Exhibit 99.3
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES B CUMULATIVE CONVERTIBLE PERPETUAL PREFERRED
SHARES
OF
TRENWICK GROUP LTD.
The Series B Cumulative Convertible Perpetual Preferred Shares shall have
the designation, preferences and rights, and shall be subject to the
restrictions, as hereinafter appearing:
Section 1. Designation and Amount. There shall be a series of preferred
shares of the Company which shall be designated as "Series B Cumulative
Convertible Perpetual Preferred Shares," par value $0.10 per share (hereinafter
called "Series B Preferred Shares"), and the number of shares constituting such
series shall be 550,000. Such number of shares may be increased or decreased at
any time and from time to time by resolution of the Company's Board of
Directors; provided, however, that no decrease shall reduce the number of shares
of Series B Preferred Shares to a number less than the number of shares then
outstanding plus the number of shares of Series B Preferred Shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
Section 2. Definitions. For purposes of the Series B Preferred Shares, the
following terms shall have the meanings indicated:
"Affiliate" of, or a person "affiliated" with, a specified Person
means a Person that directly, or indirectly through one ore more
intermediaries, controls or is controlled by, or is under common control
with, such specified Person.
"Applicable Rate" shall mean, for any particular Dividend Period, a
rate per annum equal to LIBOR plus the Average Credit Rate.
"Average Credit Rate" shall mean, for any particular Dividend
Period, a rate per annum (rounded, if necessary, to the next higher 1/100
of 1.0%, if it is not such a multiple) equal to (i) the sum of the
products of each Credit Rate that was applicable to any portion of such
Dividend Period multiplied by the number of days during such Dividend
Period to which such Credit Rate was applicable (ii) divided by the total
number of days in such Dividend Period.
"Board" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series B Preferred Shares.
"Book Value Per Common Share" shall mean (A) divided by (B); where
(A) is defined as the Company's GAAP Net Worth as of the end of the most
recent fiscal quarter preceding any Conversion Date less (1) the sum of
the aggregate liquidation preferences for all series of preferred shares
of the Company
then outstanding and less (2) the sum of all due but undeclared dividends
as of the end of such fiscal quarter on all series of preferred shares of
the Company which are not convertible by their terms into Common Shares;
and where (B) is defined as the number of Common Shares outstanding as of
the end of such fiscal quarter on a fully diluted basis in accordance with
GAAP; provided, however, that the dilution calculation shall be made as if
Series B Preferred Shares were not convertible into Common Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in any of Hamilton, Bermuda; Zurich,
Switzerland; Chicago, U.S.; or London, England are not required to be
open.
"Change of Control" shall mean the earliest to occur of (a) the date
that a Person or group of affiliated Persons (an "Acquiring Person") has
acquired, or has obtained the right to acquire, legal or beneficial
ownership of fifty percent (50%) or more of the voting power of the issued
and outstanding shares of Company, (b) the date an Acquiring Person
acquires fifty percent (50%) or more of the assets of Company, or (c) the
date of any amalgamation, consolidation or merger of Company with any
Acquiring Person. For purposes hereof, the term "Acquiring Person" shall
not include (i) Trenwick, any of its Subsidiaries or any employee benefit
plan (or related trust) sponsored or maintained by Company, or any of its
subsidiaries, or (ii) any other person where fifty percent (50%) or more
of the combined voting power of such Person's issued and outstanding
shares or capital stock is beneficially owned, directly or indirectly, by
the Persons who were the holders of the voting shares of Company
immediately prior to such acquisition, amalgamation, consolidation or
merger (as the case may be).
"Change of Control Conversion Event" shall mean the occurrence of a
Change of Control without the written consent of the registered holders of
more than 50% of the Series B Preferred Shares then outstanding.
"Common Shares" shall mean the common shares of the Company, par
value $0.10 per share.
"Company" shall mean Trenwick Group Ltd., and where an obligation or
duty is placed on the Company or the Company is authorized to do any act
then such obligation, duty or act may be carried out by the Board.
"Conversion Date," with respect to Series B Preferred Shares for
which there is a proposed Conversion Date, shall be the same day as the
Proposed Conversion Date, provided that (i) the holder of such Series B
Preferred Shares shall not have delivered a notice of revocation in
accordance with paragraph (c) of Section 6 hereof and (ii) the Company
shall not have given a notice of redemption pursuant to paragraph (b) of
Section 5 hereof naming any date on or prior to the Proposed Conversion
Date as the Proposed Redemption Date, and such notice to redeem shall not
have been revoked prior to such date; provided, further, that in the event
that the holders of more than 50% of the outstanding Series B Preferred
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Shares hold registration rights with respect to Common Shares into which
such Series B Preferred Shares can be converted, and such holders have
delivered to the Company, concurrently with any notice of conversion under
paragraph (b) of Section 6 hereof, a notice requesting registration of
such Common Shares for sale in a public offering, then the Conversion Date
shall be delayed so that it occurs on or immediately prior to the
effective date of such registration.
"Conversion Price" shall mean, with respect to any particular
Conversion Date, the greatest of (i) the product of the Liquidity Factor
multiplied by the average Current Market Price for the Common Shares for
the 30 consecutive Trading Days immediately preceding such Conversion
Date, (ii) the product of the Liquidity Factor multiplied by the Book
Value Per Common Share or (iii) the par value of a Common Share.
"Credit Rate" shall mean, for any particular day, the lowest of the
Percentage Amounts corresponding to the S&P Credit Rating for such day as
set forth in the following table:
-------------------------------------------------------------
S&P Credit Rating Percentage Amount
-------------------------------------------------------------
BBB- or above 3.75%
-------------------------------------------------------------
BB+ 4.25%
-------------------------------------------------------------
BB 4.50%
-------------------------------------------------------------
BB- 4.75%
-------------------------------------------------------------
Below BB- or Unrated 6.00%
-------------------------------------------------------------
If, after the third anniversary of any Issue Date, the Series B Preferred
Shares have no rating, or an S&P Credit Rating below BBB-, all Percentage
Amounts listed above shall be increased as of such third anniversary by
0.25% with respect to all Series B Preferred Shares issued on such Issue
Date. If, after the fifth anniversary of any Issue Date, the Series B
Preferred Shares have no rating, or an S&P Credit Rating below BBB-, all
Percentage Amounts listed above (as adjusted per the previous sentence, if
applicable) shall be increased as of such fifth anniversary by 0.50% with
respect to all Series B Preferred Shares issued on such Issue Date. In no
case, however, shall the total adjustment to any Percentage Amount
pursuant to this paragraph exceed 0.75%. Only an S&P Credit Rating, shall
be utilized for determining adjustments to any Percentage
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Amount, and the Series B Preferred Shares shall be deemed unrated if they
do not have an S&P Credit Rating.
