EXECUTION COPY
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SCOTTISH RE GROUP LIMITED
AND
JPMORGAN CHASE BANK,
as Purchase Contract Agent and Collateral Agent
PURCHASE CONTRACT AGREEMENT
Dated as of December 17, 2003
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TABLE OF CONTENTS
Page
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TABLE OF CONTENTS i
RECITALS 1
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 1
SECTION 1.01. Definitions....................................................................1
SECTION 1.02. Compliance Certificates and Opinions..........................................11
SECTION 1.03. Form of Documents Delivered to Purchase Contract Agent........................12
SECTION 1.04. Acts of Holders; Record Dates.................................................12
SECTION 1.05. Notices.......................................................................14
SECTION 1.06. Notice to Holders; Waiver.....................................................14
SECTION 1.07. Effect of Headings and Table of Contents......................................15
SECTION 1.08. Successors and Assigns........................................................15
SECTION 1.09. Separability Clause...........................................................15
SECTION 1.10. Benefits of Agreement.........................................................15
SECTION 1.11. Governing Law; Submission to Jurisdiction and Service of Process..............15
SECTION 1.12. Legal Holidays................................................................16
SECTION 1.13. Counterparts..................................................................16
SECTION 1.14. Inspection of Agreement.......................................................17
SECTION 1.15. Appointment of Financial Institution as Agent for the Company.................17
SECTION 1.16. No Waiver.....................................................................17
ARTICLE II CERTIFICATE FORMS 17
SECTION 2.01. Forms of Certificates Generally...............................................17
SECTION 2.02. Form of Purchase Contract Agent's Certificate of Authentication...............18
ARTICLE III THE UNITS 18
SECTION 3.01. Amount; Form and Denominations................................................18
SECTION 3.02. Rights and Obligations Evidenced by the Certificates..........................19
SECTION 3.03. Execution, Authentication, Delivery and Dating................................19
SECTION 3.04. Temporary Certificates........................................................20
SECTION 3.05. Registration; Registration of Transfer and Exchange...........................20
SECTION 3.06. Book-Entry Interests..........................................................22
SECTION 3.07. Notices to Holders............................................................23
SECTION 3.08. Appointment of Successor Depositary...........................................23
SECTION 3.09. Definitive Certificates.......................................................23
SECTION 3.10. Mutilated, Destroyed, Lost and Stolen Certificates............................24
SECTION 3.11. Persons Deemed Owners.........................................................25
SECTION 3.12. Cancellation..................................................................26
SECTION 3.13. Creation of Treasury Units by Substitution of Treasury Securities.............26
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SECTION 3.14. Recreation of Hybrid Capital Units............................................28
SECTION 3.15. Transfer of Collateral upon Occurrence of Termination Event...................29
SECTION 3.16. No Consent to Assumption......................................................29
SECTION 3.17. CUSIP Numbers.................................................................30
SECTION 3.18. Currency of Payments..........................................................30
ARTICLE IV THE CONVERTIBLE PREFERRED SHARES 30
SECTION 4.01. Dividend Payments; Rights to Dividend Payments Preserved......................30
SECTION 4.02. Notice and Voting.............................................................31
ARTICLE V THE PURCHASE CONTRACTS 32
SECTION 5.01. Purchase of Ordinary Shares...................................................32
SECTION 5.02. Remarketing; Payment of Purchase Price........................................34
SECTION 5.03. Issuance of Ordinary Shares...................................................39
SECTION 5.04. Adjustment of Settlement Rate.................................................40
SECTION 5.05. Notice of Adjustments and Certain Other Events................................49
SECTION 5.06. Termination Event; Notice.....................................................49
SECTION 5.07. Early Settlement..............................................................50
SECTION 5.08. No Fractional Shares..........................................................52
SECTION 5.09. Charges and Taxes.............................................................53
SECTION 5.10. Contract Adjustment Payments..................................................53
SECTION 5.11. Deferral of Contract Adjustment Payments......................................54
ARTICLE VI REMEDIES 56
SECTION 6.01. Unconditional Right of Holders to Receive Contract Adjustment Payments
and to Purchase Ordinary Shares..........................................56
SECTION 6.02. Restoration of Rights and Remedies............................................56
SECTION 6.03. Rights and Remedies Cumulative................................................56
SECTION 6.04. Delay or Omission Not Waiver..................................................56
SECTION 6.05. Undertaking for Costs.........................................................57
SECTION 6.06. Waiver of Stay or Extension Laws..............................................57
ARTICLE VII THE PURCHASE CONTRACT AGENT 57
SECTION 7.01. Certain Duties and Responsibilities...........................................57
SECTION 7.02. Notice of Default.............................................................58
SECTION 7.03. Certain Rights of Purchase Contract Agent.....................................59
SECTION 7.04. Not Responsible for Recitals or Issuance of Units.............................60
SECTION 7.05. May Hold Units................................................................61
SECTION 7.06. Money Held in Custody.........................................................61
SECTION 7.07. Compensation and Reimbursement................................................61
SECTION 7.08. Corporate Purchase Contract Agent Required; Eligibility.......................62
SECTION 7.09. Resignation and Removal; Appointment of Successor.............................62
SECTION 7.10. Acceptance of Appointment by Successor........................................63
SECTION 7.11. Merger, Conversion, Consolidation or Succession to Business...................64
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SECTION 7.12. Preservation of Information; Communications to Holders........................64
SECTION 7.13. No Obligations of Purchase Contract Agent.....................................64
SECTION 7.14. Tax Compliance................................................................65
SECTION 7.15. Collateral Agent..............................................................65
ARTICLE VIII SUPPLEMENTAL AGREEMENTS 66
SECTION 8.01. Supplemental Agreements Without Consent of Holders............................66
SECTION 8.02. Supplemental Agreements with Consent of Holders...............................66
SECTION 8.03. Execution of Supplemental Agreements..........................................67
SECTION 8.04. Effect of Supplemental Agreements.............................................68
SECTION 8.05. Reference to Supplemental Agreements..........................................68
ARTICLE IX CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 68
SECTION 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property
Except under Certain Conditions..........................................68
SECTION 9.02. Rights and Duties of Successor Person.........................................69
SECTION 9.03. Officers' Certificate and Opinion of Counsel Given to Purchase Contract
Agent....................................................................69
ARTICLE X COVENANTS 69
SECTION 10.01. Performance under Purchase Contracts.........................................69
SECTION 10.02. Maintenance of Office or Agency..............................................69
SECTION 10.03. Company to Reserve Ordinary Shares...........................................70
SECTION 10.04. Covenants as to Ordinary Shares..............................................70
SECTION 10.05. Statements of Officers of the Company as to Default..........................70
SECTION 10.06. ERISA........................................................................71
SECTION 10.07. Tax Treatment................................................................71
SECTION 10.08. Securities Contract..........................................................71
SECTION 10.09. Listing......................................................................71
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EXHIBITS
Exhibit A - Form of Hybrid Capital Units Certificate
Exhibit B - Form of Treasury Units Certificate
Exhibit C - Instruction to Purchase Contract Agent
Exhibit D - Notice from Purchase Contract Agent to Holders
Exhibit E - Notice to Settle by Separate Cash
Exhibit F - Notice from Purchase Contract Agent to Collateral Agent
Exhibit G - Time Table of Remarketing and Settlement of Purchase Contracts
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PURCHASE CONTRACT AGREEMENT, dated as of December 17, 2003, between
Scottish Re Group Limited, a Cayman Islands exempted company (the "Company"),
and JPMorgan Chase Bank, a New York banking corporation, acting as purchase
contract agent for the Holders of Units (as defined herein) from time to time
(the "Purchase Contract Agent") and as collateral agent (the "Collateral
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 Purchase Contracts (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 Purchase
Contract 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 I
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;
(d) the following terms have the meanings given to them in this Section
1.01(d):
"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 LIQUIDATION PREFERENCE" means the aggregate liquidation
preference of the Convertible Preferred Shares that are components of Hybrid
Capital 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.
"BANKRUPTCY LAW" means (i) the Bankruptcy Code or (ii) any and all
relevant provisions of the Companies Law (2003 Revision) relating to the winding
up of the Company at any time when it is unable to pay its debts as they fall
due in the ordinary course of business (including without limitation in the
circumstances set out in Section 95 of the Companies Law).
"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 Purchase Contract 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" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York City, New York are authorized or required
by applicable law to remain closed.
"CASH SETTLEMENT" has the meaning set forth in Section 5.02(c)(i).
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"CERTIFICATE" means a Hybrid Capital Units Certificate or a Treasury
Units Certificate.
"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations duly
adopted by a resolution of the duly authorized Finance and Investment Committee
of the Board of Directors of the Company on December 11, 2003 under which the
Convertible Preferred Shares are issued.
"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.
"COLLATERAL AGENT" means JPMorgan Chase Bank, a banking corporation with
trust powers, duly organized and existing under the laws of the State of New
York, 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 Hybrid Capital
Unit, the substitution for the Pledged Convertible Preferred Share included in
such Hybrid Capital Unit of Treasury Securities in an aggregate principal amount
at maturity equal to the aggregate liquidation preference of such Pledged
Convertible Preferred Share, or (ii) with respect to a Treasury Unit, the
substitution for the Pledged Treasury Securities included in such Treasury Unit
of Convertible Preferred Shares in an aggregate liquidation preference equal to
the aggregate principal amount at stated maturity of the Pledged Treasury
Securities.
"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).
"CONTRACT ADJUSTMENT PAYMENTS" means the payments payable by the Company
on the Payment Dates in respect of each Purchase Contract, at a rate per year of
4.875% of the Stated Amount per Purchase Contract.
"CONVERTIBLE PREFERRED SHARES" means the Convertible Preferred Shares to
be issued by the Company under the Certificate of Designations.
"CORPORATE TRUST OFFICE" means the office of the Purchase Contract Agent
at which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at 4 New
York Plaza, New York, New York 10004, Attn: Institutional Trust Services.
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"CURRENT MARKET PRICE" has the meaning set forth in Section 5.04(a)(8).
"CUSTODIAL AGENT" means JPMorgan Chase Bank, a banking corporation with
trust powers, duly organized and existing under the laws of the State of New
York, 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.
"DEFAULT" means the Company is in default in any material respect of its
obligations hereunder and such default continues for a period of 60 days.
"DEFERRED CONTRACT ADJUSTMENT PAYMENTS" has the meaning provided in
Section 5.11.
"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, 3.07, 3.08 and 3.09.
"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.
"DIVIDEND RATE" means the percentage rate per annum at which dividends
will be paid on each Convertible Preferred Share from time to time.
"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.
"EXCESS PROCEEDS" has the meaning set forth in Section 5.02(e)(i).
"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).
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"EXTENSION PERIOD" has the meaning set forth in Section 5.11(a).
"FAILED REMARKETING" has the meaning set forth in Section 5.02(e).
"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 such Depositary Participant acting at the
direction of the Beneficial Owners.
"HYBRID CAPITAL UNIT" means the 5.875% Hybrid Capital Units, which are
the collective rights and obligations of a Holder of a Hybrid Capital Units
Certificate in respect of the Convertible Preferred Shares, subject in each case
to the Pledge thereof, and the related Purchase Contract.
"HYBRID CAPITAL UNITS CERTIFICATE" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Hybrid Capital
Units specified on such certificate.
"INTRINSIC VALUE" means with respect to any Convertible Preferred Share,
an amount in cash equal to the product of (i) the number of Ordinary Shares that
would be required to be delivered pursuant to clause (ii) of Section 5(d) of the
Certificate of Designation if the Convertible Preferred Share had been converted
on the Purchase Contract Settlement Date and (ii) the average Closing Price of
the Ordinary Shares for the 20 consecutive Trading Day period ending on the
Purchase Contract Settlement Date.
"ISSUER ORDER" or "ISSUER REQUEST" means a written order or request
signed in the name of the Company by any two Officers, at least one of whom is
the Chief Executive Officer, the President or the Chief Financial Officer of the
Company, and delivered to the Purchase Contract Agent.
"NON-ELECTING SHARE" has the meaning set forth in Section 5.04(b).
"NYSE" has the meaning set forth in Section 5.01.
"OFFICER" means the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer, the Secretary, any
Assistant Treasurer or Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by any two Officers,
at least one of whom is the Chief Executive Officer, the President or the Chief
Financial Officer of the Company, and delivered to the Purchase Contract Agent.
Any Officers' Certificate delivered
5
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 Purchase Contract Agent. An opinion of
counsel may rely on certificates as to matters of fact.
"ORDINARY SHARES" means the ordinary shares, par value $0.01 per share,
of the Company.
"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) Hybrid Capital
Units for which the underlying Convertible Preferred Shares have been
theretofore deposited with the Purchase Contract Agent in trust for the
Holders of such Hybrid Capital Units and (y) Treasury Units;
(ii) Units evidenced by Certificates theretofore cancelled by
the Purchase Contract Agent or delivered to the Purchase Contract 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 Purchase Contract 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;
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
6
not to be Outstanding Units, except that, in determining whether the Purchase
Contract 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 Purchase Contract 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 Purchase Contract 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 15, May 15, August 15 and November
15, of each year, commencing February 15, 2004.
"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 Convertible
Preferred Shares or the Treasury Securities, as the case may be, in each case
constituting a part of the Units.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of December 17,
2003, among the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract 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 CONVERTIBLE PREFERRED SHARES" has the meaning set forth in
Section 1.01(d) of the Pledge Agreement.
"PLEDGED TREASURY SECURITIES" has the meaning set forth in Section
1.01(d) of the Pledge Agreement.
"PREDECESSOR CERTIFICATE" means a Predecessor Hybrid Capital Units
Certificate or a Predecessor Treasury Units Certificate.
"PREDECESSOR HYBRID CAPITAL UNITS CERTIFICATE" of any particular Hybrid
Capital Units Certificate means every previous Hybrid Capital Units Certificate
evidencing all or a portion of the rights and obligations of the Company and the
Holder under the Hybrid Capital Units evidenced thereby; and, for the purposes
of this definition, any Hybrid Capital Units Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Hybrid Capital Units Certificate shall be deemed to
7
evidence the same rights and obligations of the Company and the Holder as the
mutilated, destroyed, lost or stolen Hybrid Capital 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.
"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 Specified Merger Early Settlement of Purchase Contracts 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.
"PURCHASE CONTRACT" means, with respect to any Unit, the contract
forming a part of such Unit and obligating the Company to (i) sell, and the
Holder of such Unit to purchase, Ordinary Shares and (ii) pay the Holder thereof
Contract Adjustment Payments, in each case on the terms and subject to the
conditions set forth in Article Five hereof.
"PURCHASE CONTRACT AGENT" means the Person named as the "PURCHASE
CONTRACT AGENT" in the first paragraph of this Agreement until a successor
Purchase Contract Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "PURCHASE CONTRACT AGENT" shall
mean such Person or any subsequent successor who is appointed pursuant to this
Agreement.
"PURCHASE CONTRACT SETTLEMENT DATE" means February 15, 2007.
"PURCHASE CONTRACT SETTLEMENT FUND" has the meaning set forth in Section
5.03.
"PURCHASE PRICE" has the meaning set forth in Section 5.01.
"PURCHASED SHARES" has the meaning set forth in Section 5.04(a)(6).
"QUOTATION AGENT" means any Primary Treasury Dealer selected by the
Company.
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"RECORD DATE" for any distribution and Contract Adjustment Payment
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.
"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 Specified Merger Early Settlement of Purchase Contracts on
the Specified 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 CONVERTIBLE PREFERRED SHARES" has the meaning set forth in
Section 5.02(e)(1).
"REMARKETING" means the remarketing of the Convertible Preferred Shares
by the Remarketing Agent pursuant to Section 5.02 and the Remarketing Agreement.
"REMARKETING AGENT" means Bear, Stearns & Co. Inc. or any successor
remarketing agent appointed by the Company pursuant to the Remarketing
Agreement.
"REMARKETING AGREEMENT" means the Remarketing Agreement, dated as of
December 17, 2003, among the Company and the Remarketing Agent, as amended from
time to time.
"REMARKETING DATE" means February 9, 2007.
"REMARKETING FEE" has the meaning set forth in Section 5.02(e).
"REORGANIZATION EVENT" has the meaning set forth in Section 5.04(b).
"RESET RATE" has the meaning set forth in the Certificate of
Designations.
"RESPONSIBLE OFFICER" means, with respect to the Purchase Contract
Agent, any officer of the Purchase Contract Agent within the Conventional Debt
unit of the Institutional Trust Services department (or any successor unit or
department) of the Purchase Contract Agent who has direct responsibility for the
administration of this Agreement and, for purposes of Section 7.01(b)(2) hereof,
also means, with respect to a particular corporate trust matter, any other
officer of the Purchase Contract Agent as to whom such matter is referred
because of such person's knowledge of and familiarity with the particular
subject.
"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).
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"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.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings set forth in Section 3.05.
"SEPARATE CONVERTIBLE PREFERRED SHARES" means Convertible Preferred
Shares that are no longer a component of Hybrid Capital Units.
"SEPARATE CONVERTIBLE PREFERRED SHARES PURCHASE PRICE" means the amount
in cash equal to the product of the proceeds from the Remarketed Convertible
Preferred Shares per Convertible Preferred Share multiplied by the number of
Separate Convertible Preferred Shares remarketed in the Remarketing.
"SETTLEMENT RATE" has the meaning set forth in Section 5.01.
"SPECIFIED MERGER" has the meaning set forth in Section 5.04(b)(2).
"SPECIFIED MERGER EARLY SETTLEMENT" has the meaning set forth in Section
5.04(b)(2).
"SPECIFIED MERGER EARLY SETTLEMENT DATE" has the meaning set forth in
Section 5.04(b)(2).
"STATED AMOUNT" means $25.00.
"SUCCESSFUL REMARKETING" has the meaning set forth in Section 5.02(e).
"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 Purchase Contract Settlement
Date, a judgment, decree or court order shall have been entered granting
relief under any Bankruptcy Law, 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 U.S. Federal or state law and if such judgment, decree or
order shall have been entered more than 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued
undischarged and unstayed for a period of 60 days;
(ii) except under Cayman Islands law, at any time on or prior to
the Purchase Contract 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 Purchase Contract Settlement Date, such judgment,
decree or order shall have continued undischarged and unstayed for a
period of 60 days;
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(iii) at any time on or prior to the Purchase Contract
Settlement Date, the Company shall file a petition for relief under any
Bankruptcy Law, 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 any Bankruptcy Law or any
other similar applicable U.S. 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; or
(iv) at any time on or prior to the Purchase Contract 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 under any Bankruptcy Law of
the Cayman Islands, or for the termination or liquidation of the affairs
of the Company on its bankruptcy or insolvency, shall have been entered
and if such judgment, decree or order shall have been entered more than
60 days prior to the Purchase Contract Settlement Date, such judgment,
decree or order shall have continued undischarged and unstayed for a
period of 60 days.
