under Article 2 hereof;
-
(iii) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the Collateral
Agent, for the benefit of the Company, will have a valid and perfected
first priority security interest therein (assuming that any central
clearing operation or any securities intermediary or other entity not
within the control of theHolder involved in the Transfer of the
Collateral, including the Collateral Agent and the Securities
Intermediary, gives the notices and takes the action required of it
hereunder and under applicable law for perfection of that interest and
assuming the establishment and exercise of control pursuant to Article
4 hereof); and
-
(iv) the execution and performance by the Holder of its
obligations under this Agreement will not result in the creation of
any security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under Article 2
-
hereof or violate any provision of any existing law or regulation
applicable to it or of any
15
mortgage, charge, pledge, indenture, contract or undertaking to which
it is a party or which is binding on it or any of its assets.
Section 8.02. Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(i) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage, charge,
lien, pledge or any other security interest whatsoever over the
Collateral or any part of it other than pursuant to this Agreement; and
(ii) neither the Purchase Contract Agent nor such Holders will
sell or otherwise dispose (or attempt to dispose) of the Collateral or
any part of it except for the beneficial interest therein, subject to
the Pledge hereunder, transferred in connection with the Transfer of
the Securities.
ARTICLE 9
The Collateral Agent and the Securities Intermediary
It is hereby agreed as follows:
Section 9.01. Appointment, Powers and Immunities. The Collateral Agent
and Securities Intermediary shall act as agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent and Securities
Intermediary by the terms of this Agreement, together with such other powers as
are reasonably incidental thereto. The Collateral Agent and Securities
Intermediary shall:
(i) have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent and
Securities Intermediary, nor shall the Collateral Agent and Securities
Intermediary be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof;
(ii) not be responsible for any recitals contained in this
Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value,
validity, effectiveness,
16
genuineness, enforceability or sufficiency of this Agreement (other
than as against the Collateral Agent and Securities Intermediary), the
Securities or the Purchase Contract Agreement or any other document
referred to or provided for herein or therein or for any failure by the
Company or any other Person (except the Collateral Agent and Securities
Intermediary) to perform any of its obligations hereunder or thereunder
or for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;
(iii) not be required to initiate or conduct any litigation or
collection proceedings hereunder (except pursuant to directions
furnished under Section 9.02 hereof, subject to Section 9.06 hereof);
---- ----
(iv) not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or
therewith, except for its own [gross] negligence, willful misconduct or
bad faith; and
(v) not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect
to, any securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the Collateral
Agent shall take all reasonable action in connection with the safekeeping and
preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent or
Securities Intermediary to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder. In no
event shall the Collateral Agent or Securities Intermediary be liable for any
amount in excess of the Value of the Collateral. Notwithstanding the foregoing,
each of the Collateral Agent and the Securities Intermediary in its individual
capacity hereby waives any right of setoff, bankers' lien, liens or perfection
rights as securities intermediary or any counterclaim with respect to any of the
Collateral.
Section 9.02. Instructions of the Company. The Company shall have the
right, by one or more written instruments executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent shall be adequately indemnified as provided herein. Nothing contained in
this Section 9.02 shall impair the right
----
17
of the Collateral Agent in its discretion to take any action or omit to take any
action which it deems proper and which is not inconsistent with such direction.
Section 9.03. Reliance by Collateral Agent and Securities
Intermediary. Each of the Securities Intermediary and the Collateral Agent
shall be entitled to rely upon any certification, order, judgment, opinion,
notice or other written communication (including, without limitation, any
thereof by e-mail or similar electronic means, telecopy, telex or facsimile)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons (without being required to determine
the correctness of any fact stated therein) and consult with and rely upon
advice, opinions and statements of legal counsel and other experts selected by
the Collateral Agent and the Securities Intermediary. As to any matters not
expressly provided for by this Agreement, the Collateral Agent and the
Securities Intermediary shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions given by the
Company in accordance with this Agreement.
Section 9.04. Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent, any other Person interested herein
and any Holder of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent and any Holder of Securities without having to
account for the same to the Company; provided that each of the Securities
Intermediary and the Collateral Agent covenants and agrees with the Company that
it shall not accept, receive or permit there to be created in favor of itself
and shall take no affirmative action to permit there to be created in favor of
any other Person, any security interest, lien or other encumbrance of any kind
in or upon the Collateral other than the lien created by the Pledge.