"Current Market Price" of publicly traded common shares or any other
class of capital stock or other security of the Company or any other
issuer for any day shall mean the last reported sales price, regular way
on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either
case as reported on the New York Stock Exchange ("NYSE") or, if such
security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotations
System ("Nasdaq") or, if such security is not quoted on such National
Market System, the average of the closing bid and asked prices on such day
in the over-the-counter market as reported by Nasdaq or, if bid and asked
prices for such security on such day shall not have been reported through
Nasdaq, the average of the bid and asked prices on such day as furnished
by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board or, if no NYSE member firm shall be
regularly making a market in such security, such price as may be
determined by the Board in good faith.
"Dividend Payment Date" shall mean the first day of January, April,
July and October in each year; provided, however, that if any Dividend
Payment Date falls on any day other than a Business Day, the dividend
payment due on such Dividend Payment Date shall be paid on the Business
Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing
on January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend
Period (other than the initial Dividend Period, which shall commence on
the Issue Date, and other than the Dividend Period during which any Series
B Preferred Shares shall be redeemed pursuant to Section 5 hereof, which
shall end on and include the Redemption Date with respect to the Series B
Preferred Shares being redeemed).
"Dollars" or "$" shall mean U.S. Dollars.
"Early Redemption Premium" shall mean, with respect to any
redemption pursuant to Section 5 hereof, an amount equal to (i) $2.00 per
share if the Redemption Date for such redemption falls before the second
anniversary of the Issue Date, (ii) $1.00 per share if such Redemption
Date falls on or after the second anniversary of the Issue Date but before
the third anniversary of the Issue Date, and (iii) zero if such Redemption
Date falls on or after the third anniversary of the Issue Date.
"Excess Preferred Shares" shall have the meaning set forth in
Section 11(a) hereof.
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"Fully Junior Shares" shall mean the Common Shares and any other
class or series of shares of the Company's stock now or hereafter issued
and outstanding over which the Series B Preferred Shares have preference
or priority in both (i) the payment of dividends and (ii) the distribution
of assets on any liquidation, dissolution or winding up of the Company.
"GAAP" shall mean U.S. generally accepted accounting principles,
consistently applied.
"GAAP Net Worth" shall mean the amount equal to the a company's
consolidated shareholders' equity plus minority interest, if any, as
determined in accordance with GAAP.
"Issue Date" shall mean, with respect to any particular Series B
Preferred Shares, the date on which such shares are issued by the Company.
"Junior Shares" shall mean the Common Shares, any Fully Junior
Shares and any other class or series of shares of the Company's stock now
or hereafter issued and outstanding over which the Series B Preferred
Shares have preference or priority in either (i) the payment of dividends
or (ii) the distribution of assets on any liquidation, dissolution or
winding up of the Company.
"LIBOR" shall mean, for any particular Dividend Period, the offered
rate for deposits in U.S. Dollars, for a one-year period and in an amount
comparable to the aggregate Liquidation Preference of the Series B
Preferred Shares then outstanding, appearing on the Reuters Screen LIBO
Page as of 11:00 A.M. (London, England time) on the day that is two
Business Days prior to the Reference Date. If two or more of such rates
appear on the Reuters Screen LIBO Page, the rate for that Dividend Period
shall be the arithmetic mean of such rates. If the foregoing rate is
unavailable from the Reuters Screen for any reason, then such rate shall
be determined by the Company from Telerate Page 3750 or, if such rate is
also unavailable on such service, then on any other interest rate
reporting service of recognized standing designated in writing by the
Company to the holders of the Series B Preferred Shares; in any such case
rounded, if necessary, to the next higher 1/100 of 1.0%, if the rate is
not such a multiple.
"Liquidation Preference" shall mean $100.00 per Series B Preferred
Share.
"Liquidity Factor" shall mean, with respect to any conversion
pursuant to Section 6 hereof, an amount equal to (i) 0.80 if the
Conversion Date for such conversion falls 60 days or more after the
occurrence of a Change of Control Conversion Event or (ii) 1.00 if such
Conversion Date does not fall 60 days or more after the occurrence of a
Change of Control Conversion Event.
"Net Worth Conversion Event" shall mean the failure by the Company
to maintain a GAAP Net Worth equal to at least $225,000,000 excluding
contingent interest notes and outstanding trust preferred stock) which
failure shall not have been remedied within 60 days after the earlier of
(i) the Company's Chief Financial Officer (if there be such an officer,
and if not then the Company's President or Chairman) obtaining actual
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personal knowledge thereof, whereupon such officer shall give written
notice to all holders of Series B Preferred Shares, or (ii) the Company's
receipt of written notice thereof from any holder of Series B Preferred
Shares.
"Parity Shares" shall mean (i) the Series B Preferred Shares and
(ii) any other class or series of shares of the Company's stock now or
hereafter issued and outstanding, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share
thereof shall be different from those of the Series B Preferred Shares, if
the holders thereof shall be entitled, together with the holders of the
Series B Preferred Shares, to the receipt of dividends and of amounts
distributable upon liquidation, dissolution or winding up in proportion to
their respective amounts of accrued and unpaid dividends per share or
liquidation preferences, without preference or priority one over the
other.
"Person" shall mean any individual, firm, partnership, corporation,
limited liability company or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Prohibited Transferees" shall have the meaning set forth in Section
10(c) hereof.
"Proposed Conversion Date" shall mean the date on which a holder of
Series B Preferred Shares proposes to convert any or all of the Series B
Preferred Shares, as set forth in its notice to the Company properly
delivered in accordance with paragraph (b) of Section 6 hereof.
"Proposed Redemption Date" shall mean the date on which the Company
proposes to redeem any or all of the Series B Preferred Shares, as set
forth in its notice to holders of Series B Preferred Shares given in
accordance with paragraph (b) of Section 5 hereof.