"TRADING DAY" has the meaning set forth in Section 5.01.
"TREASURY SECURITIES" means zero-coupon U.S. treasury securities that
mature on February 15, 2007 (CUSIP No. 912820BW6).
"TREASURY UNIT" means, following the substitution of Treasury Securities
for Pledged Convertible Preferred Shares as collateral to secure a Holder's
obligations under the Purchase Contract, the collective rights and obligations
of a Holder of a Treasury Units Certificate in respect of such Treasury
Securities, subject to the Pledge thereof, and the related Purchase Contract.
"TREASURY UNITS CERTIFICATE" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Treasury Unit specified
on such certificate.
"UNDERWRITERS" means the underwriters identified in Schedule I to the
Underwriting Agreement.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
December 11, 2003, among the Company and the Underwriters.
"UNIT" means a Hybrid Capital 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 Purchase Contract Agent to take any
action in accordance with any provision of this Agreement, the Company shall
furnish to the Purchase Contract 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 and, except in the case of any
application or request of the Company for the authentication, execution on
behalf of the Holders and delivery of Certificates pursuant to Section 3.03, an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
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Every certificate or opinion 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 or
opinion 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 or opinions
contained in such certificate or opinion are based;
(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 Purchase Contract 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 Purchase Contract Agent and, where it is hereby expressly required, to
the Company.
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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 Purchase
Contract Agent and the Company, if made in the manner provided in this Section.
(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 Purchase Contract
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
Purchase Contract 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 Hybrid Capital 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 Hybrid Capital 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 Purchase Contract 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 Purchase Contract 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
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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.
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 Purchase Contract Agent and the Collateral Agent,
as the case may be, only upon receipt thereof:
If to the Purchase Contract Agent:
JPMorgan Chase Bank
4 New York Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 623-6783
Fax: (212) 623-6167
If to the Company:
Scottish Re Group Limited
P.O. Box 2939
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton HMMX, Bermuda
Attention: General Counsel
Telephone: (441) 295-4451
Fax: (441) 295-7576
If to the Collateral Agent:
JPMorgan Chase Bank
4 New York Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 623-6783
Fax: (212) 623-6167
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 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
14
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 Purchase Contract 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 Purchase Contract
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
Purchase Contract 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. In connection
with the Remarketing, the holders of Separate Convertible Preferred Shares shall
be beneficiaries of this Agreement.
SECTION 1.11. Governing Law; Submission to Jurisdiction and Service of
Process.
(a) This Agreement and the Units shall be governed by, and construed in
accordance with, the laws of the State of New York.
(b) The Company irrevocably (1) submits to the jurisdiction of any court
of the State of New York in New York County or the United States District Court
for the Southern District of the State of New York for the purpose of any suit,
action, or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated by this Agreement or the Convertible
Preferred Shares (each, a "Proceeding"), (2) agrees that all claims in respect
of any Proceeding may be heard and determined in any such court, (3) waives, to
the fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process
15
therein, (4) agrees not to commence any Proceeding other than in such courts,
and (5) waives, to the fullest extent permitted by law, any claim that such
Proceeding is brought in an inconvenient forum.
(c) The Company agrees that service of all writs, process and summonses
in any suit, action or proceeding brought in connection with this Agreement
against the Company in any court of the State of New York or any United States
federal court, in each case, sitting in the Borough of Manhattan, City and State
of New York, may be made upon CT Corporation System at 111 Eighth Avenue, New
York, New York 10011, whom the Company irrevocably appoints as its authorized
agent for service of process. The Company represents and warrants that CT
Corporation System has agreed to act as the Company's agent for service of
process. The Company agrees that such appointment shall be irrevocable until the
irrevocable appointment by the Company of a successor in The City of New York as
its authorized agent for such purpose and the acceptance of such appointment by
such successor. The Company further agrees to take any and all action, including
the filing of any and all documents and instruments that may be necessary to
continue such appointment in full force and effect as aforesaid. If CT
Corporation System shall cease to act as the agent for service of process for
the Company, the Company shall appoint without delay, another such agent and
provide prompt written notice to the Purchase Contract Agent of such
appointment.
SECTION 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day
(notwithstanding any other provision of this Agreement or the Units), Contract
Adjustment Payments or other distributions shall not be paid on such date, but
Contract Adjustment Payments 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 Contract Adjustment Payments 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 scheduled Payment Date;
provided that no interest shall accumulate or be payable by the Company to any
Holder in respect of such payment or distribution for the period from and after
any such scheduled Payment Date.
In any case where the Purchase Contract Settlement Date or any Early
Settlement Date or Specified Merger Early Settlement Date shall not be a
Business Day (notwithstanding any other provision of this Agreement or the
Units), Purchase Contracts shall not be performed and Early Settlement and
Specified Merger Early Settlement shall not be effected on such date, but
Purchase Contracts shall be performed or Early Settlement or Specified 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 Purchase Contract
Settlement Date, Early Settlement Date or Specified 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.
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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 Purchase Contract
Agent and the Holders, under this Agreement and the Purchase Contracts, 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 Purchase Contract Agent, the
Collateral Agent 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 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.
ARTICLE II
CERTIFICATE FORMS
SECTION 2.01. Forms of Certificates Generally.
The Certificates (including the form of Purchase Contract forming part
of each Unit evidenced thereby) shall be in substantially the form set forth in
Exhibit A hereto (in the case of Certificates evidencing Hybrid Capital 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 Units evidenced by such
Certificates, 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
PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND
17
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 PURCHASE CONTRACT 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
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SECTION 2.02. Form of Purchase Contract Agent's Certificate of
Authentication.
The form of the Purchase Contract Agent's certificate of authentication
of the Units shall be in substantially the form set forth on the form of the
applicable Certificates.
ARTICLE III
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
5,000,000 (or 5,750,000 if the over-allotment option granted to the Underwriters
pursuant to the Underwriting Agreement is exercised in full), 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, 3.09, 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 Hybrid Capital Unit or Treasury Unit and any integral
multiple thereof.
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SECTION 3.02. Rights and Obligations Evidenced by the Certificates.
Each Hybrid Capital Units Certificate shall evidence the number of
Hybrid Capital Units specified therein, with each such Hybrid Capital Unit
representing (1) the ownership by the Holder thereof of a beneficial interest in
a Convertible Preferred Share, subject to the Pledge of such Convertible
Preferred Share by such Holder pursuant to the Pledge Agreement, and (2) the
rights and obligations of the Holder thereof and the Company under one Purchase
Contract. The Purchase Contract Agent is hereby authorized, as attorney-in-fact
for, and on behalf of, the Holder of each Hybrid Capital Unit, to pledge,
pursuant to the Pledge Agreement and the Convertible Preferred Share forming a
part of such Hybrid Capital 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
Convertible Preferred Share to secure the obligation of the Holder under each
Purchase Contract to purchase Ordinary Shares.
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, or 2.5%, undivided 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 Purchase Contract.
The Purchase Contract 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 forming a part
of 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 Purchase Contract to
purchase Ordinary Shares.
Prior to the purchase of Ordinary Shares under each Purchase Contract,
such Purchase Contracts shall not entitle the Holder of a Unit to any of the
rights of a holder of Ordinary Shares, 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
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract 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, its Chief Executive Officer, its President, its Treasurer
or one of its Vice Presidents. The signature of any of these officers on the
Certificates may be manual or facsimile.
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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 or did not
hold such offices at the date of such Certificates.
No Purchase Contract 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 Purchase Contract Agent, as such
Holder's attorney-in-fact. Such signature by an authorized officer of the
Purchase Contract Agent shall be conclusive evidence that the Holder of such
Certificate has entered into the Purchase Contracts evidenced by such
Certificate.
Each Certificate shall be dated the date of its authentication.
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 Purchase Contract 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 Purchase Contract Agent, and the Purchase Contract
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
Hybrid Capital 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 Purchase Contract
Agent, and the Purchase Contract 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 Purchase Contract 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
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Purchase Contract Agent shall provide for the registration of Certificates and
of transfers of Certificates (the Purchase Contract Agent, in such capacity, the
"Security Registrar"). The Security Registrar shall record separately the
registration and transfer of the Certificates evidencing Hybrid Capital 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 Purchase
Contract Agent, and the Purchase Contract 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 denominations, like tenor, and evidencing a like number of Hybrid
Capital 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
Hybrid Capital 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 Purchase Contract Agent, and the Purchase Contract 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 Hybrid Capital
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 Hybrid
Capital 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 Purchase Contract Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent, and the Purchase Contract
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 Specified Merger Early Settlement
Date with respect to such Certificate, the Purchase Contract 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 Purchase Contract Agent shall:
21
(i) if the Purchase Contract Settlement Date (including upon any
Cash Settlement) or an Early Settlement Date or a Specified Merger Early
Settlement Date with respect to such other Certificate has occurred,
deliver the Ordinary Shares issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such other
Certificate; or
(ii) if a Termination Event shall have occurred prior to the
Purchase Contract Settlement Date, transfer the Convertible Preferred
Shares or the Treasury Securities, 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.
The Purchase Contract Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Agreement or under applicable law with respect to any transfer of any
interest in any Certificates (including any transfers between or among
Depositary Participants or beneficial owners of interests in any Certificate in
global form) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, and to do so if and when expressly required by the terms
of, this Agreement, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
The Purchase Contract Agent shall have no responsibility for any actions
taken or not taken by the Depositary.
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 Purchase Contract
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) except as provided in Section 3.11, the Company shall be
entitled to deal with the Depositary for all purposes of this Agreement
(including, without limitation, making Contract Adjustment Payments 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
22
(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 Hybrid Capital 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 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) a Default occurs; or
(iv) the Company determines in its discretion that the Global
Certificates shall be exchangeable for definitive Certificates,
then (x) definitive Certificates shall be prepared by the Company with respect
to such Units and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing 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 Purchase Contract Agent
shall not be
23
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 Purchase Contract
Agent, the Company shall execute and deliver to the Purchase Contract Agent, and
the Purchase Contract Agent shall authenticate, execute on behalf of the Holder,
and deliver in exchange therefor, a new Certificate, evidencing the same number
of Hybrid Capital 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 Purchase Contract
Agent (i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity 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 a Responsible Officer of the Purchase Contract Agent
that such Certificate has been acquired by a protected purchaser, the Company
shall execute and deliver to the Purchase Contract Agent, and the Purchase
Contract 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 Hybrid Capital 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 Purchase Contract Agent, and the Purchase Contract
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 Specified Merger Early Settlement Date
with respect to such lost or mutilated Certificate, the Purchase Contract
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 Purchase Contract Agent shall:
(i) if the Purchase Contract Settlement Date or Early Settlement
Date or Specified Merger Early Settlement Date with respect to such
lost, stolen, destroyed or mutilated Certificate has occurred, deliver
the Ordinary Shares issuable in respect of the Purchase Contracts
forming a part of 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
Purchase Contract Settlement Date, transfer the Convertible Preferred
Shares or the Treasury Securities, 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 Purchase Contract Agent may require the payment by the Holder of a sum
sufficient to cover any
24
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 Purchase Contract 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.
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.
(a) Prior to due presentment of a Certificate for registration of
transfer, the Company and the Purchase Contract Agent, and any agent of the
Company or the Purchase Contract 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 Convertible Preferred Shares, payment of Contract Adjustment Payments and
performance of the Purchase Contracts 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 Purchase Contract Agent, nor any agent of the
Company or the Purchase Contract Agent, shall be affected by notice to the
contrary.
(b) Notwithstanding the foregoing Section 3.11(a), with respect to any
Global Certificate, nothing contained herein shall prevent the Company, the
Purchase Contract Agent or any agent of the Company or the Purchase Contract
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) (and the Company shall give effect thereto),
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 Purchase Contract Agent or any agent of the Company or the Purchase
Contract 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.
(c) Notwithstanding the foregoing Section 3.11(a) or anything to the
contrary in this Agreement, any Beneficial Owner may directly enforce, without
any consent, proxy, notice or participation of any kind from the Depositary or
any other Person, the exchange of such Beneficial Owner's interest in a Global
Certificate for definitive Certificates to be issued in registered form pursuant
to Section 3.09.
25
SECTION 3.12. Cancellation.
All Certificates surrendered for delivery of Ordinary Shares on or after
the Purchase Contract Settlement Date or upon the transfer of Convertible
Preferred Shares after the occurrence of a Termination Event or pursuant to a
Cash Settlement, an Early Settlement or a Specified Merger Early Settlement, or
upon the registration of transfer or exchange of a Unit, or a Collateral
Substitution or the recreation of Hybrid Capital Units shall, if surrendered to
any Person other than the Purchase Contract Agent, be delivered to the Purchase
Contract 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 Purchase Contract 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 Purchase Contract Agent. No Certificates shall be authenticated, executed on
behalf of the Holder and delivered in lieu of or in exchange for any
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the Purchase
Contract 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 Purchase
Contract Agent cancelled or with appropriate written instructions regarding the
cancellation thereof.
SECTION 3.13. Creation of Treasury Units by Substitution of Treasury
Securities.
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 seventh Trading Day immediately preceding the Purchase
Contract Settlement Date, effect a Collateral Substitution and separate the
Convertible Preferred Shares from the related Purchase Contracts in respect of
such Holder's Hybrid Capital Units by substituting for such Convertible
Preferred Shares, Treasury Securities in an aggregate principal amount at
maturity equal to the aggregate liquidation preference of such Convertible
Preferred Shares; provided that Holders may make Collateral Substitutions only
in integral multiples of 40 Hybrid Capital Units. To effect such substitution,
the Holder must:
(1) deposit with the Collateral Agent Treasury Securities
having an aggregate principal amount at maturity equal
to the aggregate liquidation preference of the
Convertible Preferred Shares comprising part of such
Hybrid Capital Units; and
(2) transfer the related Hybrid Capital Units to the
Purchase Contract Agent accompanied by a notice to the
Purchase Contract Agent, substantially in the form of
Exhibit C hereto, (i) stating that the Holder has
deposited the relevant amount of Treasury Securities to
the Collateral Agent and (ii) requesting that the
Purchase Contract Agent instruct the Collateral Agent to
release the Convertible Preferred Shares underlying such
Hybrid Capital Units, whereupon the Purchase Contract
Agent shall promptly
26
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 effect the release of such
Convertible Preferred Shares from the Pledge, free and clear of the Company's
security interest therein, and the transfer of such Convertible Preferred Shares
to the Purchase Contract Agent on behalf of the Holder. Upon receipt of such
Convertible Preferred Shares, the Purchase Contract Agent shall promptly:
(i) cancel the related Hybrid Capital Units;
(ii) transfer the Convertible Preferred Shares to the Holder
(such Convertible Preferred Shares shall be tradable as a separate
security, independent of the resulting Treasury Units); and
(iii) authenticate, execute on behalf of such Holder and deliver
a Treasury Units Certificate executed by the Company in accordance with
Section 3.03 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Hybrid Capital Units.
Holders who elect to separate the Convertible Preferred Shares from the
related Purchase Contracts and to substitute Treasury Securities for such
Convertible Preferred Shares 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 Purchase Contract Agent shall be responsible for any
such fees or expenses.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Hybrid Capital Units
or fails to deliver Hybrid Capital Units Certificates to the Purchase Contract
Agent after depositing Treasury Securities with the Collateral Agent, any
distributions on the Convertible Preferred Shares constituting a part of such
Hybrid Capital Units shall be held in the name of the Purchase Contract Agent or
its nominee in trust for the benefit of such Holder, until such Hybrid Capital
Units are so transferred or the Hybrid Capital Units Certificate is so
delivered, as the case may be, or, such Holder provides evidence satisfactory to
the Company and the Purchase Contract Agent that such Hybrid Capital Units
Certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Purchase Contract 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 Specified Merger Early
Settlement or a Termination Event, for so long as the Purchase Contract
underlying a Hybrid Capital Unit remains in effect, such Hybrid Capital Units
shall not be separable into their constituent parts, and the rights and
obligations of the Holder in respect of the Convertible Preferred Shares and the
Purchase Contract comprising such Hybrid Capital Units may be acquired, and may
be transferred and exchanged, only as a Hybrid Capital Unit.
27
SECTION 3.14. Recreation of Hybrid Capital Units.
Subject to the conditions set forth in this Agreement, a Holder of
Treasury Units may recreate Hybrid Capital Units at any time on or prior to 5:00
p.m. (New York City time) on the seventh Trading Day immediately preceding the
Purchase Contract Settlement Date; provided that Holders of Treasury Units may
only recreate Hybrid Capital Units in integral multiples of 40 Treasury Units.
To recreate Hybrid Capital Units, the Holder must:
(1) transfer to the Collateral Agent Convertible Preferred
Shares having an aggregate liquidation preference equal
to the aggregate principal amount at stated maturity of
the Treasury Securities comprising part of the Treasury
Units; and
(2) transfer the related Treasury Units to the Purchase
Contract Agent accompanied by a notice to the Purchase
Contract Agent, substantially in the form of Exhibit C
hereto, (i) stating that the Holder has transferred the
relevant amount of Convertible Preferred Shares to the
Collateral Agent and (ii) requesting that the Purchase
Contract Agent instruct the Collateral Agent to release
the Treasury Securities underlying such Treasury Units,
whereupon the Purchase Contract 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 Convertible Preferred Shares 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 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 Purchase Contract Agent on behalf of
the Holder. Upon receipt of such Treasury Securities, the Purchase Contract
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
a Hybrid Capital Unit Certificate executed by the Company in accordance
with Section 3.03 evidencing the same number of Purchase Contracts as
were evidenced by the cancelled Treasury Units.
Holders who elect to recreate Hybrid Capital 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 Purchase Contract Agent shall
be responsible for any such fees or expenses.
Except as provided in Section 5.02 or in this Section 3.14 or in
connection with a Cash Settlement, an Early Settlement, a Specified Merger Early
Settlement or a Termination Event, for so long as the Purchase Contract
underlying 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
28
of such Treasury Unit in respect of the 1/40 of a Treasury Security and the
Purchase Contract comprising 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
Purchase Contract Agent of the Convertible Preferred Shares and the Treasury
Securities, as the case may be, underlying the Hybrid Capital Units and the
Treasury Units, as the case may be, pursuant to the terms of the Pledge
Agreement, the Purchase Contract Agent shall request transfer instructions with
respect to such Convertible Preferred Shares or Treasury Securities, as
applicable, 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 Hybrid Capital Units or the Treasury
Units or delivery of a Hybrid Capital Units Certificate or Treasury Units
Certificate to the Purchase Contract Agent with such transfer instructions, the
Purchase Contract Agent shall transfer the Convertible Preferred Shares or
Treasury Securities, as the case may be, underlying such Hybrid Capital 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 Hybrid Capital Units or Treasury Units fails to effect such transfer
or delivery, the Convertible Preferred Shares or Treasury Securities, as the
case may be, underlying such Hybrid Capital Units or Treasury Units, as the case
may be, and any distributions thereon, shall be held in the name of the Purchase
Contract Agent or its nominee in trust for the benefit of such Holder, until the
earlier to occur of:
(i) the transfer of such Hybrid Capital Units or Treasury Units,
the surrender of the Hybrid Capital Units Certificate or Treasury Units
Certificate or the receipt by the Company and the Purchase Contract
Agent from such Holder of satisfactory evidence that such Hybrid Capital
Units Certificate or Treasury Units Certificate has been destroyed, lost
or stolen, together with any indemnity that may be required by the
Purchase Contract Agent and the Company; and
(ii) the expiration of the time period specified in the
abandoned property laws of the state in which the Purchase Contract
Agent holds such property.