Section 9.05. Non-reliance on Collateral Agent and Securities
Intermediary. Neither the Securities Intermediary nor the Collateral Agent shall
be required to keep itself informed as to the performance or observance by the
Purchase Contract Agent or any Holder of Securities of this Agreement, the
Purchase Contract Agreement, the Securities or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Purchase Contract Agent or any Holder of Securities. Neither the Collateral
Agent nor the Securities Intermediary shall have any duty or responsibility to
provide the Company with any credit or other information concerning the affairs,
financial condition or business of the Purchase Contract Agent or any Holder of
Securities
18
(or any of their respective affiliates) that may come into the possession of the
Collateral Agent or the Securities Intermediary or any of their respective
affiliates.
Section 9.06. Compensation and Indemnity.
The Company agrees to:
(i) pay the Collateral Agent and the Securities Intermediary
from time to time such compensation as shall be agreed in writing
between the Company and the Collateral Agent or the Securities
Intermediary, as the case may be, for all services rendered by them
hereunder;
(ii) indemnify and hold harmless the Collateral Agent, the
Securities Intermediary and each of their respective directors,
officers, agents and employees (collectively, the "Indemnitees"),
harmless from and against any and all claims, liabilities, losses,
damages, fines, penalties and expenses (including reasonable fees and
expenses of counsel) (collectively, "Losses" and individually, a
"Loss") that may be imposed on, incurred by, or asserted against, the
Indemnitees or any of them for following any instructions or other
directions upon which either the Collateral Agent or the Securities
Intermediary is entitled to rely pursuant to the terms of this
Agreement; and
(iii) in addition to and not in limitation of paragraph (ii)
immediately above, indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on,
incurred by or asserted against, the Indemnitees or any of them in
connection with or arising out of the Collateral Agent's or the
Securities Intermediary's acceptance or performance of its powers and
duties under this Agreement, provided the Collateral Agent or the
Securities Intermediary has not acted with negligence or engaged in
willful misconduct or bad faith with respect to the specific Loss
against which indemnification is sought.
Section 9.07. Failure to Act. (a) In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, then at its sole option, each of the Collateral
Agent and the Securities Intermediary shall be entitled, after prompt notice to
the Company and the Purchase Contract Agent, to refuse to comply with any and
all claims, demands or instructions with respect to such property or funds so
long as such dispute or conflict shall continue, and the Collateral Agent and
the Securities
19
Intermediary shall not be or become liable in any way to any of the parties
hereto for its failure or refusal to comply with such conflicting claims,
demands or instructions. The Collateral Agent and the Securities Intermediary
shall be entitled to refuse to act until either:
(i) such conflicting or adverse claims or demands shall have
been finally determined by a court of competent jurisdiction or settled
by agreement between the conflicting parties as evidenced in a writing
satisfactory to the Collateral Agent or the Securities Intermediary; or
(ii) the Collateral Agent or the Securities Intermediary shall
have received security or an indemnity satisfactory to it sufficient to
save it harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which it may incur by reason of its
acting.
The Collateral Agent and the Securities Intermediary may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent or the Securities Intermediary may deem necessary.
Notwithstanding anything contained herein to the contrary, neither the
Collateral Agent nor the Securities Intermediary shall be required to take any
action that is in its opinion contrary to law or to the terms of this Agreement,
or which would in its opinion subject it or any of its officers, employees or
directors to liability.
Section 9.08. Resignation of Collateral Agent and Securities
Intermediary. (a) Subject to the appointment and acceptance of a successor
Collateral Agent as provided below:
(i) the Collateral Agent may resign at any time by giving
notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities;
(ii) the Collateral Agent may be removed at any time by the
Company; and
(iii) if the Collateral Agent fails to perform any of its
material obligations hereunder in any material respect for a period of
not less than 20 days after receiving written notice of such failure
by the Purchase Contract Agent and such failure shall be continuing,
the Collateral Agent may be removed by the Purchase Contract Agent,
acting at the direction of the Holders of Securities.
The Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (iii) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the
20
right to appoint a successor Collateral Agent. If no successor Collateral Agent
shall have been so appointed and shall have accepted such appointment within 30
days after the retiring Collateral Agent's giving of notice of resignation or
the Company or the Purchase Contract Agent giving notice of such removal, then
the retiring Collateral Agent may petition any court of competent jurisdiction
for the appointment of a successor Collateral Agent. The successor Collateral
Agent shall be a bank or a national banking association which has an office (or
an agency office) in New York City with a combined capital and surplus of at
least $50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall take all appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor Collateral Agent. The
retiring Collateral Agent shall, upon such succession, be discharged from its
duties and obligations as Collateral Agent hereunder. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions of
this Article 9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Collateral
Agent.
(b) Subject to the appointment and acceptance of a successor Securities
Intermediary as provided below:
(i) the Securities Intermediary may resign at any time by giving
notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities;
(ii) the Securities Intermediary may be removed at any time by
the Company; and
(iii) if the Securities Intermediary fails to perform any of its
material obligations hereunder in any material respect for a period of not
less than 20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the
Securities Intermediary may be removed by the Purchase Contract Agent.
The Purchase Contract Agent shall promptly notify the Company of any removal of
the Securities Intermediary pursuant to clause (iii) of the immediately
preceding sentence. Upon any such resignation or removal, the Company shall have
the right to appoint a successor Securities Intermediary. If no successor
Securities Intermediary shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Securities Intermediary's
giving of notice of resignation or the Company or the Purchase Contract Agent
giving notice of such removal, then the retiring Securities Intermediary may
petition any
21
court of competent jurisdiction for the appointment of a successor Securities
Intermediary. The successor Securities Intermediary shall be a bank or a
national banking association which has an office (or an agency office) in New
York City with a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Securities Intermediary hereunder by a
successor Securities Intermediary, such successor Securities Intermediary shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Securities Intermediary, and the retiring Securities
Intermediary shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Securities Intermediary. The retiring Securities Intermediary shall, upon such
succession, be discharged from its duties and obligations as Securities
Intermediary hereunder. After any retiring Securities Intermediary's resignation
hereunder as Securities Intermediary, the provisions of this Article 9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Securities Intermediary.
(c) Any resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous resignation or
removal of the Securities Intermediary. Any resignation or removal of the
Securities Intermediary hereunder shall be deemed for all purposes of this
Agreement as the simultaneous resignation or removal of the Collateral Agent.
Section 9.09. Conflict of Interest. (a Notwithstanding anything in this
Agreement to the contrary, if there is an actual conflict of interest, or any
dispute or conflicting or adverse demands or claims among the parties hereto or
between the Holders of Pledged Preferred Shares, on the one hand, and the
Company, on the other hand (including, without limitation, under the
circumstances described in Sections 5.02(b)(i), 9.07 or 9.08(a)), the Company
shall promptly (i) remove the Collateral Agent and the Securities Intermediary,
(ii) appoint a successor Collateral Agent and Securities Intermediary and (iii)
notify the Purchase Contract Agent of such removal.
(b) Each of the successor Collateral Agent and the successor Securities
Intermediary to any Collateral Agent and Securities Intermediary that is removed
pursuant to Section 9.09(b) shall be a bank or a national banking association
which has an office (or an agency office) in New York City with a combined
capital and surplus of at least $50,000,000 and shall not be the Purchase
Contract Agent or any of its affiliates. Upon the acceptance of any appointment
as Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to such
successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be
22
discharged from its duties and obligations as Collateral Agent hereunder. After
any retiring Collateral Agent resignation hereunder as Collateral Agent, the
provisions of this Article 9 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent. Upon the acceptance of any appointment as Securities
Intermediary hereunder by a successor Securities Intermediary, such successor
Securities Intermediary shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Securities
Intermediary, and the retiring Securities Intermediary shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Securities Intermediary. The
retiring Securities Intermediary shall, upon such succession, be discharged from
its duties and obligations as Securities Intermediary hereunder. After any
retiring Securities Intermediary's resignation hereunder as Securities
Intermediary, the provisions of this Article 9 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Securities Intermediary.
Section 9.10. Right to Appoint Agent or Advisor. The Collateral Agent shall
have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents (other than legal counsel)
pursuant to this Section 9.10 for the performance of any duties that are not
----
ministerial in nature shall be subject to prior consent of the Company, which
consent shall not be unreasonably withheld.