"Redemption Date," with respect to Series B Preferred Shares for
which there is a Proposed Redemption Date, shall be the same day as the
Proposed Redemption Date, provided that (i) the Company shall not have
withdrawn its intention to redeem such Series B Preferred Shares pursuant
to paragraph (c) of Section 5 hereof; and (ii) proper provision for the
payment of the Redemption Price to holders of Series B Preferred Shares
being redeemed shall have been made in accordance with paragraph (f) of
Section 5 hereof by the close of business on the Proposed Redemption Date.
"Redemption Price" for each Series B Preferred Share shall be equal
to the Liquidation Preference plus any applicable Early Redemption Premium
plus any amounts payable pursuant to paragraph (e) of Section 5 hereof.
"Reference Date" shall mean, with respect to any particular Dividend
Period, the later of the Issue Date or the date that is, on the last day
of such Dividend Period, the most recent anniversary of the Issue Date.
"Register of Members" shall mean the Register of Members of the
Company.
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"Repurchase Date" shall have the meaning set forth in Section 11(a)
hereof.
"Repurchase Notice" shall have the meaning set forth in Section
11(a) hereof.
"Reuters Screen" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuters
Monitor Money Rates Service (or such other page as may replace that page
on that service for the purpose of displaying rates comparable to LIBOR).
"S&P Credit Rating" shall mean, for any particular day, the risk
rating then assigned to the Series B Preferred Shares (subject to ongoing
surveillance and adjustment) by the Standard & Poor's Division of The
McGraw Hill Companies (or any successor organization or any substitute
rating organization that may be agreed upon in writing by the Company and
the registered holders of more than 50% of the outstanding Series B
Preferred Shares); provided, however, that in the event that no such
rating is assigned or that such rating has not been confirmed within the
previous 364 days, the S&P Credit Rating shall be deemed to be "Unrated."
"Securities Act" shall mean the United States Securities Act of
1933, as amended, and all rules and regulations promulgated thereunder.
"Series B Preferred Shares" shall have the meaning set forth in
Section 1 hereof.
"set apart for payment" shall be deemed to include, without any
action other than the following, the recording by the Company in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to a declaration of dividends or other distribution by the Board,
the allocation of funds to be so paid on any class or series of shares of
the Company's stock; provided, however, that if any funds for any class or
series of Junior Shares or any class or series of shares of the Company's
stock ranking on a parity with the Series B Preferred Shares as to the
payment of dividends or other distributions are placed in a separate
account of the Company or delivered to a disbursing, paying or other
similar agent, then "set apart for payment" with respect to the Series B
Preferred Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Special Conversion Event" shall mean the earlier to occur of a
Change of Control Conversion Event or a Net Worth Conversion Event.
"Special Redemption Event" shall mean the earlier to occur of (i) a
Change of Control Conversion Event or (ii) any date on which the Company
submits to the holders of its Common Shares a proposal for amalgamation,
consolidation, merger, statutory share exchange or any proposal for any
other matter that requires for its validation or effectuation an
affirmative vote of the holders of the Series B Preferred Shares at the
time outstanding, acting as a single class.
"Subsidiary" shall mean, with respect to any Person, any corporation
or other entity (including, without limitation, partnerships, joint
ventures, and associations) regardless of its jurisdiction of organization
or formation, at least a majority of the total
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combined voting power of all classes of voting stock or other ownership
interests of which shall, at the time as of which any determination is
being made, be owned by such Person, either directly or indirectly through
one or more other Subsidiaries.
"Telerate" shall mean, when used in connection with any designated
page and LIBOR, the display page so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service for
the purpose of displaying rates comparable to LIBOR).
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted
for trading on the NYSE, on the principal national securities exchange on
which such securities are listed or admitted, or if not listed or admitted
for trading on any national securities exchange, on the National Market
System of Nasdaq, or if such securities are not quoted on such National
Market System, in the applicable securities market in which the securities
are traded.
"Transfer Agent" shall mean First Chicago Trust Company of New York,
or such other agent or agents of the Company as may be designated by the
Board or its designee as the transfer agent, registrar and dividend
disbursing agent for the Series B Preferred Shares.
"U.S." shall mean the United States of America.
"U.S. Person" shall mean an individual who is a citizen or resident
of the U.S., a corporation, limited liability company or partnership
created or organized under the laws of the U.S. or any state thereof, or
an estate or trust, all of the income of which is includable in gross
income for U.S. federal income tax purposes, regardless of its source.
Section 3. Dividends.
(a) The holders of Series B Preferred Shares shall be entitled to
receive, when, as and if declared by the Board out of funds legally
available for the payment of dividends, cumulative preferential dividends
payable in cash. Such dividends shall begin to accrue and shall be fully
cumulative from the Issue Date, whether or not in any Dividend Period or
Periods there shall be funds of the Company legally available for the
payment of such dividends and whether or not such dividends shall be
declared. Such dividends shall be payable quarterly, when, as and if
declared by the Board, in arrears on Dividend Payment Dates, commencing on
the first Dividend Payment Date after the Issue Date. Each such dividend
shall be payable in arrears to the holders of record of Series B Preferred
Shares, as they appear in the Register of Members at the close of business
on such record dates, not less than 30 nor more than 60 days preceding
such Dividend Payment Dates thereof, as shall be fixed by the Board.
Accrued and unpaid dividends for any past Dividend Periods may be declared
and paid at any time and for such interim periods, without reference to
any regular Dividend Payment Date, to holders of record on such date, not
less than 30 nor more than 60 days preceding the payment date thereof, as
may be fixed by the Board. Any dividend payment made on Series B Preferred
Shares
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shall first be credited against the earliest accrued but unpaid dividend
due with respect to Series B Preferred Shares which remains payable.
(b) The amount of dividends per share payable for each full Dividend
Period shall be computed by dividing the Applicable Rate for such Dividend
Period by four and multiplying the result by the Liquidation Preference.
The amount of dividends per share payable for the initial Dividend Period,
or any other period shorter than a full Dividend Period, shall be computed
by dividing the Applicable Rate by 360 and multiplying the result by the
number of days in such Dividend Period (computed on the basis of twelve
30-day months) and then multiplying the latter result by the Liquidation
Preference. Holders of Series B Preferred Shares shall not be entitled to
any dividends, whether payable in cash, property or stock, in excess of
cumulative dividends, as herein provided, on the Series B Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable
in respect of any dividend payment or payments on the Series B Preferred
Shares that may be in arrears.