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 Purchase Contract 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.
29
SECTION 3.17. CUSIP Numbers.
The Company in issuing the Certificates may use "CUSIP" numbers (if then
generally in use), and, if so, the Purchase Contract Agent shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Certificates or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Certificates, and any such redemption shall not be
affected by any defect in or omission of such numbers. The Company will promptly
notify the Purchase Contract Agent of any change in the "CUSIP" numbers.
SECTION 3.18. Currency of Payments.
Any cash payments under this Agreement shall be paid in U.S. dollars in
immediately available funds.
ARTICLE IV
THE CONVERTIBLE PREFERRED SHARES
SECTION 4.01. Dividend Payments; Rights to Dividend Payments Preserved.
Any payment on any Convertible Preferred Share which is paid on any
Payment Date shall, subject to receipt thereof by the Purchase Contract Agent
from the Collateral Agent as provided by the terms of the Pledge Agreement, be
paid to the Person in whose name the Hybrid Capital Units Certificate (or one or
more Predecessor Hybrid Capital Units Certificates) of which such Convertible
Preferred Share forms a part is registered at the close of business on the
Record Date for such Payment Date.
Each Hybrid Capital Units Certificate evidencing Convertible Preferred
Shares delivered under this Agreement upon registration of transfer of or in
exchange for or in lieu of any other Hybrid Capital Units Certificate shall
carry the right to receive, subject to receipt thereof by the Purchase Contract
Agent from the Collateral Agent as provided by the terms of the Pledge
Agreement, accumulated and unpaid dividends or distributions, and to accumulate
future dividends or distributions, which were carried by the Convertible
Preferred Shares underlying such other Hybrid Capital Units Certificate.
In the case of any Hybrid Capital Unit with respect to which (A) Cash
Settlement of the underlying Purchase Contract is properly effected pursuant to
Section 5.02 hereof, (B) Early Settlement of the underlying Purchase Contract is
properly effected pursuant to Section 5.07 hereof, (C) Specified Merger Early
Settlement of the underlying Purchase Contract 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) the Successful Remarketing occurs with respect
to the Convertible Preferred Share that is part of such Hybrid Capital Unit, in
each case on a date that is after any Record Date and prior to or on the next
succeeding Payment Date, dividends on the Convertible Preferred Shares
underlying such Hybrid Capital Unit otherwise payable on such Payment Date shall
be payable on such Payment Date notwithstanding such Cash Settlement, Early
Settlement, Specified Merger Early Settlement, Collateral Substitution or
Remarketing,
30
and such payment or distributions shall, subject to receipt thereof by the
Purchase Contract Agent, be payable to the Person in whose name the Hybrid
Capital Units Certificate (or one or more Predecessor Hybrid Capital 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 Hybrid Capital Units with respect to which Cash
Settlement, Early Settlement or Specified Merger Early Settlement of the
underlying Purchase Contract is properly effected, or with respect to which a
Collateral Substitution has been effected, payments on the related Convertible
Preferred Shares that would otherwise be payable or made after the Purchase
Contract Settlement Date, Early Settlement Date, Specified 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 Hybrid Capital Units;
provided, however, that to the extent that such Holder continues to hold
Separate Convertible Preferred Shares that formerly comprised a part of such
Holder's Hybrid Capital Units, such Holder shall be entitled to receive
distributions on such Separate Convertible Preferred Shares.
The applicable Dividend Rate on the Convertible Preferred Shares on and
after the fourth Trading Day following the Remarketing Date will be reset to the
applicable Reset Rate as provided in and in accordance with this Agreement and
the Certificate of Designations. The Company shall furnish to the Purchase
Contract Agent and the Collateral Agent an Officers' Certificate setting forth
the Reset Rate promptly upon its determination, and neither the Purchase
Contract Agent nor the Collateral Agent shall have any duty to monitor the
resetting of the Dividend Rate on the Convertible Preferred Shares or to
calculate any Reset Rate, and each of the Purchase Contract Agent and the
Collateral Agent may conclusively presume the correctness of the Reset Rate set
forth in, and shall be fully protected in relying on, such Officers'
Certificate.
SECTION 4.02. Notice and Voting.
Under the terms of the Pledge Agreement, the Purchase Contract Agent
will be entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Convertible Preferred Shares, 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 Convertible Preferred Shares are entitled to
vote or upon any solicitation of consents, waivers or proxies of holders of
Convertible Preferred Shares, the Purchase Contract Agent shall, as soon as
practicable thereafter, mail, first class, postage pre-paid, to the Holders of
Hybrid Capital 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
Purchase Contract Agent therefor (which, to the extent possible, shall
be the same date as the record date for determining the holders of
Convertible Preferred Shares, as the case may be, entitled to vote)
shall be entitled to instruct the Purchase Contract Agent as to the
exercise of the voting rights pertaining to such Convertible Preferred
Shares underlying their Hybrid Capital Units; and
31
(iii) stating the manner in which such instructions may be
given.
Upon the written request of the Holders of Hybrid Capital Units on such
record date received by the Purchase Contract Agent at least six days prior to
such meeting, the Purchase Contract 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 Convertible Preferred Shares, 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 Hybrid Capital Unit, the
Purchase Contract Agent shall abstain from voting the Convertible Preferred
Shares underlying such Hybrid Capital Unit. The Company hereby agrees, if
applicable, to solicit Holders of Hybrid Capital Units to timely instruct the
Purchase Contract Agent in order to enable the Purchase Contract Agent to vote
such Convertible Preferred Shares.
The Holders of Hybrid Capital Units and Treasury Units shall have no
voting or other rights in respect of Ordinary Shares or in respect of general
corporate matters.
ARTICLE V
THE PURCHASE CONTRACTS
SECTION 5.01. Purchase of Ordinary Shares.
(a) Each Purchase Contract shall obligate the Holder of the related
Units to purchase, and the Company to sell, on the Purchase Contract Settlement
Date at a price equal to the Stated Amount (the "Purchase Price"), a number of
newly issued Ordinary Shares (subject to Section 5.09) equal to the Settlement
Rate unless an Early Settlement, a Specified Merger Early Settlement or a
Termination Event with respect to the Units of which such Purchase Contract is a
part shall have occurred. The "Settlement Rate" is equal to:
(i) if the Adjusted Applicable Market Value is less than or
equal to $19.32 (the "Reference Price"), 1.2940 Ordinary Shares per
Purchase Contract;
(ii) if the Adjusted Applicable Market Value is greater than the
Reference Price, the number of Ordinary Shares per Purchase Contact
having a value equal to the Stated Amount divided by the Adjusted
Applicable Market Value;
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 of
the Ordinary Shares on each of the 20 consecutive Trading Days ending on the
fourth Trading Day immediately preceding the Purchase Contract 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 (11) of
32
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 (11) 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
(11) 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), (5), (6), (7) and
(11) 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" of the Ordinary Shares, on any date of determination
means:
(i) the closing sale price or, if no closing sale price is
reported, the last reported regular-way sale price of the Ordinary
Shares on the New York Stock Exchange, Inc. (the "NYSE") on that date
or, if the Ordinary Shares are not listed for trading on the NYSE on
that date, as reported in the composite transactions for the principal
United States securities exchange on which the Ordinary Shares are so
listed; or
(ii) if the Ordinary Shares are not so reported, the last quoted
bid price for the Ordinary Shares in the over-the-counter market as
reported by the National Quotation Bureau or a similar organization, or,
if that bid price is not available, the average of the mid-point of the
last bid and ask prices of the Ordinary Shares on that date from at
least three nationally recognized independent investment banking firms
retained for this purpose by the Company.
A "TRADING DAY" means a day on which the Ordinary Shares (1) are 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) have
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 Ordinary Shares (if such exchange, association or market reports
transactions in the composite transactions); or (3) are scheduled to so trade in
the case where such term is used with respect to future days.
(b) Each Holder of a Hybrid Capital Unit or a Treasury Unit, by its
acceptance of such Unit:
(i) irrevocably authorizes the Purchase Contract Agent to enter
into and perform the related Purchase Contract 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;
(iii) covenants and agrees to perform its obligations under such
Purchase Contract for so long as such Holder remains a Holder of a
Hybrid Capital Unit or a Treasury Unit;
(iv) consents to the provisions hereof;
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(v) irrevocably authorizes the Purchase Contract 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 Convertible Preferred Shares 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 the Hybrid Capital Units as
consisting of two components, Convertible Preferred Share and the
related Purchase Contracts, (ii) treat itself as the owner of the
related Purchase Contracts that are or may constitute part of the Units
owned, and (iii) treat the Convertible Preferred Shares as equity of the
Company for all tax purposes,
provided that upon a Termination Event, the rights of the Holder of such Units
under the Purchase Contract may be enforced without regard to any other rights
or obligations.
(c) Each Holder of a Hybrid Capital 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, Proceeds from the Remarketing of (i) the Convertible Preferred
Shares or (ii) the Treasury Securities, as applicable, on the Purchase Contract
Settlement Date, shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such Proceeds (other than
Excess Proceeds). Neither the Company nor the Collateral Agent shall acquire any
right, title or interest in any Excess 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 Purchase Contracts underlying
such Certificate and the Pledge Agreement and the transferor shall be released
from the obligations under this Agreement, the Purchase Contracts underlying 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 Purchase Price.
(a) The Company shall engage the Remarketing Agent pursuant to the
Remarketing Agreement for Remarketing the Convertible Preferred Shares. Not
later than 15 calendar days nor more than 30 calendar days prior to the
Remarketing Date, the Company shall send a notice to the Holders setting forth
the time table relating to the Remarketing and settlement of the Purchase
Contracts (containing at a minimum the dates set forth in Exhibit G hereto) and
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. 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 Convertible Preferred Shares to be remarketed in
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the Remarketing shall be effective with the Securities and Exchange Commission
in a form that will enable the Remarketing Agent to rely on it in connection
with such Remarketing.
(b) Prior to 11:00 a.m. (New York City time) on the Trading Day
immediately preceding the Remarketing Date, but no earlier than the Payment Date
immediately preceding such date, Holders of Separate Convertible Preferred
Shares may elect to have their Separate Convertible Preferred Shares remarketed
under the Remarketing Agreement by delivering their Separate Convertible
Preferred Shares, along with a notice of such election, substantially in the
form of Exhibit D to the Pledge Agreement, to the Custodial Agent. After such
time, such election shall become an irrevocable election to have such Separate
Convertible Preferred Shares remarketed in such Remarketing. The Custodial Agent
shall hold Separate Convertible Preferred Shares in an account separate from the
Collateral Account in which the Pledged Convertible Preferred Shares (as defined
in the Pledge Agreement) shall be held. Holders of Separate Convertible
Preferred Shares electing to have their Separate Convertible Preferred Shares
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 11:00 a.m. (New York City time) on the Trading Day
immediately preceding the Remarketing Date, upon which notice the Custodial
Agent shall return such Separate Convertible Preferred Shares to such Holder.
Promptly after 11:00 a.m. on the Trading Day immediately preceding the
Remarketing Date, the Custodial Agent shall notify the Remarketing Agent of the
aggregate liquidation preference of the Separate Convertible Preferred Shares to
be included in the Remarketing and will deliver to the Remarketing Agent for
remarketing all such Separate Convertible Preferred Shares delivered to the
Custodial Agent pursuant to Section 5.07(c) of the Pledge Agreement and not
validly withdrawn prior to such date.
(c) (i) Each Holder shall have the right to satisfy such Holder's
obligations under the Purchase Contract on the Purchase Contract Settlement Date
in cash by notifying the Purchase Contract 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 seventh
Trading Day immediately preceding the Purchase Contract Settlement Date.
Promptly following 5:00 p.m. (New York City time) on the fifth Trading Day
immediately preceding the Purchase Contract Settlement Date, the Purchase
Contract Agent shall notify the Collateral Agent of the receipt of such notices
from Holders intending to make a Cash Settlement pursuant to this Section.
(ii) A Holder of a Hybrid Capital Unit who has so notified the
Purchase Contract Agent of its intention to effect a Cash Settlement
shall pay the Purchase Price to the Collateral Agent for deposit in the
Collateral Account prior to 11:00 a.m. (New York City time) on the fifth
Trading Day immediately preceding the Purchase Contract Settlement Date,
in lawful money of the United States by wire transfer in immediately
available funds payable to or upon the order of the Collateral Agent.
Any cash received by the Collateral Agent shall be invested promptly in
Permitted Investments pursuant to written instructions received from the
Company and an amount thereof equal to the Purchase Price shall be paid
to the Company on the Purchase Contract Settlement Date in settlement of
the Purchase Contracts in accordance with the terms of this Agreement
and the Pledge Agreement. Any funds received by the Collateral Agent in
respect of the investment earnings from such Permitted Investments in
excess of the Purchase Price for
35
the Ordinary Shares to be purchased by such Holder shall be distributed
to the Purchase Contract Agent when received for payment to the Company.
Whenever in this Agreement reference is made to written instructions
received from the Company in respect of investments to be made by the
Purchase Contract Agent hereunder, the Purchase Contract Agent may
conclusively presume that such instructions are authorized by the
Company if they are signed by a person purporting to be an officer of
the Company.
(iii) If a Holder of a Hybrid Capital Unit does not notify the
Purchase Contract Agent of its intention to make a Cash Settlement in
accordance with paragraph 5.02(c)(i) above, or does notify the Purchase
Contract 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 Convertible Preferred Shares pursuant to the Remarketing as
described in paragraph 5.02(d) below.
(iv) Promptly after 11:00 a.m. (New York City time) on the
Trading Day immediately preceding the Remarketing Date, the Collateral
Agent, based on cash payments received by the Collateral Agent pursuant
to Section 5.02(c)(ii) hereof, shall promptly notify the Purchase
Contract Agent and the Remarketing Agent of the aggregate liquidation
preference of Convertible Preferred Shares that comprise part of Hybrid
Capital Units that are to be included in the Remarketing in a notice
pursuant to the terms of the Pledge Agreement and will deliver to the
Remarketing Agent for Remarketing all such Convertible Preferred Shares
pursuant to the Pledge Agreement.
(d) In addition to the right to elect Cash Settlement provided for in
Section 5.02(c) above, in the event of a Failed Remarketing each Holder of a
Hybrid Capital Unit shall have the right to satisfy such Holder's obligations
under the Purchase Contract on the Purchase Contract Settlement Date in cash by
notifying the Purchase Contract Agent by use of a notice in substantially the
form of Exhibit E hereto of its intention to make a Cash Settlement prior to
5:00 p.m. (New York City time) on the second Trading Day immediately preceding
the Purchase Contract Settlement Date.
Promptly following 5:00 p.m. (New York City time) on the second Trading
Day immediately preceding the Purchase Contract Settlement Date, the Purchase
Contract Agent shall notify the Collateral Agent of the receipt of such notices
from Holders intending to make a Cash Settlement pursuant to this Section.
A Holder of a Hybrid Capital Unit who has so notified the Purchase
Contract Agent of its intention to effect a Cash Settlement shall pay the
Purchase Price to the Collateral Agent for deposit in the Collateral Account
prior to 11:00 a.m. (New York City time) on the Trading Day immediately
preceding the Purchase Contract Settlement Date, in lawful money of the United
States by certified or cashier's check or wire transfer, in each case in
immediately available funds payable to or upon the order of the Collateral
Agent. Any cash so received by the Collateral Agent shall be invested promptly
in Permitted Investments pursuant to written instructions received from the
Company and an amount thereof equal to the Purchase Price shall be paid to the
Company on the Purchase Contract Settlement Date in settlement of the Purchase
Contracts in accordance with the terms of
36
this Agreement and the Pledge Agreement. Any funds received by the Collateral
Agent in respect of the investment earnings from such Permitted Investments in
excess of the Purchase Price for the Ordinary Shares to be purchased by such
Holder shall be distributed to the Purchase Contract Agent when received for
payment to the Company.
(e) (i) Upon receipt of notice from the Collateral Agent and Custodial
Agent and the Pledged Convertible Preferred Shares and Separate Convertible
Preferred Shares (if any) from the Collateral Agent and Custodial Agent as
provided above, the Remarketing Agent will, on the Remarketing Date, pursuant to
the Remarketing Agreement, use its commercially reasonable efforts to remarket
(based on the Reset Rate) (the "Remarketing") such Pledged Convertible Preferred
Shares and Separate Convertible Preferred Shares (together, the "Remarketed
Convertible Preferred Shares") on such date at a price of approximately 100.25%
of the aggregate liquidation preference of the Remarketed Convertible Preferred
Shares. If the Remarketing Agent is able to remarket the Remarketed Convertible
Preferred Shares at a price equal to or greater than 100.25% of the aggregate
liquidation preference of the Remarketed Convertible Preferred Shares, the
Remarketing Agent shall deduct as a remarketing fee (the "Remarketing Fee") an
amount equal to 25 basis points (0.25%) of such aggregate liquidation
preference. None of the Company, the Purchase Contract Agent, or any Holders of
Hybrid Capital Units or holders of Separate Convertible Preferred Shares whose
Convertible Preferred Shares or Separate Convertible Preferred Shares are so
remarketed will otherwise be responsible for the payment of any Remarketing Fee
in connection therewith. In addition to the price obtained in the Remarketing,
the purchaser of Convertible Preferred Shares in the Remarketing shall pay an
amount equal to any accumulated and unpaid dividends on the Convertible
Preferred Shares.
If the Remarketing Agent is able to remarket the Remarketed Convertible
Preferred Shares at a price equal to or greater than 100.25% of the aggregate
principal amount of the Remarketed Convertible Preferred Shares (a "Successful
Remarketing"), the Remarketing Agent will remit (x) the net proceeds (net of the
related Remarketing Fee) derived from the Successful Remarketing of the
Convertible Preferred Shares that were components of Hybrid Capital Units to the
Collateral Agent and (y) the net proceeds (net of the related Remarketing Fee)
derived from the Successful Remarketing of the Separate Convertible Preferred
Shares to the Custodial Agent. The proceeds from the Remarketing remitted to the
Collateral Agent pursuant to clause (x) above 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 Hybrid Capital Units to pay the Purchase Price for the Ordinary Shares under
the related Purchase Contracts, less the amount of any Deferred Contract
Adjustment Payments payable to such Holders, on the Purchase Contract Settlement
Date. Any proceeds in excess of those required to pay the Purchase Price and the
Remarketing Fee, together with any investment earnings thereon (the "Excess
Proceeds"), will be remitted to the Purchase Contract Agent for payment to the
Holders of the related Hybrid Capital Units. The proceeds from the Remarketing
pursuant to clause (y) above remitted to the Custodial Agent will be paid by the
Custodial Agent to the holders of such Separate Convertible Preferred Shares.