Section 9.11. Survival. The provisions of this Article 9 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Securities Intermediary.
Section 9.12. Exculpation. Anything contained in this Agreement to the
contrary notwithstanding, in no event shall the Collateral Agent or the
Securities Intermediary or their officers, directors, employees or agents be
liable under this Agreement to any third party for indirect, special, punitive,
or consequential loss or damage of any kind whatsoever, including, but not
limited to, lost profits, whether or not the likelihood of such loss or damage
was known to the Collateral Agent or the Securities Intermediary, or any of
them.
23
ARTICLE 10
Amendment
Section 10.01. Amendment Without Consent of Holders. Without the
consent of any Holders, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, at any time and from time to time,
may amend this Agreement, in form satisfactory to the Company, the Collateral
Agent, the Securities Intermediary and the Purchase Contract Agent, to:
(i) evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company;
(ii) evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent;
(iii) add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the
Company, provided such covenants or such surrender do not adversely
affect the validity, perfection or priority of the Pledge created
hereunder; or
(iv) cure any ambiguity (or formal defect), correct or
supplement any provisions herein which may be inconsistent with any
other such provisions herein, or make any other provisions with respect
to such matters or questions arising under this Agreement, provided
such action shall not adversely affect the interests of the Holders.
Section 10.02. Amendment with Consent of Holders. With the consent of
the Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of such Holders delivered to the Company, the Purchase
Contract Agent, the Securities Intermediary or the Collateral Agent, as the case
may be, the Company, when duly authorized, the Purchase Contract Agent, the
Securities Intermediary and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the unanimous consent of the Holders
of each Outstanding Security adversely affected thereby:
(i) change the amount or type of Collateral underlying a
Security, impair the right of the Holder of any Security to receive
distributions on the underlying Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral; or
24
(ii) otherwise effect any action that would require the consent
of the Holder of each Outstanding Security affected thereby pursuant to
the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(iii) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment;
provided that if any amendment or proposal referred to above would adversely
affect only the PEPS 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; provided, further, that the unanimous consent of the Holders of each
outstanding Purchase Contract of such class affected thereby shall be required
to approve any amendment or proposal specified in clauses (i) through (iii)
above.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 10.03. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent, the Securities Intermediary and
the Purchase Contract Agent shall be entitled to receive and (subject to Section
7.01 of the Purchase Contract Agreement with respect to the Purchase Contract
Agent) shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution and
delivery of such amendment have been satisfied.
Section 10.04. Effect of Amendments. Upon the execution of any
amendment under this Section, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.
Section 10.05. Reference to Amendments. Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the Collateral
Agent or the Purchase Contract Agent, bear a notation in form approved by the
Purchase Contract Agent and the Collateral Agent as to any matter provided for
in such amendment. If the Company shall so determine, new Certificates so
25
modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders and
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Certificates.
ARTICLE 11
Miscellaneous
Section 11.01. No Waiver. No failure on the part of 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 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.
Section 11.02. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. The Company,
the Collateral Agent, the Securities Intermediary and the Holders from time to
time of the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent, the Securities Intermediary and the
Holders from time to time of the Securities, acting through the Purchase
Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 11.03. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
26
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
Section 11.04. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of
the Company, the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent, and the Holders from time to time of the
Securities, by their acceptance of the same, shall be deemed to have agreed
to be bound by the provisions hereof and to have ratified the agreements
of, and the grant of the Pledge hereunder by, the Purchase Contract Agent.
Section 11.05. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.
Section 11.06. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in order to carry out
the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
Section 11.07. Expenses, Etc.. The Company agrees to reimburse the
Collateral Agent and the Securities Intermediary for:
(i) all reasonable costs and expenses of the Collateral Agent
and the Securities Intermediary (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral Agent and
the Securities Intermediary), in connection with (A) the negotiation,
preparation, execution and delivery or performance of this Agreement
and (B) any modification, supplement or waiver of any of the terms of
this Agreement;
(ii) all reasonable costs and expenses of the Collateral Agent
and the Securities Intermediary (including, without limitation,
reasonable fees and expenses of counsel) in connection with (A) any
enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the
Purchase Contracts forming a part of the Securities and (B) the
enforcement of this Section 11.07;
-----
27
(iii) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority
in respect of this Agreement or any other document referred to herein
and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection
of any security interest contemplated hereby;
(iv) all fees and expenses of any agent or advisor appointed by
the Collateral Agent and consented to by the Company under Sections
9.03 and 9.10 of this Agreement; and
---- ----
(v) any other out-of-pocket costs and expenses reasonably
incurred by the Collateral Agent and the Securities Intermediary in
connection with the performance of their duties hereunder.