(c) So long as any Series B Preferred Shares are outstanding, no
dividends or other distributions, except as described in the immediately
following sentence, shall be declared or paid or set apart for payment on
any class or series of Parity Shares for any period unless full cumulative
dividends have been or contemporaneously are declared and paid or declared
and a sum sufficient for the payment thereof set apart for such payment on
the Series B Preferred Shares for all Dividend Periods terminating on or
prior to the dividend payment date in respect of the dividend or other
distribution on such class or series of Parity Shares. When dividends on
the Series B Preferred Shares are not paid in full or a sum sufficient for
such payment is not set apart for payment, as aforesaid, all dividends
declared upon Series B Preferred Shares and all dividends declared upon
any class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid
on the Series B Preferred Shares and accumulated and unpaid on such Parity
Shares.
(d) So long as any Series B Preferred Shares are outstanding, no
dividends or other distributions (other than dividends or distributions
paid solely in shares of, or options, warrants or rights to subscribe for
or purchase shares of, Fully Junior Shares) shall be declared or paid or
set apart for payment and no other distribution shall be declared or paid
or set apart for payment upon Junior Shares, nor shall any Junior Shares
be redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Shares made for purposes of an
employee incentive or benefit plan of the Company or any Subsidiary of the
Company) for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any Junior Shares) by the
Company, directly or indirectly (except by conversion into or exchange for
Fully Junior Shares), unless in each case (i) the full cumulative
dividends on all outstanding Series B Preferred Shares and any Parity
Shares shall have been or contemporaneously are declared and paid or
declared and set apart for payment for all past Dividend Periods with
respect to the Series B Preferred Shares and all past dividend periods
with respect to such Parity Shares and (ii) sufficient funds shall have
been or contemporaneously are declared and set apart for the payment of
the dividend for the
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current Dividend Period with respect to the Series B Preferred Shares and
the current dividend period with respect to such Parity Shares.
(e) No dividends on Series B Preferred Shares shall be declared by
the Board or paid or set apart for payment by the Company at such time as
the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibit such declaration, payment
or setting apart for payment or provide that such declaration, payment or
setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart shall be
restricted or prohibited by law.
(f) If there shall be any change in the law, regulation or official
directive (whether or not having the force of law) or in the
interpretation by any Bermuda Government authority or court of competent
jurisdiction which imposes on the Company any condition with respect to
the Series B Preferred Shares as a result of which any dividend payment is
required to be reduced, the Company shall give notice to the holders of
Series B Preferred Shares of such event and all such reductions shall be
borne in full by the holders of Series B Preferred Shares (but only to the
extent permitted by law).
Section 4. Liquidation Rights.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, before any dividend payment
or distribution of the assets of the Company (whether capital or surplus)
shall be made or set apart for payment to the holders of Junior Shares,
the holders of the Series B Preferred Shares shall be entitled to receive
the Liquidation Preference for each Series B Preferred Share plus an
amount equal to all dividends (whether or not declared) accrued and unpaid
thereon to the date of final distribution to such holders and such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Company, the assets of the Company, or
proceeds thereof, distributable among the holders of the Series B
Preferred Shares shall be insufficient to pay in full the preferential
amount aforesaid and liquidating payments on any shares of any class or
series of Parity Shares, then such assets, or the proceeds thereof, shall
be distributed among the holders of Series B Preferred Shares and any such
Parity Shares ratably in accordance with the respective amounts that would
be payable on such Series B Preferred Shares and any such Parity Shares if
all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) an amalgamation, consolidation or merger of the Company
with one or more corporations or other entities, (ii) a sale, lease or
conveyance of all or substantially all of the shares of capital stock or
the property or business of the Company or (iii) a statutory share
exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Company.
(b) Subject to the rights of the holders of shares of any series or
class or classes of shares of the Company's stock ranking on a parity with
or prior to the Series B Preferred Shares upon liquidation, dissolution or
winding up, upon any liquidation, dissolution or winding up of the
Company, after payment shall have been made in full to the holders of the
Series B Preferred Shares, as provided in this Section 4, any other
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series or class or classes of Junior Shares shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, according
to their respective numbers of shares, and the holders of the Series B
Preferred Shares shall not be entitled to share therein.
Section 5. Redemption.
(a) Unless a Special Redemption Event shall have occurred, the
Series B Preferred Shares shall not be redeemable prior to the first
anniversary of the Issue Date. At any time and from time to time on or
after such anniversary or at any time after the occurrence of a Special
Redemption Event, the Company may, at its option, with proper notice as
set forth in paragraph (b) of this Section 5, redeem any or all of the
outstanding Series B Preferred Shares, as of a Proposed Redemption Date
specified in the notice to holders, for cash in an amount equal to the
Redemption Price per share, subject to a minimum aggregate Redemption
Price of $10,000,000 for all Series B Preferred Shares to be redeemed
(which minimum shall not apply if the Company elects to redeem all of the
Series B Preferred Shares then outstanding). Notwithstanding anything to
the contrary in this paragraph (a), the Company may provide notice of its
intention to redeem any Series B Preferred Shares prior to the first
anniversary of the Issue Date, so long as the Proposed Redemption Date
specified in such notice is a date on or after the date of such first
anniversary.
(b) In order to effect the redemption of Series B Preferred Shares,
the Company shall provide notice by first-class mail to each holder of
record of Series B Preferred Shares to be redeemed at the address of each
such holder as shown in the Register of Members, not less than 30 nor more
than 90 days prior to the Proposed Redemption Date. Neither the failure to
mail any notice required by this paragraph (b), nor any defect therein or
in the mailing thereof, to any particular holder, shall affect the
sufficiency of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice that was mailed
in the manner herein provided shall be conclusively presumed to have been
duly given on the date when the same would be delivered in the ordinary
course of transmission, whether or not the holder receives the notice.
Each such mailed notice shall state, as appropriate: (1) the Proposed
Redemption Date; (2) the number of Series B Preferred Shares to be
redeemed and, if fewer than all the Series B Preferred Shares held by such
holder are to be redeemed, the number of such shares to be redeemed from
such holder; (3) the Redemption Price; (4) the place or places at which
certificates for such shares are to be surrendered; and (5) that dividends
on the Series B Preferred Shares to be redeemed shall cease to accrue on
such Proposed Redemption Date except as otherwise provided herein.