(ii) If, in spite of using its commercially reasonable efforts,
the Remarketing Agent cannot on or prior to 4:30 p.m. (New York City
time) on the Remarketing Date remarket the Remarketed Convertible
Preferred Shares (if any) at a price not less than
37
100.25% (net of the Remarketing Fee and any other fees and commissions)
of the aggregate liquidation preference of the Remarketed Convertible
Preferred Shares, plus accrued and unpaid dividends, or if a condition
precedent set forth in the Remarketing Agreement is not fulfilled, the
remarketing will be deemed to have failed (a "Failed Remarketing"). Upon
a Failed Remarketing, the Remarketing Agent shall return the Remarketed
Convertible Preferred Shares to the Collateral Agent or the Custodial
Agent, as the case may be.
(iii) In the event of a Failed Remarketing, each Holder shall
have the right to satisfy such Holder's obligations under the Purchase
Contract on the Purchase Contract Settlement Date in cash as provided in
Section 5.02(d) above.
(iv) Upon a Failed Remarketing, if a Holder of Remarketed
Convertible Preferred Shares fails to settle its obligations under the
Purchase Contract in cash pursuant to Section 5.02(d), an event of
default shall be deemed to have occurred under this Agreement and the
Pledge Agreement and in accordance with the terms of the Pledge
Agreement, the Collateral Agent, for the benefit of the Company, may
exercise its rights as a secured party with respect to the related
Pledged Convertible Preferred Shares; provided, that if upon a Failed
Remarketing, the Collateral Agent exercises such rights for the benefit
of the Company with respect to such Convertible Preferred Shares, any
accumulated and unpaid dividends on such Convertible Preferred Shares,
including any accrued and unpaid dividends as of the Purchase Contract
Settlement Date, and the Intrinsic Value (or such greater amount as is
required under the UCC), if any, shall become payable in cash by the
Company (and the Company shall pay such amounts) to the Purchase
Contract Agent for payment to the Beneficial Owner of the Hybrid Capital
Units to which such Convertible Preferred Shares relate.
(v) In the event of a Failed Remarketing the Company shall, no
later than third Trading Day preceding the Purchase Contract Settlement
Date, issue a press release to such effect on the Bloomberg and Reuters
newswires and shall concurrently cause such press release to be posted
on its web site.
(f) With respect to any Pledged Convertible Preferred Shares which are
subject to a Failed Remarketing, resulting in an event of default under this
Agreement, the Collateral Agent for the benefit of the Company reserves all of
its rights as a secured party with respect thereto and, subject to applicable
law and Sections 5.02(e)(iv) and 5.02(j), shall, in full satisfaction of the
Holders' obligations under the Purchase Contracts among other things, (A) retain
the Convertible Preferred Shares in accordance with applicable law or (B)
dispose of the Convertible Preferred Shares in accordance with applicable law,
which in each case shall constitute payment in full for the aggregate Purchase
Price for the Ordinary Shares to be purchased under the Purchase Contracts.
(g) In the case of a Treasury Unit, upon the maturity of the Pledged
Treasury Securities held by the Collateral Agent on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date, the principal
amount of the Treasury Securities received by the Collateral Agent shall be used
by the Collateral Agent as follows. On the Purchase Contract Settlement Date, an
amount equal to the Purchase Price, less the amount of any
38
Deferred Contract Adjustment Payments payable to such Holders, shall be remitted
to the Company as payment of such Holder's obligation under the related Purchase
Contracts without receiving any instructions from the Holder. In the event the
Proceeds from the related Pledged Treasury Securities are in excess of the
aggregate Purchase Price, less the amount of any Deferred Contract Adjustment
Payments payable to such Holders, the Collateral Agent shall distribute such
excess to the Purchase Contract Agent for the benefit of the Holder of the
related Treasury Units when received.
(h) Any distribution to Holders of any payments described above shall be
payable at the office of the Purchase Contract 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.
(i) Upon Cash Settlement of any Purchase Contract:
(i) the Collateral Agent will in accordance with the terms of
the Pledge Agreement cause the Pledged Convertible Preferred Shares
underlying the relevant Hybrid Capital Units to be released from the
Pledge, free and clear of any security interest of the Company, and
transferred to the Purchase Contract Agent for delivery to the Holder
thereof or its designee as soon as practicable; and
(ii) subject to the receipt thereof, the Purchase Contract Agent
shall, by book-entry transfer or other appropriate procedures, in
accordance with written instructions provided by the Holder thereof,
transfer such Convertible Preferred Shares or, if no such instructions
are given to the Purchase Contract Agent by the Holder, the Purchase
Contract Agent shall hold such Convertible Preferred Shares, and any
dividend payment thereon, in the name of the Purchase Contract 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 jurisdiction where such property is held.
(j) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and, except to the extent satisfied by Early
Settlement, Specified 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 Purchase Price.
(k) The Company shall not be obligated to issue any Ordinary Shares in
respect of a Purchase Contract or deliver any certificates thereof to the Holder
of the related Units unless the Company shall have received payment for the
Ordinary Shares to be purchased thereunder in the manner herein set forth.
SECTION 5.03. Issuance of Ordinary Shares.
Unless a Termination Event shall have occurred, on an Early Settlement,
a Specified Merger Early Settlement and the Purchase Contract Settlement Date,
subject to Section 5.04(b), upon receipt of the aggregate Purchase Price payable
under all Outstanding Units on such date, the Company shall issue and deposit
with the Purchase Contract Agent, for the benefit of the Holders of the
Outstanding Units, one or more certificates representing newly issued Ordinary
39
Shares registered in the name of the Purchase Contract Agent (or its nominee) as
custodian for the Holders (such certificates for Ordinary Shares, together with
any dividends or distributions for which a record date and payment date for such
dividend or distribution has occurred after such date, being hereinafter
referred to as the "Purchase Contract Settlement Fund") to which the Holders are
entitled hereunder.
Subject to the foregoing, upon surrender of a Certificate to the
Purchase Contract Agent on or after the Purchase Contract Settlement Date, Early
Settlement Date or Specified 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 Ordinary
Shares 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 Ordinary Shares
constituting part of the Purchase Contract Settlement Fund, but without any
interest thereon, and the Certificate so surrendered shall forthwith be
cancelled. Such Ordinary 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 Purchase Contract Agent. If any Ordinary Shares issued in
respect of a Purchase Contract are to be registered to a Person other than the
Person in whose name the Certificate evidencing such Purchase Contract 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
Purchase Contract 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, Share Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on Ordinary Shares in Ordinary Shares, 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:
(i) the numerator shall be the number of Ordinary Shares
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 Ordinary
Shares and the total number of Ordinary 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.
(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 Ordinary Shares (not being available on an equivalent basis to
Holders of the Units upon settlement of the Purchase Contracts underlying such
Units) entitling them, for a period expiring within 60 days
40
after the record date for the determination of shareholders entitled to receive
such rights, warrants or options, to subscribe for or purchase Ordinary Shares
at a price per share less than the Current Market Price per Ordinary Share 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 Ordinary Shares
outstanding at the close of business on the date of such announcement
plus the number of Ordinary Shares which the aggregate of the offering
price of the total number of Ordinary Shares so offered for subscription
or purchase would purchase at such Current Market Price; and
(ii) the denominator shall be the number of Ordinary Shares
outstanding at the close of business on the date of such announcement
plus the number of Ordinary Shares 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 Purchase Contract 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.
(3) In case outstanding Ordinary Shares shall be subdivided or split
into a greater number of Ordinary Shares, 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 Ordinary Shares shall each be combined into a smaller number of
Ordinary Shares, 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 Ordinary Shares evidences of its indebtedness or assets
(including Ordinary Shares, other securities, cash and property but excluding
(w) any rights, warrants or options referred to in paragraph (2) of this Section
5.04(a), (x) any dividend or distribution paid exclusively in cash, (y) any
dividend or distribution referred to in paragraph (1) or (5) of this Section
5.04(a) and (z) any dividends and distributions of stock, securities or other
property or assets (including cash) in connection with the reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance to which Section 5.04(b)(1) applies), 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 Ordinary
Share 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 Ordinary
Share; and
41
(ii) the denominator shall be such Current Market Price per
Ordinary Share,
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 or substantially all holders of its Ordinary Shares the share capital of one
of its subsidiaries, the Settlement Rate will be adjusted, if at all, based on
the Current Market Value of the subsidiary stock so distributed relative to the
Current Market Value of the Company's Ordinary Shares over a measurement period
following such distribution, in which certain components of the Settlement Rate
will be divided by a fraction:
(i) the numerator of which is the Current Market Price of the
Company's Ordinary Shares immediately following the distribution less
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) of the portion of these
assets or evidences of indebtedness; and
(ii) the denominator of which is the Current Market Price of the
Company's Ordinary Shares immediately following the distribution;
(6) In case the Company or any of its subsidiaries shall, by dividend or
otherwise, make distributions consisting exclusively of cash to all holders of
its Ordinary Shares, excluding any cash dividend or distribution on the Ordinary
Shares to the extent that the aggregate cash dividend or distribution per
Ordinary Share in any quarter does not exceed $0.05 (the "Dividend Threshold
Amount"), then, in such case, the Settlement Rate in effect at the close of
business on the record date fixed for the determination of shareholders entitled
to receive such distribution dividend or distribution shall be adjusted by
dividing such rate by a fraction of which:
(i) the numerator shall be the Current Market Price of the
Company's Ordinary Shares on such record date less the amount of cash so
distributed applicable to one Ordinary Share in excess of the Dividend
Threshold Amount; and
(ii) the denominator shall be the Current Market Price of the
Company's Ordinary Shares on such record date,
such adjustment to be effective at the opening of business on the day following
the record date fixed for the determination of shareholders entitled to receive
such dividend or distribution. 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 that would then be in effect if such dividend or distribution
had not been declared. The Dividend Threshold Amount is subject to adjustment on
the same basis as the Settlement Rate, provided that no adjustment shall be made
to the Dividend Threshold Amount for any adjustment made pursuant to this
Section 5.04(a)(6).
42
(7) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Ordinary Shares shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to shareholders of consideration per Ordinary
Share having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors) that as of the last time (the "Expiration Time") tenders or exchanges
may be made pursuant to such tender or exchange offer (as it may be amended)
exceeds the Closing Price of an Ordinary Share on the Trading Day next
succeeding the Expiration Time, the Settlement Rate shall be increased so that
the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the Expiration Time by a fraction:
(i) the numerator of which shall be equal to the product of (x)
the Current Market Price of an Ordinary Share as of the Expiration Time
and (y) the number of Ordinary Shares outstanding (less any shares
accepted in terms of the tender or exchange offer, such shares being
referred to as the "Purchased Shares") at the Expiration Time less the
fair market value (determined aforesaid) of the aggregate consideration
payable to shareholders for all Purchased Shares, and
(ii) the denominator of which shall be the product of (x) the
number of Ordinary Shares outstanding at the Expiration Time less any
Purchased Shares and (y) the Closing Price of an Ordinary Share at the
Expiration Time,
such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Settlement Rate shall again be adjusted to
be the Settlement Rate that would then be in effect if such tender or exchange
offer had not been made.
(8) The reclassification of Ordinary Shares into securities including
securities other than Ordinary Shares (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 Ordinary Shares
to all holders of Ordinary Shares (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 Ordinary Shares outstanding immediately prior to
such reclassification into the number of shares of Ordinary Shares
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", 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).
43
(9) The "Current Market Price" per Ordinary Share on any date of
determination means the average of the daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than thirty
(30) Trading Days before and ending not later than the earlier of such date of
determination and the day before the "ex date" with respect to the issuance or
distribution requiring such 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 Ordinary Shares trade regularly on such exchange or
in such market without the right to receive such issuance or distribution.
(10) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of an Ordinary Share (or if there is not a nearest 1/10,000th
of an Ordinary Share, to the next lower 1/10,000th of an Ordinary Share).
(11) 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 Ordinary Shares resulting from any dividend or
distribution of Ordinary Shares or issuance of rights or warrants to purchase or
subscribe for Ordinary Shares or from any event treated as such for income tax
purposes or for any other reason.
(12) For purposes of paragraph (4) of this Section and paragraphs (1),
(2) and (3) of this Section, any dividend or distribution to which paragraph (4)
is applicable that also includes (x) Ordinary Shares, (y) rights or warrants to
subscribe for or purchase Ordinary Shares to which paragraph (2) applies or (z)
a subdivision or combination of Ordinary Shares to which paragraph (3) applies
(or any combination thereof), shall be deemed instead to be:
(i) a dividend or distribution of the evidences of indebtedness,
assets, shares of capital stock, rights or warrants, other than such
Ordinary Shares, such rights or warrants or such subdivision or
combination to which paragraphs (1), (2) and (3) apply, respectively
(and any Settlement Rate adjustment required by paragraph (4) with
respect to such dividend or distribution shall then be made),
immediately followed by
(ii) a dividend or distribution of such Ordinary Shares, such
rights or warrants or such subdivision or combination (and any further
Settlement Rate adjustment required by paragraphs (1), (2) and (3) with
respect to such dividend or distribution shall then be made), except:
(A) the Record Date of such dividend or distribution
shall be substituted as (i) "the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution"
within the meaning of paragraph (1), (ii) "the date fixed for the
determination of shareholders entitled to receive such rights or
warrants" within the meaning of paragraph (2) and (iii) "the day upon
which such subdivision or split becomes effective" and "the day upon
which such subdivision, split or combination becomes effective" within
the meaning of paragraph (3); and
(B) any Ordinary Shares included in such dividend or
distribution shall not be deemed "outstanding at the opening of business
on the day following the date
44
fixed for such determination" within the meaning of paragraph (1) and
any reduction or increase in the number of Ordinary Shares resulting
from such subdivision or combination shall be disregarded in connection
with such dividend or distribution.
(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 Ordinary Shares
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 Purchase Contract shall become, without the consent of the Holder of the
Unit representing such Purchase Contract, an agreement to purchase only the kind
of securities, cash and other property receivable upon consummation of such
Reorganization Event by a holder of Ordinary Shares 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 Purchase Contract 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 Ordinary Shares deliverable under a Purchase Contract
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
Ordinary Shares 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 Ordinary Shares 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 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 Ordinary Share 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
45
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 Purchase Contract shall be (1) in the case of settlement on the Purchase
Contract 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 using the Early Settlement Rate at the time of Early
Settlement.
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 consisting of
common stock (or its equivalent) traded on a U.S. securities exchange or the
Nasdaq National Market that compose all or part of the Exchange Property, based
on the Closing Price of such securities, (B) in the case of any cash that
composes all or part of the Exchange Property, based on the amount of such cash
and (C) in the case of any other property that composes all or part of the
Exchange Property, based on the value of such property on the date of the
Reorganization Event, 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 shareholder rights from the
Ordinary Shares, such rights or similar shareholder rights shall be deemed to
have no value. For purposes of this paragraph, the term "Closing Price" (and the
term "Trading Day" as used therein) shall be deemed to refer to such price and
days as are applicable to any securities referred to in clause (A) above.
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, and
any issuer of Exchange Property in such Reorganization Event, shall execute and
deliver to the Purchase Contract 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 agreement to be in form reasonably satisfactory to
the Purchase Contract Agent and the Collateral Agent, executed and delivered to
the Purchase Contract Agent and the Collateral Agent by such Person and issuer.
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 result in any reclassification, conversion, exchange or
cancellation of outstanding Ordinary Shares), in each case in which 30% or more
of the total consideration paid to the Company's shareholders consists of cash,
cash equivalents, debt or preferred securities or common stock or the equivalent
which is not traded or to be traded immediately following the merger on a U.S.
securities exchange or the Nasdaq National Market (a "Specified Merger"), a
Holder of a Unit may settle ("Specified Merger Early Settlement") its Purchase
Contract, upon the conditions set
46
forth below, at the Settlement Rate in effect immediately prior to the closing
of the Specified Merger; provided that (i) the Specified Merger Early Settlement
Date (as defined below) is no later than the seventh Trading Day immediately
preceding the Purchase Contract Settlement Date and (ii) no Specified Merger
Early Settlement will be permitted pursuant to this Section 5.04(b)(2) unless,
at the time such Specified 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 Specified 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 Purchase
Contracts being settled and (B) provide a Prospectus in connection therewith, in
each case in a form that may be used in connection with such Specified Merger
Early Settlement. If a Holder effects a Specified Merger Early Settlement of
some or all of its Purchase Contracts, such Holder shall be entitled to receive,
on the Specified Merger Early Settlement Date, the aggregate amount of any
Deferred Contract Adjustment Payments and any accumulated and unpaid Contract
Adjustment Payments since the immediately preceding Payment Date with respect to
such Purchase Contracts. The Company shall pay such amount as a credit against
the amount otherwise payable by the Holders to effect such Specified Merger
Early Settlement.
Within five Business Days of the completion of a Specified Merger, the
Company shall provide written notice to Holders of Units of such completion of a
Specified 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
Specified Merger Early Settlement shall occur (which date shall be ten days
after the date of such written notice by the Company, but which shall in no
event be later than the seventh Trading Day immediately preceding the Purchase
Contract Settlement Date) (the "Specified Merger Early Settlement Date"), the
applicable Settlement Rate and the amount (per Ordinary Share) of cash,
securities and other consideration receivable by the Holder, including the
amount of Contract Adjustment Payments receivable, upon settlement. The
applicable Settlement Rate for a Specified Early Merger Settlement Date shall be
based on the Applicable Market Value of the Ordinary Shares on each of the 20
consecutive Trading Days ending on the fourth Trading Day immediately preceding
the Specified Merger Settlement Date.
Treasury Units Holders may only effect Specified Merger Early Settlement
pursuant to this Section 5.04(b)(2) in integral multiples of 40 Hybrid Capital
Units or Treasury Units, as the case may be. 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 Specified Merger
Early Settlement pursuant to this Section 5.04(b)(2).