SECTION 11.08. Security Interest Absolute. All rights of the
Collateral Agent and security interests hereunder, and all obligations of
the Holders from time to time hereunder, shall be absolute and
unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of the Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase
Contract Agreement or any Purchase Contract or any other agreement or
instrument relating thereto; or
(iii) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledger.
[SIGNATURES ON THE FOLLOWING PAGE]
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
PARTNERRE LTD. JPMORGAN CHASE BANK, as
Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By: ______________________ By: ______________________
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
PartnerRe Ltd. JPMorgan Chase Bank
Chesney House 450 West 33/rd/ Street
96 Pitts Bay Road New York, New York 10001
Hamilton, HM 08 Telecopier No.: 212-946-8158
Bermuda Attention: Institutional Trust
Telecopier No.: 441-292-3060 Services
Attention: General Counsel
with a copy to:
Willkie Farr & Gallagher
787 Seventh Ave.
New York, New York 10019
Telecopier No.: 212-728-8111
Attention: John S. D'Alimonte, Esq.
29
JPMORGAN CHASE BANK, JPMORGAN CHASE BANK,
as Collateral Agent as Securities Intermediary
By: _________________ By: ________________________
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
JPMorgan Chase Bank JPMorgan Chase Bank
450 West 33/rd/ Street 450 West 33/rd/ Street
New York, New York 10001 New York, New York 10001
Telecopier No.: 212-946-8158 Telecopier No.: 212-946-8158
Attention: Institutional Trust Attention: Institutional Trust
Services Services
30
EXHIBIT A
NOTICE OF CASH SETTLEMENT FROM SECURITIES
INTERMEDIARY TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)
JPMORGAN CHASE BANK,
as Purchase Contract Agent
450 West 33/rd/ Street
New York, New York 10001
Attention: Institutional Trust Services
Telecopy: 212-946-8158
Re: ________________ PEPS Units of PartnerRe Ltd.
(the "Company")
Please refer to the Pledge Agreement dated as of November . , 2001
(the "Pledge Agreement"), by and among you, the Company, JPMorgan Chase
Bank, as Collateral Agent and the undersigned, as Securities Intermediary.
Unless otherwise defined herein, terms defined in the Pledge Agreement are
used herein as defined therein.
In accordance with Section 5.5(d) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m. (New York City time) on the fifth Business
Day immediately preceding _______ 2004, we have received $ _______________
in immediately available funds paid in an aggregate amount equal to the
Purchase Price to the Company on the Purchase Contract Settlement Date with
respect to ________________ PEPS Units.
JPMORGAN CHASE BANK,
as Securities Intermediary,
Date: _______________________ By: _________________________
Name:
Title:
1
CROSS-REFERENCE TARGET LIST
===========================
NOTE: Due to the number of targets some target names may not appear in the
target pull-down list.
(This list is for the use of the wordprocessor only, is not a part of this
document and may be discarded.)
ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME ARTICLE/SECTION TARGET NAME
=============== =========== =============== =========== =============== =========== =============== ===========
1....................... 001
- -
1.01(e) ................ 002
- -------
2 ...................... 015
- -
3 ...................... 014
- -
3.03(b) ................ 006
- -------
4 ...................... 004
- -
5.02 ................... 009
- ----
5.02(b)(i) ............. 011
- ----------
5.03 ................... 008
- ----
5.03(a)(ii) ............ 012
- ----------
5.04 ................... 010
- ----
5.05 ................... 003
- ----
6 ...................... 007
- -
? ...................... 013
? ...................... 005
9 ...................... 018
- -
9.02 ................... 016
- ----
9.03 ................... 021
- ----
9.06 ................... 017
- ----
9.10 ................... 019
- ----
11.07 .................. 020
- -----
Exhibit A (1 Page No.).. 022
-