(c) The Company's election to redeem the Series B Preferred Shares
pursuant to paragraph (a) of this Section 5 shall be fully or partially
revocable, and any notice to holders of Series B Preferred Shares provided
in accordance with paragraph (b) of this Section 5 shall be subject to
revocation or amendment by the Company. In order to effect the revocation
or amendment of such notice, the Company shall provide notice of its
revocation or amendment by first-class mail to holders of record of the
Series B Preferred Shares previously notified of the proposed redemption
at the address of each
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such holder as shown in the Register of Members, not less than three
Business Days prior to the Proposed Redemption Date. Neither the failure
to mail any notice required by this paragraph (c), nor any defect therein
or in the mailing thereof, to any particular holder, shall affect the
sufficiency of the notice with respect to the other holders. Any notice
that was mailed in the manner herein provided shall be conclusively
presumed to have been duly given on the date when the same would be
delivered in the ordinary course of transmission, whether or not the
holder receives the notice. Such notice of revocation or amendment shall
clearly state that: (1) on the Proposed Redemption Date, the Company will
not redeem any of the Series B Preferred Shares, or if notice of partial
revocation, the amended number of Series B Preferred Shares held by such
holder to be redeemed, and the balance of Series B Preferred Shares held
by such holder not being redeemed; and (2) dividends on the Series B
Preferred Shares not being redeemed will continue to accrue on and after
the Proposed Redemption Date without interruption.
(d) If fewer than all outstanding Series B Preferred Shares are to
be redeemed on any Proposed Redemption Date, the shares to be redeemed
(which shall be a whole number) shall be selected by the Company from
outstanding Series B Preferred Shares not previously called for redemption
pro rata (to the extent possible without redeeming fractional shares), by
lot or by any other method determined by the Company in its sole
discretion to be equitable. Notwithstanding anything to the contrary in
this Section 5, unless full cumulative dividends on the Series B Preferred
Shares and any class or series of Parity Shares shall have been declared
and paid or declared and set apart for payment for all past Dividend
Periods and the then current Dividend Period (including such dividend
periods on any Parity Shares), the Series B Preferred Shares and any
Parity Shares may not be redeemed in part under this Section 5, and the
Company may not otherwise purchase or acquire Series B Preferred Shares or
any Parity Shares, otherwise than pursuant to a purchase or exchange offer
made on the same terms to all holders of Series B Preferred Shares and
Parity Shares.
(e) Upon any redemption of Series B Preferred Shares pursuant to
this Section 5, the Company shall pay all accrued and unpaid dividends, if
any, thereon to the Redemption Date, without interest. If the Redemption
Date falls after a dividend payment record date and prior to the
corresponding Dividend Payment Date, then each holder of Series B
Preferred Shares at the close of business on such dividend payment record
date shall be entitled to the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the redemption of such
shares before such Dividend Payment Date or the Company's default in the
payment of the dividend due. Except as provided above, the Company shall
make no payment or allowance for unpaid dividends, whether or not in
arrears, on Series B Preferred Shares called for redemption.
(f) From and after the Redemption Date (unless the Company shall
fail to make available, as hereinafter provided, an amount of cash
necessary to effect such redemption), (i) except as otherwise provided
herein, dividends shall cease to accrue on the Series B Preferred Shares
being redeemed; (ii) such shares shall no longer be deemed to be
outstanding; (iii) all rights of the holders thereof as holders of Series
B Preferred Shares of the Company shall cease (except the right to receive
cash payable upon such redemption, without interest thereon, upon
surrender and endorsement of their certificates
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if so required and to receive any dividends payable thereon); and (iv) any
officer of the Company shall be entitled, on behalf of such holder and as
its attorney-in-fact, to execute and deliver any and all documents as may
be necessary to effect such redemption. The Company's obligation to
provide cash in accordance with the preceding sentence shall be deemed
fulfilled if, on or before the Redemption Date, the Company shall deposit
with a bank or trust company (which may be an affiliate of the Company)
that has an office in London, England, and that has, or is an affiliate of
a bank or trust company that has, capital and surplus of at least
$50,000,000, funds necessary for such redemption, in trust, with
irrevocable instructions that such cash be applied to the redemption of
the Series B Preferred Shares surrendered for redemption. No interest
shall accrue for the benefit of the holders of Series B Preferred Shares
to be redeemed on any cash so set aside by the Company. Subject to
applicable escheat laws, any such cash unclaimed at the end of two years
from the Redemption Date shall revert to the general funds of the Company,
after which reversion the holders of such shares so called for redemption
shall look only to the general funds of the Company for the payment of
such cash.
(g) On or before the Redemption Date, the holders of each Series B
Preferred Share being redeemed shall surrender the certificate
representing such share, duly endorsed or assigned to the Company or in
blank, at the office of the Transfer Agent. As promptly as practicable
after such surrender, such shares shall be exchanged for any cash (without
interest thereon) for which such shares are being redeemed. If fewer than
all the Series B Preferred Shares represented by any certificate are being
redeemed, then new certificates representing the unredeemed shares shall
be issued without cost to the holder thereof.
Section 6. Conversion.
(a) Unless a Special Conversion Event shall have occurred, the
Series B Preferred Shares shall not be convertible into any other
securities prior to the fifth anniversary of the Issue Date. At any time
and from time to time on or after such anniversary or at any time after
the occurrence of a Special Conversion Event, any holder of Series B
Preferred Shares shall have the right, at its option, on the terms and
subject to the conditions set forth in this Section 6, to cause any or all
of such shares to be converted, as of the Proposed Conversion Date
specified in such holder's notice to the Company given pursuant to
paragraph (b) of this Section 6, into the number of fully paid and
non-assessable Common Shares obtained by dividing the aggregate
Liquidation Preference of such shares by the Conversion Price. Any
conversion hereunder shall take the form of a redemption of the Series B
Preferred Shares to be converted at the Conversion Price followed by the
issue of Common Shares paid for with the proceeds of the said redemption
applied in accordance with this Section 6. The minimum number of Series B
Preferred Shares for which conversion may be elected shall be 10,000, or
such lesser number which constitutes all of the outstanding Series B
Preferred Shares held by such holder. Notwithstanding anything to the
contrary in this paragraph (a), a holder of Series B Preferred Shares may
provide notice of its intention to convert any or all of such shares prior
to the fifth anniversary of the Issue Date, so long as the Proposed
Conversion Date specified in such notice is a date after the date of such
fifth anniversary. At any and
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all times, a conversion hereunder is subject to the Company being able to
comply with applicable provisions of Bermuda law.