In order to exercise the right to effect Specified Merger Early
Settlement with respect to any Purchase Contracts, a Holder of the Certificate
evidencing Units shall deliver, no later than 5:00 p.m. (New York City time) on
the fourth Trading Day immediately preceding the Specified Merger Early
Settlement Date, such Certificate to the Purchase Contract 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 Purchase Contracts with respect to which the Holder has
47
elected to effect Specified Merger Early Settlement, less the amount of any
Contract Adjustment Payments (including, for the avoidance of doubt, any
accumulated and unpaid Contract Adjustment Payments and any Deferred Contract
Adjustment Payments) payable to such Holder on the next succeeding Payment Date
as a result of such Specified Merger Early Settlement.
If a Holder properly effects an effective Specified 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 Specified Merger Early Settlement Date:
(i) the kind and amount of securities, cash and other property
receivable upon such Specified Merger by a Holder of the number of
Ordinary Shares issuable on account of each Purchase Contract if the
Purchase Contract Settlement Date had occurred immediately prior to such
Specified Merger (based on the Settlement Rate in effect at such time),
assuming such Holder of Ordinary Shares is not a Constituent Person or
an Affiliate of a Constituent Person to the extent such Specified Merger
provides for different treatment of Ordinary Shares 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 Specified Merger (provided that
if the kind or amount of securities, cash and other property receivable
upon such Specified 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 Specified
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 Specified Merger shall be deemed to be
the Purchase Contract Settlement Date;
(ii) the Convertible Preferred Shares or Treasury Securities, as
the case may be, related to the Purchase Contracts with respect to which
the Holder is effecting a Specified 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 Purchase Contract Agent shall
have no responsibility with respect thereto, may conclusively presume the
correctness thereof and shall be fully protected in relying thereon.
(d) The Hybrid Capital Units or the Treasury Units of the Holders who do
not elect Specified Merger Early Settlement in accordance with the foregoing
will continue to remain outstanding and be subject to settlement on the Purchase
Contract Settlement Date in accordance with the terms hereof.
(e) To the extent that the Company has a rights plan in effect upon
settlement of a Purchase Contract, Holders will receive, in addition to the
Ordinary Shares, the rights under the
48
rights plan, unless, prior to any settlement of a Purchase Contract, the rights
have separated from the Ordinary Shares, in which case the Settlement Rate will
be adjusted at the time of separation as if the Company had made a distribution
to all holders of its Ordinary Shares pursuant to Section 5.04(a)(4), subject to
readjustment in the event of the expiration, termination or redemption of the
rights.
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 Purchase Contract 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 Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent shall not be deemed to have knowledge of any
adjustment unless and until it has received such certificate. The Purchase
Contract Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any Ordinary Shares, or of any securities or
property, which may at the time be issued or delivered with respect to any
Purchase Contract; and the Purchase Contract Agent makes no representation with
respect thereto. The Purchase Contract Agent shall not be responsible for any
failure of the Company to issue, transfer or deliver any Ordinary Shares
pursuant to a Purchase Contract 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 Purchase Contracts 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 Contract Adjustment
Payments (including any accumulated and unpaid Contract Adjustment Payments and
any Deferred Contract Adjustment Payments), if the Company shall have such
obligation, and the rights and obligations of Holders to purchase Ordinary
Shares, shall immediately and automatically terminate, without the necessity of
any
49
notice or action by any Holder, the Purchase Contract Agent or the Company, if,
prior to or on the Purchase Contract Settlement Date, a Termination Event shall
have occurred.
Upon and after the occurrence of a Termination Event, the Units shall
thereafter represent the right to receive the Convertible Preferred Shares or
the Treasury Securities, as the case may be, forming part of 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 Purchase
Contract 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,
Purchase Contracts underlying Units may be settled early ("Early Settlement") at
any time prior to 5:00 p.m. (New York City time) on the seventh Trading Day, in
the case of Hybrid Capital Units, and the second Trading Day, in the case of
Treasury Units, immediately preceding the Purchase Contract 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 Purchase Contracts
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 Purchase Contracts, the Holder of the Certificate evidencing
Units shall deliver, at any time prior to 5:00 p.m. (New York City time) on the
seventh Trading Day, in the case of Hybrid Capital Units, and the second Trading
Day, in the case of Treasury Units, immediately preceding the Purchase Contract
Settlement Date, such Certificate to the Purchase Contract 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 the sum of:
(A) the product of (I) the Stated Amount times (II) the number of
Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement, plus
(B) if such delivery is made with respect to any Purchase
Contracts 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
(including any Deferred Contract Adjustment Payments) payable on such
Payment Date with respect to such Purchase Contracts.
Except as contemplated in the immediately preceding sentence, no payment
shall be made upon Early Settlement of any Purchase Contract on account of any
Contract Adjustment
50
Payments accumulated on such Purchase Contract (including any Deferred Contract
Adjustment Payment) since the immediately preceding Payment Date. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying 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 Purchase Contract Agent shall pay to the Company such Early
Settlement Amount, the receipt of which payment the Company shall confirm in
writing. The Purchase Contract 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 Purchase Contracts as to which such Holder has elected to effect Early
Settlement, (B) 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 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.
Upon Early Settlement of the Purchase Contracts, the rights of the
Holders to receive and the obligation of the Company to pay any accumulated and
unpaid Contract Adjustment Payments (including any Deferred Contract Adjustment
Payments) with respect to such Purchase Contracts since the immediately
preceding Payment Date and any future Contract Adjustment Payments with respect
to such Purchase Contracts shall immediately and automatically terminate.
(c) Upon Early Settlement of Purchase Contracts by a Holder of the
related Units, the Company shall issue, and the Holder shall be entitled to
receive, Ordinary Shares on account of each Purchase Contract as to which Early
Settlement is effected (the "Early Settlement Rate") equal to the quotient of
$25 divided by the greater of (i) the conversion price of the Convertible
Preferred Shares on the Early Settlement Date and (ii) the Applicable Market
Value of such Ordinary Shares as of such time. The Early Settlement Rate shall
be adjusted, to the extent applicable, 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 fourth Trading Day after the applicable Early
Settlement Date, the Company shall cause:
(i) the Ordinary Shares issuable upon Early Settlement of
Purchase Contracts to be issued and delivered, together with payment in
lieu of any fraction of a share, as provided in Section 5.09; and
(ii) the related Convertible Preferred Shares in the case of
Hybrid Capital Units, or the related Treasury Securities, in the case of
Treasury Units, to be released
51
from the Pledge by the Collateral Agent and transferred, in each case,
to the Purchase Contract Agent for delivery to the Holder thereof or its
designee.
(e) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of Ordinary Shares from the Company and the Convertible Preferred Shares
or Treasury Securities, as the case may be, from the Collateral Agent, as
applicable, the Purchase Contract 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 Convertible Preferred
Shares or Treasury Securities, as the case may be, forming a
part of such Units,
(ii) deliver to the Holder a certificate or certificates
for the full number of Ordinary Shares 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 Ordinary Shares issuable upon such Early
Settlement as contemplated by Section 5.07(a).
(f) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Units evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the
Purchase Contract 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 Convertible Preferred Shares no longer a part of a Hybrid Capital Unit
remarketed in accordance with the provisions of Section 5.02.
SECTION 5.08. No Fractional Shares.
No fractional shares or scrip representing fractional Ordinary Shares
shall be issued or delivered upon settlement on the Purchase Contract Settlement
Date, or upon Early Settlement or Specified Merger Early Settlement of any
Purchase Contracts. If Certificates evidencing more than one Purchase Contract
shall be surrendered for settlement at one time by the same Holder, the number
of full Ordinary Shares which shall be delivered upon settlement shall be
computed on the basis of the aggregate number of Purchase Contracts evidenced by
the Certificates so surrendered. Instead of any Ordinary Shares which would
otherwise be deliverable upon settlement of any Purchase Contracts on the
Purchase Contract Settlement Date, or upon Early Settlement or Specified Merger
Early Settlement, the Company, through the Purchase Contract 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 Purchase Contract Settlement Date.
The Company shall provide the Purchase Contract Agent from time to time with
sufficient funds to permit the Purchase Contract Agent to make all cash payments
required by this Section 5.09 in a timely manner.
52
SECTION 5.09. Charges and Taxes.
The Company will pay all share transfer and similar taxes attributable
to the initial issuance and delivery of the Ordinary Shares pursuant to the
Purchase Contracts; 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 an Ordinary
Share 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 Purchase Contract 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 5.10. Contract Adjustment Payments.
Subject to Section 5.10(d), the Company shall pay, on each Payment Date,
the Contract Adjustment Payments payable in respect of each Purchase Contract 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 Contract Adjustment Payments
will be payable at the office of the Purchase Contract 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 Contract Adjustment Payments 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 Purchase Contract Agent. If any date on which
Contract Adjustment Payments are to be made is not a Business Day, then payment
of the Contract Adjustment Payments 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 Contract Adjustment Payments will be made on
the Business Day immediately preceding such Business Day. Contract Adjustment
Payments payable for any period will be computed (i) for any full quarterly
period on the basis of a 360-day year of twelve 30-day months, (ii) for any
period shorter than a full quarterly period, on the basis of a 30-day month and
(iii) for any period less than a month, on the basis of the actual number of
days elapsed per 30-day month. The Contract Adjustment Payments will accumulate
from December 17, 2003.
(a) Upon the occurrence of a Termination Event, the Company's obligation
to pay Contract Adjustment Payments (including any accumulated Contract
Adjustment Payments and any Deferred Contract Adjustment Payments) shall cease.
(b) 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 Hybrid Capital Units) any other
Certificate shall carry the right to accumulated and unpaid Contract Adjustment
Payments and Deferred Contract Adjustment Payments, which right was carried by
the Purchase Contracts underlying such other Certificates.
(c) In the case of any Unit with respect to which Specified Merger Early
Settlement of the underlying Purchase Contract is effected on a date that is
after any Record Date and prior
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to or on the next succeeding Payment Date, Contract Adjustment Payments
otherwise payable on such Payment Date shall be payable on such Payment Date
notwithstanding such Specified Merger Early Settlement, and such Contract
Adjustment Payments 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 Specified Merger Early Settlement of
the underlying Purchase Contract is effected, future Contract Adjustment
Payments that would otherwise be payable after the Specified Merger Early
Settlement Date with respect to such Purchase Contract shall not be payable.
(d) Nothing in this Section 5.10 shall apply to claims of, or payments
to, the Purchase Contract Agent under or pursuant to Section 7.07.
SECTION 5.11. Deferral of Contract Adjustment Payments.
(a) The Company has the right at any time, and from time to time, to
defer payment of all or part of the Contract Adjustment Payments in respect of
each Purchase Contract by extending the period for payment of Contract
Adjustment Payments to any subsequent Payment Date (an "Extension Period"), but
not beyond the Purchase Contract Settlement Date (or, with respect to Purchase
Contracts for which an effective Early Settlement or Specified Merger Early
Settlement has occurred, the Early Settlement Date or Specified Merger Early
Settlement Date, as the case may be). Prior to the expiration of any Extension
Period, the Company may further extend such Extension Period to any subsequent
Payment Date, but not beyond the Purchase Contract Settlement Date (or any
applicable Early Settlement Date or Specified Merger Early Settlement Date).
If the Company so elects to defer Contract Adjustment Payments, the
Company shall pay additional Contract Adjustment Payments on such deferred
installments of Contract Adjustment Payments at a rate equal to 4.750% per
annum, compounding on each succeeding Payment Date, until such deferred
installments are paid in full (such deferred installments of Contract Adjustment
Payments together with the accumulated additional Contract Adjustment Payments
thereon, being referred to herein as the "Deferred Contract Adjustment
Payments").
At the end of each Extension Period, including as the same may be
extended as provided above, or, in the event of an effective Specified Merger
Early Settlement, on the Specified Merger Early Settlement Date, the Company
shall pay all Deferred Contract Adjustment Payments then due in the manner set
forth in Section 5.10(a) (in the case of the end of an Extension Period) or in
the manner set forth in Section 5.04(b)(2) (in the case of a Specified Merger
Early Settlement) to the extent such amounts are not deducted from the amount
otherwise payable by the Holder in the case of a Cash Settlement or any
Specified Merger Early Settlement. In the event of a Specified Merger Early
Settlement, the Company shall pay all Deferred Contract Adjustment Payments due
on the Purchase Contracts being settled on the Specified Merger Early Settlement
Date to but excluding such Specified Merger Early Settlement Date.
Upon termination of any Extension Period and the payment of all Deferred
Contract Adjustment Payments and all accumulated and unpaid Contract Adjustment
Payments then due,
54
the Company may commence a new Extension Period, provided that such Extension
Period, together with all extensions thereof, may not extend beyond the Purchase
Contract Settlement Date (or any applicable Specified Merger Early Settlement
Date). Except in the case of a Specified Merger Early Settlement, no Contract
Adjustment Payments shall be due and payable during an Extension Period except
at the end thereof, except that prior to the end of such Extension Period, the
Company, at its option, may prepay on any Payment Date all or any portion of the
Deferred Contract Adjustment Payments accumulated during the then elapsed
portion of such Extension Period.
(b) The Company shall give written notice to the Purchase Contract Agent
(and the Purchase Contract Agent shall give notice thereof to Holders of
Purchase Contracts) of its election to extend any period for the payment of
Contract Adjustment Payments, the expected length of any such Extension Period
and any extension of any Extension Period, at least five Business Days before
the earlier of (i) the Record Date for the Payment Date on which Contract
Adjustment Payments would have been payable except for the election to begin or
extend the Extension Period or (ii) the date the Purchase Contract Agent is
required to give notice to any securities exchange or to Holders of Purchase
Contracts of such Record Date or such Payment Date.
(c) The Company shall give written notice to the Purchase Contract Agent
(and the Purchase Contract Agent shall give notice thereof to Holders of
Purchase Contracts) of the end of an Extension Period or its election to pay any
portion of the Deferred Contract Adjustment Payments on a payment date prior to
the end of an Extension Period, at least five Business Days before the earlier
of (i) the Record Date for the Payment Date on which such Extension Period shall
end or such payment of Deferred Contract Adjustment Payments shall be made or
(ii) the date the Purchase Contract Agent is required to give notice to any
securities exchange or to Holders of Purchase Contracts of such Record Date or
such Payment Date.
(d) In the event the Company exercises its option to defer the payment
of Contract Adjustment Payments, then, until all Deferred Contract Adjustment
Payments 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 the share capital of the Company, except for:
(i) as a result of a reclassification of share capital or the
exchange or conversion of one class or series of the Company's share
capital for another class or series of the Company's share capital;
(ii) the purchase of fractional interests in the Company's share
capital pursuant to the conversion or exchange provisions of the share
capital or the security being converted or exchanged;
(iii) dividends or distributions in the Company's share capital
(or rights to acquire our share capital), or repurchases, redemptions
or acquisitions of the Company's share capital (or securities
convertible into or exchangeable for the Company's share capital with
the Company's share capital); or
55
(iv) redemptions, exchanges or repurchases of any rights
outstanding under a shareholder rights plan (prior to separation of
the rights) or the declaration or payment thereunder of a dividend or
distribution consisting of rights in the future.
ARTICLE VI
REMEDIES
SECTION 6.01. Unconditional Right of Holders to Receive Contract
Adjustment Payments and to Purchase Ordinary Shares.
Each Holder of a Unit shall have the right, which is absolute and
unconditional, (i) subject to the Company's rights under Section 5.11 to defer
Contract Adjustment Payments, to receive each Contract Adjustment Payment with
respect to the Purchase Contract comprising part of such Unit on the respective
Payment Date for such Unit, or at any other time they are required to be paid
hereunder, and (ii) except upon and following a Termination Event, to purchase
Ordinary Shares pursuant to such Purchase Contract and, in each such case, to
institute suit for the enforcement of any such right to receive Contract
Adjustment Payments and the right to purchase Ordinary Shares, 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 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.
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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 Purchase Contract Agent for any
action taken, suffered or omitted by it as Purchase Contract 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 Purchase Contract 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 dividends on any Convertible Preferred Shares
or Contract Adjustment Payments 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 Ordinary Shares under the Purchase Contracts constituting part of 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 Purchase Contract Agent or the Holders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VII
THE PURCHASE CONTRACT AGENT
SECTION 7.01. Certain Duties and Responsibilities.
(a) The Purchase Contract Agent:
(1) undertakes to perform, with respect to the Units, such duties and
only such duties as are specifically set forth in this Agreement and the Pledge
Agreement to be performed by the Purchase Contract Agent and no implied
covenants or obligations shall be read into this Agreement or the Pledge
Agreement the Purchase Contract Agent; and
(2) in the absence of bad faith 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 Purchase Contract 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 Purchase Contract Agent, the
Purchase Contract Agent shall be under a duty to examine the same to determine
whether or not they conform to the
57
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 Purchase Contract 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 Purchase Contract 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 Purchase
Contract 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 Purchase Contract 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
Purchase Contract Agent shall be subject to the provisions of this Section.
(d) The Purchase Contract Agent is authorized to execute and deliver the
Pledge Agreement in its capacity as Purchase Contract Agent. The rights,
privileges, protections, immunities and benefits afforded to the Purchase
Contract Agent and each Indemnitee under this Agreement, including, without
limitation, its and their rights to be indemnified, shall also extend to and
cover the Purchase Contract Agent and each Indemnitee with respect to the role
of the Purchase Contract Agent under, including actions taken, omitted to be
taken or suffered by the Purchase Contract Agent pursuant to, the Pledge
Agreement.
SECTION 7.02. Notice of Default.
Within 60 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Purchase Contract Agent has
actual knowledge, the Purchase Contract 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 Purchase Contract Agent.
Subject to the provisions of Section 7.01:
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(1) the Purchase Contract 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, debenture, Convertible
Preferred Share, 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 Purchase Contract Agent shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting to take any action hereunder or thereunder, the Purchase Contract Agent
(unless other evidence be herein or therein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an Officers'
Certificate of the Company;
(4) the Purchase Contract Agent may consult with counsel of its
selection 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 Purchase Contract 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, Convertible Preferred Share, other evidence of
indebtedness or other paper or document, but the Purchase Contract 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 Purchase
Contracts as it may see fit, and, if the Purchase Contract Agent shall determine
to make such further 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 Purchase Contract 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 of the Purchase
Contract Agent and the Purchase Contract Agent shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee or an Affiliate of the Purchase Contract Agent appointed with due care
by it hereunder; provided that the appointment of agents pursuant to this
paragraph (6) are subject to the prior written consent of the Company, which
consent shall not be unreasonably withheld;
(7) the Purchase Contract 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 Purchase Contract Agent security or indemnity
satisfactory to the Purchase Contract Agent against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
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(8) the Purchase Contract Agent shall not be liable for any action
taken, suffered, or omitted to be taken by it in the absence of bad faith by it
and believed by it to be authorized and within the discretion or rights or
powers conferred upon it by this Agreement;
(9) the Purchase Contract Agent shall not be deemed to have notice of
any adjustment to the Settlement Rate, the occurrence of a Termination Event or
any default hereunder unless written notice of any such adjustment, occurrence
or event which is in fact such a default is received by a Responsible Officer at
the Corporate Trust Office of the Purchase Contract Agent, and such notice
references the Units and this Agreement;
(10) the Purchase Contract 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 Purchase Contract Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Purchase Contract
Agent in each of its capacities hereunder, and to each officer, director,
employee of the Purchase Contract Agent and each agent, custodian and other
Person employed, in any capacity whatsoever, by the Purchase Contract Agent to
act hereunder and shall survive the resignation or removal of the Purchase
Contract Agent and the termination of this Agreement;
(12) the Purchase Contract 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; and
(13) the permissive right of the Purchase Contract Agent to do things
enumerated in this Agreement or the Pledge Agreement shall not be construed as a
duty.