(b) In order to effect the conversion of Series B Preferred Shares,
the holder of such shares shall provide notice to the Company not less
than 60 Trading Days prior to the Proposed Conversion Date. Such notice
must be provided by first-class, registered mail, postage prepaid, to the
Company at its principal executive offices. Each such notice shall state,
as appropriate: (1) the Proposed Conversion Date; (2) the number of Series
B Preferred Shares (which must be a whole number of shares) to be
converted; (3) the name or names in which such holder wishes the
certificate or certificates for Common Shares and for any Series B
Preferred Shares not to be so converted to be issued and the address to
which such holder wishes delivery to be made of the new certificates to be
issued upon conversion; (4) if applicable, a statement setting forth the
facts and circumstances under which the holder believes that a Special
Conversion Event has occurred; and (5) an acknowledgment that the shares
to be converted remain subject to the Company's right of redemption in
accordance with Section 5 hereof.
(c) The right of any holder of Series B Preferred Shares electing to
convert the Series B Preferred Shares pursuant to paragraph (a) of this
Section 6 shall be fully or partially revocable, and any notice to the
Company provided in accordance with paragraph (b) of this Section 6 shall
be subject to revocation or amendment by the holder of the shares to which
such notice relates. In order to effect the revocation or amendment of
such notice, the holder shall provide notice to the Company of its
revocation or amendment not less than three Business Days prior to the
Proposed Conversion Date. Such notice must be given by first-class,
registered mail, postage prepaid, to the Company at its principal
executive offices and must clearly state that the holder of such Series B
Preferred Shares will not convert any of such shares, or if notice of
partial revocation, the amended number of Series B Preferred Shares held
by such holder that are to be converted.
(d) Notwithstanding paragraph (a) of this Section 6, no Series B
Preferred Shares shall be converted on or after the close of business on
any Redemption Date for which notice has been given in accordance with
Section 5 hereof. The Company's right to redeem any or all outstanding
Series B Preferred Shares on or prior to any Proposed Conversion Date
shall supersede any holder's right of conversion under this Section 6,
whether or not such holder's notice of conversion was properly delivered
prior to the Company's notice to redeem, so long as the Company's notice
to redeem was given in accordance with Section 5 hereof at least 30 days
prior to the Proposed Conversion Date.
(e) In order to consummate the conversion of Series B Preferred
Shares, the holder of each share to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the
Company or in blank, at the office of the Transfer Agent, accompanied by a
copy of the written notice of conversion previously provided to the
Company in accordance with paragraph (b) of this Section 6, on or before
the Conversion Date.
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(i) Unless the shares issuable on conversion are to be issued
in the same name as the name in which such Series B Preferred Share
is registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Company, duly executed by the holder or such holder's duly
authorized attorney and an amount sufficient to pay any transfer or
similar tax (or evidence reasonably satisfactory to the Company
demonstrating that such taxes have been paid).
(ii) Holders of Series B Preferred Shares at the close of
business on a dividend payment record date shall be entitled to
receive the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the conversion thereof
following such dividend payment record date and prior to such
Dividend Payment Date. However, Series B Preferred Shares
surrendered for conversion during the period between the close of
business on any dividend payment record date and the opening of
business on the corresponding Dividend Payment Date must be
accompanied by payment of an amount equal to the dividend payable on
such shares on such Dividend Payment Date. A holder of Series B
Preferred Shares on a dividend payment record date who (or whose
transferee) tenders any such shares for conversion into Common
Shares on the corresponding Dividend Payment Date will receive the
dividend payable by the Company on such Series B Preferred Shares on
such date, and the converting holder need not include payment of the
amount of such dividend upon surrender of Series B Preferred Shares
for conversion. Except as provided above, the Company shall make no
payment or allowance for unpaid dividends, whether or not in
arrears, on converted shares or for dividends on the Common Shares
issued upon such conversion.
(f) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the Conversion Date, and the
Person or Persons in whose name or names any certificate or certificates
for Common Shares shall be issuable upon such conversion shall be deemed
to have become the holder or holders of record of the shares represented
thereby at such time on such date, unless the Register of Members shall be
closed on that date, in which event such Person or Persons shall be deemed
to have become such holder or holders of record at the close of business
on the next succeeding day on which the Register of Members is open, but
such conversion shall be at the Conversion Price in effect on the
Conversion Date.
(g) As soon as practicable after the Conversion Date, provided that
the certificate or certificates for Series B Preferred Shares shall have
been surrendered in accordance with paragraph (e) of this Section 6:
(i) the Company shall issue and send by first-class mail,
postage prepaid, to the holder thereof or to such holder's designee,
at the address designated by such holder in the notice of conversion
provided pursuant to paragraph (b) of this Section 6, a certificate
or certificates for the number of full Common Shares issuable in
accordance with paragraph (a) of this Section 6 upon the conversion
of the number of Series B Preferred Shares specified in such notice
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(excluding any fractional interest in a Common Share arising upon
such conversion);
(ii) instead of issuing any fractional shares or scrip
representing any fractional interest in a Common Share that would
otherwise be deliverable upon the conversion of a Series B Preferred
Share, the Company shall pay to the holder of such share an amount
in cash based upon the Current Market Price of Common Shares on the
Trading Day immediately preceding the Conversion Date; provided,
however, that if more than one share shall be surrendered for
conversion at one time by the same holder, the number of full Common
Shares issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Series B Preferred Shares so
surrendered; and
(iii) in case there shall have been surrendered a certificate
or certificates representing Series B Preferred Shares only part of
which are to be converted, the Company shall also issue and mail to
such holder or such holder's designee a new certificate or
certificates for the number of Series B Preferred Shares which shall
not have been converted.
(h) The Company will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of
Common Shares or other securities or property on conversion of the Series
B Preferred Shares pursuant hereto; provided, however, that the Company
shall not be required to pay any tax that may be payable in respect of any
transfer involved in the issue or delivery of Common Shares or other
securities or property in a name other than that of the holder of the
Series B Preferred Shares to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue or
delivery has paid to the Company the amount of any such tax or
established, to the reasonable satisfaction of the Company, that such tax
has been paid.
(i) The Company covenants that it shall at all times reserve and
keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Shares, for the purpose of effecting
conversion of the Series B Preferred Shares, the full number of Common
Shares deliverable upon the conversion of all outstanding Series B
Preferred Shares not theretofore converted. For purposes of this paragraph
(i), the number of Common Shares that shall be deliverable upon the
conversion of all outstanding Series B Preferred Shares shall be computed
as if at the time of computation all such outstanding shares were held by
a single holder. The Company covenants that any Common Shares issued upon
conversion of the Series B Preferred Shares shall be legally issued, fully
paid and non-assessable. Prior to the delivery of any Common Shares that
the Company shall be obligated to deliver upon conversion of the Series B
Preferred Shares, the Company shall endeavor to comply with all laws and
regulations applicable to such conversion, including without limitation
the approval of any applicable insurance regulatory body or agency and the
approval of any filing or application required under applicable securities
laws (whether of Bermuda, the United States, any state of the United
States or any other applicable jurisdiction).
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(j) If any capital reorganization or reclassification of the capital
stock of the Company, or any amalgamation, consolidation or merger of the
Company with one or more corporations or other entities, or the sale of
all or substantially all of the Company's assets to one or more
corporations or other entities, or any other transaction, shall be
effected in such a way that holders of Common Shares shall be entitled to
receive stock, securities or assets with respect to or in exchange for
Common Shares, then, as a condition of such reorganization,
reclassification, amalgamation, consolidation, merger, sale, or other
transaction, lawful and adequate provisions (in form authorized and
approved by the Board) shall be made whereby each holder of any Series B
Preferred Shares shall thereafter have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of
the Common Shares immediately theretofore receivable upon the conversion
of such Series B Preferred Shares, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a
number of Common Shares equal to the number of Common Shares immediately
theretofore so receivable had such reorganization, reclassification,
amalgamation, consolidation, merger, sale, or other transaction not taken
place, and in any such case appropriate provision shall be made with
respect to the rights and interests of such holder to the end that the
provisions hereof shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.
(i) If applicable, the Company shall reserve as provided by
paragraph (i) of this Section 6 such shares of common stock, other
capital stock or other securities of the Company as may be issuable
upon conversion of Series B Preferred Shares as provided by this
Section 6 and shall comply with the other requirements of paragraph
(i) of this Section 6 in respect of such shares or other securities
so as to permit their issuance to holders of Series B Preferred
Shares upon conversion thereof.
(ii) The Company covenants that it will not effect any such
amalgamation, consolidation or merger, or any sale of all or
substantially all of its assets or properties, unless either (A)
prior to the consummation thereof the successor corporation or other
entity (if other than the Company) resulting from such amalgamation,
consolidation or merger or the corporation or other entity
purchasing such assets shall assume, by written instrument (in form
authorized and approved by the Board) executed and mailed or
delivered to each holder of Series B Preferred Shares at the address
of each such holder as shown in the Register of Members, the
obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive or (B) all of the
outstanding Series B Preferred Shares shall have been redeemed by
the Company pursuant to Section 5 hereof.
Section 7. Shares To Be Retired. All Series B Preferred Shares which
shall have been issued and reacquired in any manner by the Company,
including without limitation by redemption in accordance with Section 5
hereof or by conversion in accordance with Section 6 hereof, shall be
restored to the status of authorized but unissued shares of the Company's
stock, without designation as to class or series.
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Section 8. Ranking. Any class or series of shares of the Company's
stock shall be deemed to rank:
(a) prior to the Series B Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, if the holders of such class or series
shall be entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as the
case may be, in preference or priority to the holders of Series B
Preferred Shares;
(b) on a parity with the Series B Preferred Shares, as to the
payment of dividends and as to distribution of assets upon
liquidation, dissolution or winding up, if such class or series
shall be Parity Shares;
(c) junior to the Series B Preferred Shares, as to the payment
of dividends or as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Junior
Shares; and
(d) junior to the Series B Preferred Shares, as to the payment
of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, if such class or series shall be Fully
Junior Shares.
Section 9. Voting Rights.
(a) Except as otherwise provided in this Section 9 and as otherwise
required by law, holders of the Series B Preferred Shares shall have no
voting rights; provided, however, that each holder of Series B Preferred
Shares shall be entitled to notice of all shareholders' meetings at the
same time and in the same manner as notice is given to the shareholders
entitled to vote at such meetings and shall have the right to attend such
meetings.
(b) So long as any Series B Preferred Shares are outstanding, in
addition to any other vote or consent of shareholders required by law or
by the Company's Bye-Laws, as amended, the affirmative vote of the holders
of at least 75% of the Series B Preferred Shares at the time outstanding,
acting as a single class, given either in writing without a meeting or by
vote in person or by proxy at any meeting called for the purpose, shall be
necessary for effecting or validating:
(i) Any amendment, alteration or repeal of any of the
provisions of the Company's Memorandum of Association, Bye-Laws or
this Certificate of Designation that would vary the rights,
preferences or voting powers of the holders of the Series B
Preferred Shares;
(ii) An amalgamation, consolidation, merger or statutory share
exchange that affects the Series B Preferred Shares, unless in each
such case each Series B Preferred Share shall either (A) remain
outstanding with no variation in its rights, preferences or voting
powers or (B) be converted into or exchanged for
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preferred shares of the surviving entity having rights, preferences
and voting powers identical to that of a Series B Preferred Share;
(iii) The authorization, creation or any increase in the
authorized amount of, any shares of any class or series or any
security convertible into shares of any class or series ranking
prior to the Series B Preferred Shares in the payment of dividends
or the distribution of assets on any liquidation, dissolution or
winding up of the Company; or
(iv) Any other transaction or action which would amount to a
variation of the rights, preferences or voting powers of the holders
of the Series B Preferred Shares;
provided, however, that any action to authorize or create or to increase
the authorized amount of, any Fully Junior Shares or Parity Shares shall
not be deemed to vary the rights, preferences or voting powers of the
holders of Series B Preferred Shares; and provided, further, that no such
vote of the holders of Series B Preferred Shares shall be required if,
prior to the time when any of the foregoing actions is to take effect, all
outstanding Series B Preferred Shares shall have been redeemed.