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 Purchase Contract Agent assumes no responsibility for their
accuracy or validity. The Purchase Contract Agent makes no 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 or the Remarketing Agreement
and shall have no responsibility for perfecting or maintaining the perfection of
any security interest in the Collateral. The Purchase Contract Agent shall not
be accountable for the use or application by the Company of the proceeds in
respect of the Units or the Purchase Contracts.
SECTION 7.05. May Hold Units.
Any Security Registrar or any other agent of the Company, or the
Purchase Contract 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
60
Person with the same rights it would have if it were not Security Registrar or
such other agent, or the Purchase Contract Agent. The Company may become the
owner or pledgee of Units.
SECTION 7.06. Money Held in Custody.
Money held by the Purchase Contract Agent in custody hereunder need not
be segregated from the Purchase Contract Agent's other funds except to the
extent required by law or provided herein. The Purchase Contract 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 Purchase Contract Agent compensation for all services
rendered by it hereunder, under the Pledge Agreement and under the Remarketing
Agreement as the Company and the Purchase Contract Agent shall from time to time
agree in writing;
(2) except as otherwise expressly provided for herein, to reimburse the
Purchase Contract Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Purchase Contract 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 and defend the Purchase Contract Agent and any
predecessor Purchase Contract Agent, and each of its directors, officers, agents
and employees (collectively, with the Purchase Contract Agent, the
"Indemnitees") for, and to hold each Indemnitee 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 by the Purchase Contract Agent of its duties hereunder and under
the Pledge Agreement and the Remarketing Agreement, including the 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 Purchase Contract
Agent's powers or duties hereunder or thereunder or of enforcing the provisions
of this Section.
The provisions of this Section shall survive the resignation and removal
of the Purchase Contract Agent, the satisfaction or discharge of the Units and
the Purchase Contracts and the termination of this Agreement.
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SECTION 7.08. Corporate Purchase Contract Agent Required; Eligibility.
There shall at all times be a Purchase Contract 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 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 or files 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 or filed. If at any time the Purchase
Contract 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 Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 7.10.
(b) The Purchase Contract Agent may resign at any time by giving written
notice thereof to the Company 30 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Purchase Contract
Agent required by Section 7.10 shall not have been delivered to the Purchase
Contract Agent within 30 days after the giving of such notice of resignation,
the resigning Purchase Contract Agent may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.
(c) The Purchase Contract Agent may be removed at any time by Act of the
Holders of a majority in number of the Outstanding Units delivered to the
Purchase Contract Agent and the Company. If the instrument of acceptance by a
successor Purchase Contract Agent required by Section 7.10 shall not have been
delivered to the Purchase Contract Agent within 30 days after such Act, the
Purchase Contract Agent being removed may petition any court of competent
jurisdiction for the appointment of a successor Purchase Contract Agent.
(d) If at any time:
(1) the Purchase Contract Agent fails to comply with Section 310(b) of
the TIA, as if the Purchase Contract 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 Purchase Contract 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
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(3) the Purchase Contract Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Purchase Contract
Agent or of its property shall be appointed or any public officer shall take
charge or control of the Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent and the appointment of a successor Purchase
Contract Agent.
(e) If the Purchase Contract Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Purchase
Contract Agent for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 7.10. If no successor Purchase Contract 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
Purchase Contract Agent may petition at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Purchase Contract
Agent.
(f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
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 Security
Register. Each notice shall include the name of the successor Purchase Contract
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 Purchase
Contract Agent, every such successor Purchase Contract Agent so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Purchase
Contract Agent an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Purchase Contract Agent shall become
effective and such successor Purchase Contract Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, agencies
and duties of the retiring Purchase Contract Agent; but, on the request of the
Company or the successor Purchase Contract Agent, such retiring Purchase
Contract Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Purchase Contract Agent all the
rights, powers and trusts of the retiring Purchase Contract Agent and duly
assign, transfer and deliver to such successor Purchase Contract Agent all
property and money held by such retiring Purchase Contract Agent hereunder.
(b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph (a) of this Section.
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(c) No successor Purchase Contract Agent shall accept its appointment
unless at the time of such acceptance such successor Purchase Contract Agent
shall be qualified and eligible under this Article.
SECTION 7.11. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Purchase Contract 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 Purchase Contract Agent shall
be a party, or any Person succeeding to all or substantially all the corporate
trust business of the Purchase Contract Agent, shall be the successor of the
Purchase Contract 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 Purchase Contract Agent then in office, any
successor by merger, conversion or consolidation to such Purchase Contract Agent
may adopt such authentication and execution and deliver the Certificates so
authenticated and executed with the same effect as if such successor Purchase
Contract Agent had itself authenticated and executed such Units.
SECTION 7.12. Preservation of Information; Communications to Holders.
(a) The Purchase Contract Agent shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Security Registrar.
(b) If three or more Holders (herein referred to as "Applicants") apply
in writing to the Purchase Contract Agent, and furnish to the Purchase Contract
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 Purchase Contract 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 Purchase Contract
Agent of the 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 Purchase Contract Agent.
Except to the extent otherwise expressly provided in this Agreement, the
Purchase Contract Agent assumes no obligations and shall not be subject to any
liability under this Agreement, the Pledge Agreement, the Remarketing Agreement
or any Purchase Contract 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 Purchase Contract
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 Purchase Contract
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five hereof.
Anything contained in this Agreement to the contrary
64
notwithstanding, in no event shall the Purchase Contract Agent or its officers,
directors, employees or agents be liable under this Agreement, the Pledge
Agreement or the Remarketing Agreement for (i) 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
Purchase Contract Agent and regardless of the form of action or (ii) any failure
or delay in the performance of the obligations of the Purchase Contract Agent
under this Agreement or the Pledge Agreement arising out of, or caused directly
or indirectly by, circumstances beyond its reasonable control, including,
without limitation, acts of God, earthquakes, fires, floods, wars, terrorist
acts, sabotage, civil or military disturbances, riots, epidemics, interruptions,
loss or malfunctions of utilities, computer (hardware or software) or
communications service, or labor disputes.
SECTION 7.14. Tax Compliance.
(a) The Purchase Contract 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 Purchase Contract Agent shall comply in accordance with the
terms hereof with any reasonable 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 Purchase Contract 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.
SECTION 7.15. Collateral Agent.
With respect to this Agreement, the Collateral Agent shall have the
rights, privileges, protections, immunities and benefits given to the Collateral
Agent pursuant to the Pledge Agreement.
65
ARTICLE VIII
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 Purchase Contract 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 Purchase Contract 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 Purchase Contract 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) cure any ambiguity, correct or supplement any provisions herein
which may be inconsistent with any other provisions herein, provided that such
action shall not adversely affect the interests of the Holders in any material
respect; or
(6) to make any other provisions with respect to such matters or
questions arising under the agreement which the Company and the Purchase
Contract Agent may deem necessary or desirable and which will not adversely
affect the interests of the Holders.
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 Purchase Contract
Agent, the Company, when authorized by a Board Resolution, and the Purchase
Contract Agent may enter into an agreement or agreements supplemental hereto for
the purpose of modifying in any manner the terms of the Purchase Contracts, 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 consent of each of the Holders of each
outstanding Purchase Contract affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be Pledged
to secure a Holder's obligations under the Purchase Contract, unless such change
is not adverse to the Holders, impair the right of the Holder of any Purchase
Contract to receive distributions on the
66
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 Holders' right to institute suit for the enforcement of
any Purchase Contract or any Contract Adjustment Payments;
(4) reduce the number of Ordinary Shares or the amount of any other
property to be purchased pursuant to any Purchase Contract (except pursuant to
Section 5.04), increase the price to purchase Ordinary Shares or any other
property upon settlement of any Purchase Contract or change the Purchase
Contract Settlement Date or the right to Early Settlement or Specified Merger
Early Settlement or otherwise adversely affect the Holder's rights under the
Purchase Contract;
(5) reduce any Contract Adjustment Payments or change any place where,
or the coin or currency in which, any Contract Adjustment Payment is payable; or
(6) reduce the percentage of the outstanding Purchase Contracts the
consent of whose Holders is required for any modification or amendment to the
provisions of this Agreement, the Purchase Contracts or the Pledge Agreement;
provided that if any amendment or proposal referred to above would adversely
affect only the Hybrid Capital 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 Purchase Contract 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 Purchase Contract Agent shall be
provided, and (subject to Section 7.01) shall be fully authorized and protected
in relying upon, an Officers' Certificate and an Opinion of Counsel stating that
the execution of such supplemental agreement is authorized or permitted by this
Agreement and that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied. The Purchase
Contract Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Purchase Contract Agent's own rights,
duties, privileges, protections, indemnities, liabilities or immunities under
this Agreement or otherwise.
67
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 Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract 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 Purchase
Contract 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 Purchase Contract Agent in exchange for
outstanding Certificates.
ARTICLE IX
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 Person 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 Person, or the
successor (if other than the Company) shall be a corporation,
partnership, trust or limited liability company organized and existing
under the laws of the United States of America or a State thereof or the
District of Columbia, the Cayman Islands or Bermuda and such Person
shall expressly assume all the obligations of the Company under the
Purchase Contracts, this Agreement, the Pledge Agreement and the
Remarketing Agreement by one or more supplemental agreements in form
reasonably satisfactory to the Purchase Contract Agent and the
Collateral Agent, executed and delivered to the Purchase Contract Agent
and the Collateral Agent by such Person; and
(ii) the Company or such successor Person, as the case may be,
shall not, immediately after such consolidation, conversion, merger,
sale, assignment, transfer, lease or conveyance, be in default of
payment or other obligations under the Purchase Contracts, this
Agreement, the Pledge Agreement, Certificate of Designations or the
Remarketing Agreement.
68
SECTION 9.02. Rights and Duties of Successor Person.
In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor Person in accordance with Section 9.01, such successor Person 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 Person thereupon may cause to
be signed, and may issue either in its own name or in the name of Scottish Re
Group Limited, any or all of the Certificates evidencing Units issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Purchase Contract Agent; and, upon the order of such successor
Person, instead of the Company, and subject to all the terms, conditions and
limitations in this Agreement prescribed, the Purchase Contract 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 Purchase Contract Agent for authentication and execution, and any
Certificate evidencing Units which such successor Person thereafter shall cause
to be signed and delivered to the Purchase Contract 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
Purchase Contract Agent.
The Purchase Contract Agent, subject to Section 7.01, shall receive an
Officers' Certificate and 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 that all conditions precedent to the consummation of any such
merger, consolidation, share exchange, sale, assignment, transfer, lease or
conveyance have been met.
ARTICLE X
COVENANTS
SECTION 10.01. Performance under Purchase Contracts.
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 Purchase Contracts in accordance with the terms of the
Purchase Contracts 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 Ordinary Shares
69
upon settlement of the Purchase Contracts on the Purchase Contract Settlement
Date or upon Early Settlement or Specified 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 Hybrid Capital 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 Purchase
Contract Agent of the location, and any change in the location, of such office
or agency. The Company initially designates the Corporate Trust Office of the
Purchase Contract Agent as such office of the Company, and the Company hereby
appoints the Purchase Contract Agent as its agent to receive all such
presentations, surrenders, notices and demands. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Purchase Contract Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office, and the Company hereby appoints the Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent at its Corporate
Trust Office as paying agent in the city in which is located the Corporate Trust
Office.
SECTION 10.03. Company to Reserve Ordinary Shares.
The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Ordinary Shares the full number of Ordinary Shares
issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Units evidenced by Outstanding Certificates.
SECTION 10.04. Covenants as to Ordinary Shares.
The Company covenants that all Ordinary Shares which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Units will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable. No shareholder consents are required in
respect of the issuance of the foregoing Ordinary Shares.
SECTION 10.05. Statements of Officers of the Company as to Default.
The Company will deliver to the Purchase Contract 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,
70
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. ERISA.
Each Holder from time to time of the Units that is a Plan or who used
assets of a Plan to purchase Units hereby represents that either (i) no portion
of the assets used by such Holder to acquire the Hybrid Capital Units
constitutes assets of the Plan or (ii) the purchase or holding of the Hybrid
Capital Units by such purchaser or transferee will not constitute a non-exempt
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or
similar violation under any applicable laws.
SECTION 10.07. Tax Treatment.
The Company covenants and agrees, and by purchasing a Treasury Unit or a
Hybrid Capital Unit each Holder agrees, for United States federal, state and
local tax purposes, to (i) treat the Hybrid Capital Units as consisting of two
components, Convertible Preferred Share and the related Purchase Contracts, (ii)
treat the Holder as the owner of the Convertible Preferred Shares, the Treasury
Securities and the related Purchase Contracts that are or may constitute part of
the Units owned, (iii) treat the Convertible Preferred Shares as equity of the
Company for all tax purposes and (iv) with respect to each initial Holder of
each Hybrid Capital Unit, to allocate $25 of the initial purchase price to each
Convertible Preferred Share and $0 to each Purchase Contract.
SECTION 10.08. Securities Contract.
Without limiting the applicability of Section 365 of the Bankruptcy
Code, it is the intention of the Company that this Agreement shall constitute a
"securities contract" for purposes of and subject to the provisions of Section
555 of the Bankruptcy Code. The Company agrees that (i) prior to an exercise by
the Collateral Agent on behalf of the Company of its rights as a secured party
pursuant to the Pledge Agreement, the Company does not have any ownership right,
title or interest in and to the Pledged Convertible Preferred Shares and (ii)
the Holders of a Security shall not be deemed to have purchased, and the Company
shall not be deemed to have sold any Ordinary Shares pursuant to a Purchase
Contract related to such Security prior to a Cash Settlement, an Early
Settlement or the occurrence of the Purchase Contract Settlement Date (provided
that no prior occurrence of a Termination Event with respect to such Security
has occurred).
SECTION 10.09. Listing.
In the event that the Treasury Units or Separate Convertible Preferred
Shares become separately traded from the Hybrid Capital Units to the extent that
applicable exchange listing requirements are met, the Company covenants and
agrees to use commercially reasonable efforts to cause such Treasury Units or
Separate Convertible Preferred Shares, as the case may be, to be listed on the
securities exchange on which the Hybrid Capital Units are then listed.
[SIGNATURES ON THE FOLLOWING PAGE]
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SCOTTISH RE GROUP LIMITED
By:
-----------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Purchase Contract Agent
By:
-----------------------------------
Name:
Title:
JPMORGAN CHASE BANK,
as Collateral Agent
By:
-----------------------------------
Name:
Title:
EXHIBIT A
(FORM OF FACE OF HYBRID CAPITAL UNIT CERTIFICATE)
[For inclusion in Global Certificates only - THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT 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 PURCHASE CONTRACT 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. __ CUSIP No. ______
Number of Hybrid Capital Units: ______
SCOTTISH RE GROUP LIMITED
Hybrid Capital Units
This Hybrid Capital Units Certificate certifies that [Cede & Co.]
______is the registered Holder of the number of Hybrid Capital Units set forth
above [For inclusion in Global Certificates only - or such other number of
Hybrid Capital Units reflected in the Schedule of Increases or Decreases in
Global Certificate attached hereto]. Each Hybrid Capital Unit consists of (i)
the beneficial ownership by the Holder of one convertible preferred share,
liquidation preference $25.00 (the "Convertible Preferred Shares"), of Scottish
Re Group Limited, a holding company organized under the laws of the Cayman
Islands (the "Company"), subject to the Pledge of such Convertible Preferred
Share by such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with the Company. All
capitalized terms used herein which are defined in the Purchase Contract
Agreement (as defined on the reverse hereof) have the meanings set forth
therein.
Pursuant to the Pledge Agreement, the Convertible Preferred Shares
constituting part of each Hybrid Capital 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 Purchase Contract comprising part of such
Hybrid Capital Unit.
The Pledge Agreement provides that all payments of the liquidation
preference with respect to any of the Pledged Convertible Preferred Shares or
dividends or distributions on any Pledged Convertible Preferred Shares (as
defined in the Pledge Agreement) constituting part of the Hybrid Capital Units
received by the Collateral Agent shall be paid by wire transfer in same day
funds (i) in the case of (A) dividends and distributions on Pledged Convertible
Preferred Shares and (B) any payments of the liquidation preference of any
Convertible Preferred Shares that have been released from the Pledge pursuant to
the Pledge Agreement, to the Purchase Contract Agent to the account designated
by the Purchase Contract Agent, no later than 12:00 p.m., New York City time, on
the Business Day such payment is received by the Collateral Agent (provided that
in the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 11:00 a.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 liquidation preference of the Convertible Preferred Shares pursuant to
the Remarketing to the Company on the Purchase Contract 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 Hybrid Capital
Units of which such Pledged Convertible Preferred Shares are a part under the
Purchase Contracts forming a part of such Hybrid Capital Units. Dividends on the
Convertible Preferred Shares forming part of a Hybrid Capital Units evidenced
hereby, which are payable quarterly in arrears on February 15, May 15, August 15
and November 15 of each year, commencing February 15, 2004 (a "Payment Date"),
shall, subject to receipt thereof by the Purchase Contract Agent from the
Collateral Agent, be paid to the Person in whose name this Hybrid Capital Units
Certificate (or a Predecessor Hybrid Capital Units Certificate) is registered at
the close of business on the Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Hybrid Capital Units Certificate to purchase, and the Company to sell, on
February 15, 2007 (the "Purchase Contract Settlement Date"), at a price equal to
$25.00 (the "Stated Amount"), a number of newly issued ordinary shares, par
value $0.01 per share ("Ordinary Shares"), of the Company, equal to the
Settlement Rate, unless on or prior to the Purchase Contract Settlement Date
there shall have occurred a Termination Event or an Early Settlement or
Specified Merger Early Settlement with respect to such Purchase Contract, all as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof. The purchase price (the "Purchase Price") for the Ordinary
Shares purchased pursuant to each Purchase Contract evidenced hereby, if not
paid earlier, shall be paid on the Purchase Contract Settlement Date by
application of payment received in respect of the liquidation preference with
respect to any Pledged Convertible Preferred Shares pursuant to the Remarketing,
pledged to secure the obligations under such Purchase Contract of the Holder of
the Hybrid Capital Units of which such Purchase Contract is a part.
Each Purchase Contract evidenced hereby obligates the Holder to agree,
for United States federal, state and local tax purposes, to (i) treat an
acquisition of the Hybrid Capital Units as an acquisition of the Convertible
Preferred Shares and Purchase Contracts constituting the Hybrid
A-2
Capital Units, (ii) treat the Holder as owner of the applicable interest in the
Collateral Account, including the Convertible Preferred Shares, (iii) treat each
Convertible Preferred Share as equity of the Company and (iv) with respect to
each initial Holder of a Hybrid Capital Unit, to allocate $25 of the initial
purchase price to each Convertible Preferred Share and $0 to each Purchase
Contract.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Hybrid Capital Unit evidenced hereby, an amount (the
"Contract Adjustment Payments") equal to 4.875% per year of the Stated Amount.
Such Contract Adjustment Payments shall be payable to the Person in whose name
this Hybrid Capital 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 Contract Adjustment Payments, subject to the terms and conditions of the
Purchase Contract Agreement.
Dividends on the Convertible Preferred Shares and the Contract
Adjustment Payments will be payable at the office of the Purchase Contract Agent
in New York City. If the book-entry system for the Hybrid Capital Units has been
terminated, the Contract Adjustment Payments 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 Purchase Contract 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
Purchase Contract Agent by manual signature, this Hybrid Capital Units
Certificate shall not be entitled to any benefit under the Pledge Agreement or
the Purchase Contract Agreement or be valid or obligatory for any purpose.
A-3
IN WITNESS WHEREOF, the Company and the Holder specified above have
caused this instrument to be duly executed.
Scottish Re Group Limited
By:
--------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase
Contracts)
By: JPMORGAN CHASE BANK,
not individually but solely as
Attorney-in-Fact of such Holder
By:
----------------------------
Name:
Title:
Dated:
------------------------
A-4
CERTIFICATE OF AUTHENTICATION
OF PURCHASE CONTRACT AGENT
This is one of the Hybrid Capital Units Certificates referred to in the
within mentioned Purchase Contract Agreement.
JPMorgan Chase Bank,
as Purchase Contract Agent
By:
-------------------------------
Authorized Officer
Dated:
-------------------
A-5
(FORM OF REVERSE OF HYBRID CAPITAL UNIT CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of December 17, 2003 (as may be supplemented from
time to time, the "Purchase Contact Agreement"), between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
thereunder, the "Purchase Contract Agent") and as Collateral Agent (including
its successors thereunder, the "Collateral Agent"), to which Purchase Contract
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 Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the Hybrid Capital Units Certificates are,
and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Hybrid Capital Units Certificate to purchase, and the Company to sell, on the
Purchase Contract Settlement Date at a price equal to the Stated Amount (the
"Purchase Price"), a number of Ordinary Shares equal to the Settlement Rate,
unless an Early Settlement, a Specified Merger Early Settlement or a Termination
Event with respect to the Units of which such Purchase Contract is a part shall
have occurred. The "Settlement Rate" is equal to:
(1) if the Adjusted Applicable Market Value is less than or
equal to $19.32 (the "Reference Price"), 1.2940 Ordinary Shares per
Purchase Contract; and
(2) if the Adjusted Applicable Market Value is greater than the
Reference Price, the number of Ordinary Shares per Purchase Contact
having a value equal to the Stated Amount divided by the Adjusted
Applicable Market Value;
in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).
No fractional Ordinary Shares will be issued upon settlement of Purchase
Contracts, as provided in Section 5.08 of the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled through Early
Settlement or Specified Merger Early Settlement shall obligate the Holder of the
related Hybrid Capital Units to purchase at the Purchase Price, and the Company
to sell, a number of newly issued Ordinary Shares equal to the Early Settlement
Rate (in the case of an Early Settlement) or applicable Settlement Rate (in the
case of a Specified Merger Early Settlement).
The "APPLICABLE MARKET VALUE" means the average of the Closing Price of
Ordinary Shares on each of the 20 consecutive Trading Days ending on the fourth
Trading Day immediately preceding the Purchase Contract Settlement Date subject
to adjustments set forth under Section 5.04 of the Purchase Contract 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 (11) of Section 5.04(a) of the Purchase Contract 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 (11) of Section
5.04(a) of the Purchase Contract Agreement, the Applicable Market Value
A-6
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 (11) of Section 5.04(a) of the Purchase Contract 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 (11) of Section 5.04(a) of the
Purchase Contract 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" of the Ordinary Shares, on any date of determination
means:
(i) the closing sale price or, if no closing sale price is
reported, the last reported regular-way sale price of the Ordinary
Shares on the New York Stock Exchange, Inc. (the "NYSE") on that date
or, if the Ordinary Shares are not listed for trading on the NYSE on
that date, as reported in the composite transactions for the principal
United States securities exchange on which the Ordinary Shares are so
listed; or
(ii) if the Ordinary Shares are not so reported, the last quoted
bid price for the Ordinary Shares in the over-the-counter market as
reported by the National Quotation Bureau or a similar organization, or,
if that bid price is not available, the average of the mid-point of the
last bid and ask prices of the Ordinary Shares on that date from at
least three nationally recognized independent investment banking firms
retained for this purpose by the Company.
A "TRADING DAY" means a day on which Ordinary Shares (1) are 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) have
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 Ordinary Shares (if such exchange, association or market reports
transactions in the composite transactions); or (3) are scheduled to so trade in
the case where such term is used with respect to future days.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Hybrid Capital Units Certificate may pay the Purchase Price for
the Ordinary Shares purchased pursuant to each Purchase Contract evidenced
hereby, by effecting a Cash Settlement, an Early Settlement or, if applicable, a
Specified Merger Early Settlement or a Remarketing of the related Pledged
Convertible Preferred Shares. A Holder of Hybrid Capital Units who (1) does not,
on or prior to 5:00 p.m. (New York City time) on the seventh Trading Day
immediately preceding the Purchase Contract Settlement Date, notify the Purchase
Contract Agent of its intention to effect a Cash Settlement, or who does so
notify the Purchase Contract Agent but fails to make an effective Cash
Settlement prior to 11:00 a.m. (New York City time) on the fifth Trading Day
immediately preceding the Purchase Contract Settlement Date, or (2) on or prior
to 5:00 p.m. (New York City time) on the seventh Trading Day prior to the
Purchase Contract Settlement Date, does not make an effective Early Settlement,
shall pay the Purchase Price for the Ordinary Shares to be delivered under the
related Purchase Contract from the proceeds of the sale of the related Pledged
Convertible Preferred Shares held by the Collateral Agent unless the Holder has
A-7
previously made a Specified Merger Early Settlement. Such sale will be made by
the Remarketing Agent pursuant to the terms of the Remarketing Agreement on the
Remarketing Date.
In the event of a Failed Remarketing each Holder shall have the right to
satisfy such Holder's obligations under the Purchase Contract on the Purchase
Contract Settlement Date in cash by notifying the Purchase Contract Agent of its
intention to make a Cash Settlement prior to 5:00 p.m. (New York City time) on
the second Trading Day immediately preceding the Purchase Contract Settlement
Date pursuant to Section 5.02(d) of the Purchase Contract Agreement.
If, as provided in the Purchase Contract Agreement, upon the occurrence
of a Failed Remarketing, the Collateral Agent, for the benefit of the Company,
exercises its rights as a secured creditor with respect to the Pledged
Convertible Preferred Shares related to this Hybrid Capital Units Certificate,
any accumulated and unpaid dividends on such Pledged Convertible Preferred
Shares and any Intrinsic Value (or such greater amount as is required under the
UCC) will become payable in cash by the Company (and the Company shall pay such
amounts) to the holder of this Hybrid Capital Units Certificate in the manner
provided for in the Purchase Contract Agreement.
The Company shall not be obligated to issue any Ordinary Shares in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate Purchase Price for
the Ordinary Shares to be purchased thereunder in the manner set forth in the
Purchase Contract Agreement.
Each Purchase Contract 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 Purchase Contract 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
Convertible Preferred Shares forming a part of each Hybrid Capital Unit from the
Pledge. A Hybrid Capital Unit shall thereafter represent the right to receive
the Convertible Preferred Share forming a part of such Hybrid Capital Units in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Hybrid Capital Units Certificates are issuable only in registered
form and only in denominations of a single Hybrid Capital Unit and any integral
multiple thereof. The transfer of any Hybrid Capital Units Certificate will be
registered and Hybrid Capital Units Certificates may be exchanged as provided in
the Purchase Contract Agreement. The Security Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Purchase Contract 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 Convertible Preferred Share,
thereby creating Treasury Units, shall be responsible for any fees or expenses
payable in connection therewith. Except as provided in the Purchase Contract
Agreement, for so long as the Purchase Contract underlying a Hybrid Capital
Units remains in effect, such Hybrid Capital Units shall not be separable into
its constituent parts, and the rights
A-8
and obligations of the Holder of such Hybrid Capital Units in respect of the
Convertible Preferred Shares and Purchase Contract constituting such Hybrid
Capital Units may be transferred and exchanged only as a Hybrid Capital Unit.
Subject to the conditions set forth in the Purchase Contract Agreement,
the Holder of Hybrid Capital Units may substitute, at any time prior to 5:00
p.m. (New York City time) on the seventh Trading Day immediately preceding the
Purchase Contract Settlement Date, for the Pledged Convertible Preferred Shares
securing such Holder's obligations under the related Purchase Contracts,
Treasury Securities in an aggregate principal amount at maturity equal to the
aggregate liquidation preference of the Pledged Convertible Preferred Shares in
accordance with the terms of the Purchase Contract 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 Purchase
Contract shall be referred to as a "Treasury Unit". A Holder may make such
Collateral Substitution only in integral multiples of 40 Hybrid Capital Units.
The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the Hybrid Capital Units Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Purchase
Contract Agent in New York City. If the book-entry system for the Hybrid Capital
Units has been terminated, the Contract Adjustment Payments 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 Purchase Contract Agent.
The Company has the right to defer payment of all or part of the
Contract Adjustment Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date (or in the event of an effective
Specified Merger Early Settlement, the Specified Merger Early Settlement Date)
as set forth in the Purchase Contract Agreement. If the Company so elects to
defer Contract Adjustment Payments, the Company shall pay additional Contract
Adjustment Payments on such deferred installments of Contract Adjustment
Payments at a rate equal to 4.750% 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 Contract Adjustment Payments on the
Purchase Contracts until the Purchase Contract Settlement Date (or, in the event
of an effective Specified Merger Early Settlement, the Specified Merger Early
Settlement Date), each Holder will receive on the Purchase Contract Settlement
Date or Specified Merger Early Settlement Date, as applicable, the Deferred
Contract Adjustment Payments to the extent such fees are not deducted from the
Settlement Price in the case of a Cash Settlement or any Specified Merger Early
Settlement as set forth in the Purchase Contract Agreement.
The Purchase Contracts 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 Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
A-9
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 Purchase Contract 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 Convertible Preferred Shares from the Pledge in accordance with the
provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Units may be settled early at any time prior to 5:00 p.m. (New York
City time) on the seventh Trading Day immediately preceding the Purchase
Contract Settlement Date ("Early Settlement") as provided in the Purchase
Contract Agreement. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contract evidenced by this Certificate, the Holder
of this Hybrid Capital Units Certificate shall deliver to the Purchase Contract
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 the sum of (A) the product of (I) the Stated Amount
times (II) the number of Purchase Contracts with respect to which the Holder has
elected to effect Early Settlement, plus (B) if such delivery is made with
respect to any Purchase Contracts 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
(including any Deferred Contract Adjustment Payments) payable on such Payment
Date with respect to such Purchase Contracts.
Upon Early Settlement of Purchase Contracts by a Holder of the related
Units, the Company shall issue, and the Holder shall be entitled to receive,
Ordinary Shares on account of each Purchase Contract as to which Early
Settlement is effected (the "Early Settlement Rate") equal to the quotient of
$25 divided by the greater of (i) the conversion price of the Convertible
Preferred Shares and (ii) the Applicable Market Value of such Ordinary Shares as
of such time. 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 Purchase Contract Agreement.
Upon the occurrence of a Specified Merger, a Holder of Hybrid Capital
Units may effect Specified Merger Early Settlement of the Purchase Contract
underlying such Hybrid Capital Units pursuant to the terms of Section 5.04(b)(2)
of the Purchase Contract Agreement. Upon Specified Merger Early Settlement of
Purchase Contracts by a Holder of the related Hybrid Capital Units, the Pledged
Convertible Preferred Shares underlying such Hybrid Capital Units shall be
released from the Pledge as provided in the Pledge Agreement.
Upon registration of transfer of this Hybrid Capital 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 Purchase Contract
Agent pursuant to the Purchase Contract Agreement), under the terms of the
Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by this Hybrid Capital 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.
A-10
The Holder of this Hybrid Capital Units Certificate, by its acceptance
hereof, authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts forming part of the Hybrid Capital Units evidenced
hereby on its behalf as its attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the Company or
its trustee 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, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,
authorizes the Purchase Contract Agent to enter into and perform the Purchase
Contract Agreement and the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Convertible Preferred Shares
underlying this Hybrid Capital Units Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees that, to the extent and in
the manner provided in the Purchase Contract Agreement and the Pledge Agreement,
but subject to the terms thereof, payments with respect to the aggregate
liquidation preference of the Pledged Convertible Preferred Shares on the
Purchase Contract Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts 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 Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract Agent may treat the Person in
whose name this Hybrid Capital Units Certificate is registered as the owner of
the Hybrid Capital Units evidenced hereby for the purpose of receiving payments
of dividends payable on the Convertible Preferred Shares, receiving payments of
Contract Adjustment Payments (subject to any applicable record date),
performance of the Purchase Contracts 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 Purchase Contract Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of Ordinary Shares.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Purchase Contract Agent.
A-11
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.
A-12
ASSIGNMENT
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 Hybrid Capital Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing ______________________________________,
attorney, to transfer said Hybrid Capital Units Certificates on the books of
Scottish Re Group Limited, 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
Hybrid Capital Units Certificates in every particular,
without alteration or enlargement or any change
whatsoever.
Signature Guarantee: ___________________________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-13
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Ordinary Shares
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying the number of Hybrid Capital Units evidenced
by this Hybrid Capital 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 REGISTERED HOLDER
Person other than the Holder,
please (i) print such Person's name
and address and (ii) provide a Please print name and address of
guarantee of your signature: Registered Holder:
______________________________________ _______________________________________
Name Name
______________________________________ _______________________________________
Address Address
______________________________________ _______________________________________
______________________________________ _______________________________________
______________________________________ _______________________________________
Social Security or other Taxpayer
Identification Number, if any _______________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-14
ELECTION TO SETTLE EARLY/SPECIFIED MERGER EARLY SETTLEMENT
The undersigned Holder of this Hybrid Capital Units Certificate hereby
irrevocably exercises the option to effect [Early Settlement] [Specified Merger
Early Settlement following a Specified Merger] in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Hybrid Capital Units evidenced by this Hybrid Capital
Units Certificate specified below. The undersigned Holder directs that a
certificate for Ordinary Shares or other securities deliverable upon such [Early
Settlement] [Specified Merger Early Settlement] be registered in the name of,
and delivered, together with a check in payment for any fractional share and any
Hybrid Capital Units Certificate representing any Hybrid Capital Units evidenced
hereby as to which [Early Settlement] [Specified Merger Early Settlement] of the
related Purchase Contracts is not effected, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
Pledged Convertible Preferred Shares deliverable upon such [Early Settlement]
[Specified 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: ___________________________________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
A-15
Number of Units evidenced hereby as to which [Early Settlement]
[Specified Merger Early Settlement] of the related Purchase Contracts is being
elected:
If Ordinary Shares or Hybrid Capital REGISTERED HOLDER
Units Certificates are to be registered
in the name of and delivered to and
Pledged Convertible Preferred Shares are
to be transferred to a Person other than
the Holder, please print such Person's
name and address:
Please print name and address of
Registered Holder:
______________________________________ _______________________________________
Address Address
______________________________________ _______________________________________
______________________________________ _______________________________________
______________________________________ _______________________________________
Social Security or other Taxpayer
Identification Number, if any _______________________________________
Transfer Instructions for Pledged Convertible Preferred Shares transferable upon
[Early Settlement] [Specified Merger Early Settlement] or a Termination Event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
A-16
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The initial number of Hybrid Capital Units of this Global
Certificate is ______. The following increases or decreases in this Global
Certificate have been made:
- ----------------- ------------------- ------------------- ------------------- -------------------
Number or Hybrid
Capital Units
Amount of increase Amount of decrease evidenced by Signature of
in Number of in Number of this Global authorized
Hybrid Capital Hybrid Capital Certificate signatory
Units Units following such of Purchase
evidenced by the evidenced by the decrease or Contract
Date Global Certificate Global Certificate increase Agent
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A-17
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 PURCHASE CONTRACT 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
PURCHASE CONTRACT 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. __ CUSIP No. ______
Number of Treasury Units: ______
SCOTTISH RE GROUP LIMITED
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 consists of (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 Purchase Contract with Scottish Re Group Limited, a holding
company organized under the laws of the Cayman Islands (the "Company"). All
capitalized terms used herein which are defined in the Purchase Contract
Agreement (as defined on the reverse hereof) have the meanings set forth
therein.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of 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 Purchase Contract comprising part of such Treasury Unit. Each Purchase
Contract evidenced hereby obligates the Holder of this Treasury Units
Certificate to purchase, and the Company, to sell, on February 15, 2007 (the
"Purchase Contract Settlement Date"), at a price equal to $25.00 (the "Stated
Amount"), a number of newly issued Ordinary shares, par value $0.01 per share
("Ordinary Shares"), of the Company, equal to the Settlement Rate, unless prior
to or on the Purchase Contract Settlement Date there shall have occurred a
Termination Event, an Early Settlement or a Specified Merger Early Settlement
with respect to such Purchase Contract, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the "Purchase Price") for the Ordinary Shares purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of the proceeds from the
Treasury Securities at maturity pledged to secure the obligations of the Holder
under such Purchase Contract of the Treasury Units of which such Purchase
Contract is a part.
Each Purchase Contract 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 Purchase Contracts constituting the Treasury Units and (ii) treat
itself as owner of the applicable interest in the Collateral Account, including
the Treasury Securities.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Treasury Unit evidenced hereby, an amount (the
"Contract Adjustment Payments") equal to 4.750% per year of the Stated Amount.
Such Contract Adjustment Payments 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
Contract Adjustment Payments.
Contract Adjustment Payments will be payable at the office of the
Purchase Contract Agent in New York City. If the book-entry system for the
Hybrid Capital Units has been terminated, the Contract Adjustment Payments 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 Purchase Contract 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
Purchase Contract Agent by manual signature, this Treasury Units Certificate
shall not be entitled to any benefit under the Pledge Agreement or the Purchase
Contract Agreement or be valid or obligatory for any purpose.
B-2
IN WITNESS WHEREOF, the Company and the Holder specified above have
caused this instrument to be duly executed.
SCOTTISH RE GROUP LIMITED
By:
--------------------------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations of such
Holder under the Purchase Contracts)
By: JPMORGAN CHASE BANK,
not individually but solely as
Attorney-in-Fact of such Holder
By: -----------------------------------------
Name:
Title:
Dated:
-----------------
B-3
CERTIFICATE OF AUTHENTICATION OF
PURCHASE CONTRACT AGENT
This is one of the Treasury Units referred to in the within-mentioned
Purchase Contract Agreement.
JPMorgan Chase Bank,
as Purchase Contract Agent
By:
------------------------------------
Authorized Officer
Dated:
-----------------------
B-4
(REVERSE OF TREASURY UNIT CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of December 17, 2003 (as such may be supplemented
from time to time, the "Purchase Contract Agreement") between the Company and
JPMorgan Chase Bank, as Purchase Contract Agent (including its successors
thereunder, the "Purchase Contract Agent") and as Collateral Agent (including
its successors thereunder, the "Collateral Agent"), to which the Purchase
Contract 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 Purchase Contract 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 Purchase Contract evidenced hereby obligates the Holder of this
Treasury Units Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price") a number of newly issued Ordinary Shares equal to the Settlement Rate,
unless an Early Settlement, a Specified Merger Early Settlement or a Termination
Event with respect to the Units of which such Purchase Contract is a part shall
have occurred. The "Settlement Rate" is equal to:
(1) if the Adjusted Applicable Market Value is less than or
equal to $19.32 (the "Reference Price"), 1.2940 Ordinary Shares per
Purchase Contract; and
(2) if the Adjusted Applicable Market Value is greater than or
equal to the Reference Price, the number of Ordinary Shares per Purchase
Contact having a value equal to the Stated Amount divided by the
Adjusted Applicable Market Value
in each case subject to adjustment as provided in the Purchase
Contract Agreement (and in each case rounded upward or downward to the nearest
1/10,000th of a share).
No fractional Ordinary Shares will be issued upon settlement of Purchase
Contracts, as provided in Section 5.08 of the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby that is settled through Early
Settlement or Specified Merger Early Settlement shall obligate the Holder of the
related Treasury Units to purchase at the Purchase Price, and the Company to
sell, a number of newly issued Ordinary Shares equal to the Early Settlement
Rate (in the case of an Early Settlement) or applicable Settlement Rate (in the
case of a Specified Merger Early Settlement).
The "APPLICABLE MARKET VALUE" means the average of the Closing Price of
Ordinary Shares on each of the 20 consecutive Trading Days ending on the fourth
Trading Day immediately preceding the Purchase Contract 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 (11) of Section 5.04(a) of the Purchase Contract 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),
B-5
(5), (6), (7) or (11) of Section 5.04(a) of the Purchase Contract 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 (11) of Section 5.04(a) of the Purchase
Contract 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
(11) of Section 5.04(a) of the Purchase Contract 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" of the Ordinary Shares, on any date of determination
means the:
(iii) the closing sale price or, if no closing sale price is
reported, the last reported regular-way sale price of the Ordinary
Shares on the New York Stock Exchange, Inc. (the "NYSE") on that date
or, if the Ordinary Shares are not listed for trading on the NYSE on
that date, as reported in the composite transactions for the principal
United States securities exchange on which the Ordinary Shares are so
listed; or
(iv) if the Ordinary Shares are not so reported, the last quoted
bid price for the Ordinary Shares in the over-the-counter market as
reported by the National Quotation Bureau or a similar organization, or,
if that bid price is not available, the average of the mid-point of the
last bid and ask prices of the Ordinary Shares on that date from at
least three nationally recognized independent investment banking firms
retained for this purpose by the Company.
A "TRADING DAY" means a day on which the Ordinary Shares (1) are 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) have
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 Ordinary Shares (if such exchange, association or market reports
transactions in the composite transactions); or (3) are scheduled to so trade in
the case where such term is used with respect to future days.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Treasury Unit shall pay the Purchase Price for the shares of the
Ordinary Shares purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement, an Early Settlement or, if applicable, a
Specified Merger Early Settlement of each such Purchase Contract or by applying
a principal amount of the Pledged Treasury Securities underlying such Holder's
Treasury Unit equal to the Stated Amount of such Purchase Contract to the
purchase of the Ordinary Shares. A Holder of Treasury Units who on or prior to
5:00 p.m. (New York City time) on the second Trading Day prior to the Purchase
Contract Settlement Date, does not make an effective Early Settlement shall pay
the Purchase Price for the Ordinary Shares to be issued under the related
Purchase Contract from the proceeds of the Pledged Treasury Securities.
The Company shall not be obligated to issue any Ordinary Shares in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received
B-6
payment of the aggregate purchase price for the Ordinary Shares to be purchased
thereunder in the manner set forth in the Purchase Contract Agreement.
The Company has the right to defer payment of all or part of the
Contract Adjustment Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date (or in the event of an effective
Early Settlement or Specified Merger Early Settlement, the Early Settlement Date
or Specified Merger Early Settlement Date, as the case may be) as set forth in
the Purchase Contract Agreement. If the Company so elects to defer Contract
Adjustment Payments, the Company shall pay additional Contract Adjustment
Payments on such deferred installments of Contract Adjustment Payments at a rate
equal to 4.750% 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 Contract Adjustment Payments on the Purchase Contracts
until the Purchase Contract Settlement Date (or, in the event of an effective
Specified Merger Early Settlement, the Specified Merger Early Settlement Date),
each Holder will receive on the Purchase Contract Settlement Date or Specified
Merger Early Settlement Date, as applicable, the aggregate amount of Deferred
Contract Adjustment Payments to the extent such fees are not deducted from the
Settlement Price in the case of a Cash Settlement or any Specified Merger Early
Settlement as set forth in the Purchase Contract Agreement.
The Purchase Contracts 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 Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract 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 Purchase Contract 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) forming a
part of each Treasury Unit. A Treasury Unit shall thereafter represent the right
to receive the Proceeds of the Treasury Security forming a part of such Treasury
Unit, in accordance with the terms of the Purchase Contract 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 Purchase
Contract Agreement. The Security Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents permitted by
the Purchase Contract Agreement. No service charge shall be required for any
such registration of transfer or exchange, but the Company and the Purchase
Contract 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 Convertible Preferred Shares, for Treasury Securities, thereby
recreating Hybrid Capital Units, shall be responsible for any fees or expenses
associated therewith. Except as provided in the Purchase Contract Agreement, for
so long as the Purchase Contract underlying 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
B-7
Unit in respect of the Treasury Security and the Purchase Contract constituting
such Treasury Unit may be transferred and exchanged only as a Treasury Unit.
Subject to the conditions set forth in the Purchase Contract Agreement,
a Holder of Treasury Units may recreate, at any time prior to 5:00 p.m. (New
York City time) on the seventh Trading Day immediately preceding the Purchase
Contract Settlement Date, Hybrid Capital Units by delivering to the Collateral
Agent Convertible Preferred Shares with an aggregate liquidation preference,
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 Purchase Contract Agreement and the Pledge
Agreement. From and after such substitution, the Holder's Units shall be
referred to as a "Hybrid Capital Unit". Any such creation of Hybrid Capital
Units may be effected only in multiples of 40 Treasury Units.
The Company shall pay, on each Payment Date, the Contract Adjustment
Payments payable in respect of each Purchase Contract to the Person in whose
name the Treasury Units Certificate evidencing such Purchase Contract is
registered at the close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the office of the Purchase
Contract 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.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Units may be settled early ("Early Settlement") as provided in the
Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contract evidenced by this Certificate,
the Holder of this Treasury Units Certificate shall deliver to the Purchase
Contract 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 the sum of (A) the product of (I) the
Stated Amount times (II) the number of Purchase Contracts with respect to which
the Holder has elected to effect Early Settlement, plus (B) if such delivery is
made with respect to any Purchase Contracts 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 (including any Deferred Contract Adjustment Payments) payable on such
Payment Date with respect to such Purchase Contracts.
Upon Early Settlement of Purchase Contracts by a Holder of the related
Units, the Company shall issue, and the Holder shall be entitled to receive,
Ordinary Shares on account of each Purchase Contract as to which Early
Settlement is effected (the "Early Settlement Rate") equal to the quotient of
$25 divided by the greater of (i) the conversion price of the Convertible
Preferred Shares and (ii) the Applicable Market Value of such Ordinary Shares as
of such time. 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 Purchase Contract Agreement.
Upon the occurrence of a Specified Merger, a Holder of Treasury Units
may effect Specified Merger Early Settlement of the Purchase Contract underlying
such Treasury Units pursuant to the terms of Section 5.04(b)(2) of the Purchase
Contract Agreement. Upon Specified
B-8
Merger Early Settlement of Purchase Contracts by a Holder of the related
Treasury Units, the Pledged Treasury Securities underlying 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 Purchase Contract Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
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 Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of 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 Purchase Contracts by the Company or its
trustee 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, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,
authorizes the Purchase Contract Agent to enter into and perform the Purchase
Contract Agreement and the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Treasury Securities
underlying 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 Purchase Contract 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 Purchase Contract Settlement
Date shall be paid by the Collateral Agent to the Company in satisfaction of
such Holder's obligations under such Purchase Contract and such Holder shall
acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts 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 Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract 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 Treasury Securities, receiving payments of Contract Adjustment
Payments (subject to any applicable record date), performance of the Purchase
Contracts 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 Purchase Contract Agent nor any such agent shall be
affected by notice to the contrary.
B-9
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of Ordinary Shares.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Purchase Contract Agent.
B-10
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.
B-11
ASSIGNMENT
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 Scottish
Re Group Limited, 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
Treasury Units Certificates in every
particular, without alteration or
enlargement or any change whatsoever.
Signature Guarantee: __________________________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
B-12
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for Ordinary Shares
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying 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: ________________
Dated: (if assigned to another person)
If shares are to be registered in
the name of and delivered to a REGISTERED HOLDER
Person other than the Holder,
please (i) print such Person's name
and address and (ii) provide a Please print name and address of
guarantee of your signature: Registered Holder:
_______________________________________ _____________________________________
Name Name
_______________________________________ _____________________________________
Address Address
_______________________________________ _____________________________________
_______________________________________ _____________________________________
_______________________________________ _____________________________________
Social Security or other Taxpayer
Identification Number, if any _____________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
B-13
ELECTION TO SETTLE EARLY/SPECIFIED MERGER EARLY SETTLEMENT
The undersigned Holder of this Treasury Units Certificate hereby
irrevocably exercises the option to effect [Early Settlement] [Specified Merger
Early Settlement upon a Specified Merger] in accordance with the terms of the
Purchase Contract Agreement with respect to the Purchase Contracts underlying
the number of Treasury Units evidenced by this Treasury Units Certificate
specified below. The option to effect [Early Settlement] [Specified Merger Early
Settlement] may be exercised only with respect to Purchase Contracts underlying
Treasury Units with an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof. The undersigned Holder directs that a certificate for Ordinary
Shares or other securities deliverable upon such [Early Settlement] [Specified
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
Specified Merger Early Settlement of the related Purchase Contracts 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] [Specified 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: ________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
B-14
Number of Units evidenced hereby as to which [Early Settlement]
[Specified Merger Early Settlement] of the related Purchase Contracts is being
elected:
If Ordinary Shares or Hybrid Capital REGISTERED HOLDER
Units Certificates are to be registered
in the name of and delivered to and
Pledged Convertible Preferred Shares are
to be transferred to a Person other than
the Holder, please print such Person's
name and address:
Please print name and address of
Registered Holder:
Name Name
_______________________________________ _____________________________________
Address Address
_______________________________________ _____________________________________
_______________________________________ _____________________________________
_______________________________________ _____________________________________
Social Security or other Taxpayer
Identification Number, if any _____________________________________
Transfer Instructions for Pledged Convertible Preferred Shares transferable upon
[Early Settlement] [Specified Merger Early Settlement] or a Termination Event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
B-15
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The initial number of Treasury Units of this Global Certificate
is 0. The following increases or decreases in this Global Certificate have been
made:
- ----------------- ------------------- ------------------- ------------------- -------------------
Number or
Treasury Units
evidenced by Signature of
Amount of increase Amount of decrease this Global authorized
in Number of in Number of Certificate signatory
Treasury Units Treasury Units following such of Purchase
evidenced by the evidenced by the decrease or Contract
Date Global Certificate Global Certificate increase Agent
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B-16
EXHIBIT C
INSTRUCTION TO PURCHASE CONTRACT AGENT
JPMorgan Chase Bank,
as Purchase Contract Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Attention: Institutional Trust Services
Re: [______ Hybrid Capital Units] [______ Treasury Units] of
Scottish Re Group Limited, a holding company organized under the
laws of the Cayman Islands (the "Company").
The undersigned Holder hereby notifies you that it has delivered to
JPMorgan Chase Bank, as Collateral Agent, $______ aggregate [liquidation
preference] [principal amount] of [Convertible Preferred Shares] [Treasury
Securities] in exchange for the [Pledged Convertible Preferred Shares] [Pledged
Treasury Securities] held in the Collateral Account, in accordance with the
Pledge Agreement, dated as of ______, 200__ (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 and the
Custodial Agent. 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 Convertible Preferred Shares] [Pledged Treasury Securities]
related to such [Hybrid Capital 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
_______________________________________
_______________________________________
_______________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
C-2
EXHIBIT D
NOTICE FROM PURCHASE CONTRACT AGENT
TO HOLDERS
(TRANSFER OF COLLATERAL UPON OCCURRENCE OF A TERMINATION EVENT)
[HOLDER]
Attention:
Telecopy:
Re: [______ Hybrid Capital Units] [______ Treasury Units] of
Scottish Re Group Limited, a holding company organized under the
laws of the Cayman Islands (the "Company")
Please refer to the Purchase Contract Agreement, dated as of ______,
200__ (the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Hybrid Capital Units and Treasury Units from
time to time.
We hereby notify you that a Termination Event has occurred and that [the
Convertible Preferred Shares] [the Treasury Securities] compromising a portion
of your ownership interest in ______ [Hybrid Capital Units] [Treasury Units]
have been released and are being held by us for your account pending receipt of
transfer instructions with respect to such [Convertible Preferred
Shares][Treasury Securities] (the "Released Securities").
Pursuant to Section 3.15 of the Purchase Contract 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 [Hybrid
Capital Units][Treasury Units] effected through book-entry or by delivery to us
of your [Hybrid Capital 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 [Hybrid Capital Units][Treasury Units] are transferred
or your [Hybrid Capital Units Certificate] [Treasury Units Certificate] is
surrendered or satisfactory evidence is provided that such [Hybrid Capital Units
Certificate][Treasury Units Certificate] has been destroyed, lost or stolen,
together with any indemnification that we or the Company may require.
JPMorgan Chase Bank,
Date: as the Purchase Contract Agent
__________________________________________
Authorized Officer
D-1
EXHIBIT E
NOTICE TO SETTLE BY CASH
JPMorgan Chase Bank,
as Purchase Contract Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Attention: Institutional Trust Services
Re: ______ Hybrid Capital Units of Scottish Re Group Limited, a
holding company organized under the laws of the Cayman Islands
(the "Company")
The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.02 of the Purchase Contract Agreement, dated as of ______, 200__
(the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and you, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Collateral Agent, prior to or on 11:00 a.m. (New York City time) on the
fourth Business Day immediately preceding the Purchase Contract Settlement Date
(in lawful money of the United States by wire transfer, in immediately available
funds), $______ as the Purchase Price for the Ordinary Shares issuable to such
Holder by the Company with respect to ______ Purchase Contracts on the Purchase
Contract Settlement Date. The undersigned Holder hereby instructs you to notify
promptly the Collateral Agent of the undersigned Holder's election to make such
Cash Settlement with respect to the Purchase Contracts related to such Holder's
Hybrid Capital Units.
Date __________________________________ _____________________________________
Signature
Signature Guarantee:
Please print name and address of Registered Holder:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Security Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Security
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
E-1
EXHIBIT F
NOTICE FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(SETTLEMENT OF PURCHASE CONTRACT THROUGH REMARKETING)
JPMorgan Chase Bank,
as Collateral Agent
4 New York Plaza, 15th Floor
New York, New York 10004
Attention: Institutional Trust Services
Re: ______ Hybrid Capital Units of Scottish Re Group Limited, a
holding company organized under the laws of the Cayman Islands
(the "Company")
Please refer to the Purchase Contract Agreement, dated as of ______,
200__ (the "Purchase Contract Agreement"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Hybrid Capital Units from time to time.
In accordance with Section 5.02 of the Purchase Contract Agreement and,
based on notices of [Early Settlements][Cash Settlements] received from Holders
of Hybrid Capital Units as of 5:00 p.m. (New York City time), on the seventh
Trading Day immediately preceding the ______Remarketing Date, we hereby notify
you that an aggregate liquidation preference of $______ Convertible Preferred
Shares is to be tendered for purchase in the Remarketing.
JPMorgan Chase Bank,
Date: as the Purchase Contract Agent
---------------------------------------
Authorized Officer
F-1
EXHIBIT G
TIME TABLE OF REMARKETING AND SETTLEMENT OF PURCHASE CONTRACTS
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Between January 10, 2007 and o The Company will give notice to Holders of Hybrid
January 25, 2007 Capital Units and Convertible Preferred Shares as to
the date and procedures to be followed on the
Remarketing Date.
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February 6, 2007 o Last day to create Treasury Units from Hybrid Capital
Units and recreate Hybrid Capital Units from Treasury
Units.
o Last day for Hybrid Capital Unit
Holders to give notice of desire to
settle Purchase Contract in cash.
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February 8, 2007 o Last day for Hybrid Capital Unit Holders to deliver
cash to the Collateral Agent for settlement of
Purchase Contract in cash.
o Last day for Holders of Separate Convertible
Preferred Shares to give notice of election to
participate in Remarketing
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February 9, 2007 o Remarketing date of Convertible Preferred Shares.
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February 12, 2007 o If a Failed Remarketing occurs, the Company will
issue a press release.
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February 13, 2007 o Last day for Hybrid Capital Unit Holders upon a
Failed Remarketing to give notice of desire to settle
the Purchase Contract in cash.
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February 14, 2007 o Last day for Hybrid Capital Unit Holders upon a
Failed Remarketing to deliver cash to the Collateral
Agent for settlement of the Purchase Contract in cash.
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February 15, 2007 o Settlement of Remarketing of Convertible Preferred
Shares.
o Purchase Contract Settlement Date.
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May 18, 2007 o Last day for Holders of Convertible Preferred Shares
to give notice of conversion.
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May 21, 2007 o Mandatory Redemption Date of Convertible Preferred
Shares.
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