(c) The holders of the Series B Preferred Shares shall not be
entitled to vote on any sale of all or substantially all of the assets of
the Company.
(d) For purposes of any vote by the holders of the Series B
Preferred Shares pursuant to the foregoing provisions of this Section 9,
each Series B Preferred Share shall have one (1) vote per share. Except as
otherwise required by applicable law or as set forth herein, the Series B
Preferred Shares shall not have any other voting rights or powers, and the
consent of the holders thereof shall not be required for the taking of any
action by the Company.
Section 10. Transferability. The Series B Preferred Shares shall be
freely transferable subject to the following restrictions:
(a) all transfers shall comply with the Company's Bye-Laws, as
amended;
(b) all transfers shall comply with all applicable laws and
regulations, including without limitation the need for the approval
of the Bermuda Monetary Authority, the approval of any applicable
insurance regulatory body or agency and the approval of any filing
or application required under applicable securities laws (whether of
Bermuda, the United States, any state of the United States or any
other applicable jurisdiction), it being understood that with
respect to any proposed transfer of more than one-third of the
outstanding Series B Preferred Shares, the Company will use
commercially reasonable efforts to cooperate with reasonable
requests to seek to obtain any required approval of the Bermuda
Monetary Authority or any applicable insurance regulatory body or
agency; and
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(c) all transfers of Series B Preferred Shares during the
first six (6) months following issuance of such Series B Preferred
Shares (other than a transfer to an Affiliate of European
Reinsurance Company of Zurich) shall require the prior written
consent of the Company, which consent shall not be unreasonably
withheld.
Section 11. Limitation on Ownership.
(a) Limitation. Notwithstanding any other provision of the terms of
the Series B Preferred Shares, except as provided in Section 11(b), no
U.S. Person shall at any time directly or indirectly acquire ownership of
more than 9.9% of the outstanding Series B Preferred Shares. Any Series B
Preferred Shares owned by a U.S. Person in excess of such 9.9% shall be
deemed "Excess Preferred Shares." Within 10 days of becoming aware of the
existence of Excess Preferred Shares (whether by notice on Schedule 13D or
otherwise), the Company shall initiate the repurchase of any and all
Excess Preferred Shares by giving notice of repurchase (the "Repurchase
Notice") to the holder or holders thereof, unless, prior to the giving of
such Repurchase Notice the holder shall have disposed of its ownership in
the Excess Preferred Shares. The Repurchase Notice shall set forth the
number of Series B Preferred Shares constituting Excess Preferred Shares,
the repurchase price and the place and date of the closing at which the
certificates representing such Excess Preferred Shares are to be
surrendered and the repurchase price paid. The closing date shall be no
more than 10 days after the date on which the Company mails the Repurchase
Notice by first-class mail (such date of mailing hereinafter referred to
as the "Repurchase Date"). The Company will be entitled to assign its
repurchase right to a third party or parties, who may be other
shareholders of the Company, with the consent of any such assignee(s). The
Company may revoke the Repurchase Notice at any time before it (or its
assignee) pays for the Series B Preferred Shares. Neither the Company nor
its assignee(s) shall be obliged to give general notice to the Company's
shareholders of any intention to repurchase or the conclusion of any
repurchase of Series B Preferred Shares. The repurchase price of each
Excess Preferred Share called for such repurchase shall be the greater of
(x) the average Current Market Price for the Series B Preferred Shares for
the 30 consecutive Trading Days immediately preceding the Repurchase Date
or (y) the par value of a Series B Preferred Share. From and after the
Repurchase Date (i) except as otherwise provided herein, dividends on the
Series B Preferred Shares so called for repurchase shall cease to accrue;
(ii) such shares shall no longer be deemed to be outstanding; (iii) all
rights of the holders thereof as holders of Series B Preferred Shares of
the Company shall cease (except the right to receive cash payable upon
such repurchase, without interest thereon, upon surrender and endorsement
of their certificates if so required and to receive any dividends payable
thereon); and (iv) any officer of the Company shall be entitled, on behalf
of such holder and as its attorney-in-fact, to execute and deliver any and
all documents as may be necessary to effect such repurchase. Nothing in
this Section 11(a) shall preclude the settlement of any transaction
entered into through the facilities of the New York Stock Exchange.
(b) Exemptions. The limitation on ownership set forth in Section
11(a) shall not apply to the acquisition of Series B Preferred Shares by
an underwriter in a public
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offering of Series B Preferred Shares. The Board, in its sole and absolute
discretion, may exempt from the ownership limitation set forth in Section
11(a) certain designated Series B Preferred Shares owned by a U.S. Person
who has provided the Board with evidence and assurances acceptable to the
Board that ownership of such shares will cause no adverse tax, legal or
regulatory consequences to the Company, any of the Company's Subsidiaries
or any of the Company's shareholders.
Section 12. Record Holders. The Company and the Transfer Agent may
deem and treat the record holder of any Series B Preferred Shares, as the
same appears in the Register of Members, as the true and lawful owner
thereof for all purposes, and neither the Company nor the Transfer Agent
shall be affected by any notice to the contrary. Payments in respect of
Series B Preferred Shares shall be sent to the holders thereof at their
address most recently noted on the Register of Members and, in the case of
joint holders of Series B Preferred Shares, may be made to all such joint
holders but sent to that one of the joint holders of Series B Preferred
Shares who is first named in the Register of Members at his address most
recently noted in the Register of Members or shall be made payable to such
Person or Persons and sent to such address as all the joint holders of
such Series B Preferred Shares may in writing direct. Cheques in payment
of any obligation of the Company to holders of Series B Preferred Shares
shall be sent by first-class mail at the risk of the holder of the Series
B Preferred Shares, and due payment of a cheque shall be full satisfaction
of the obligation represented thereby notwithstanding any notice which the
Company may have whether express or otherwise of any right, title or
interest or claim of any other Person to or in such Series B Preferred
Shares.
Section 13. Sinking Fund. The Series B Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.
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This Certificate of Designation, Preferences and Rights of Series B
Cumulative Convertible Perpetual Preferred Shares of Trenwick Group Ltd.,
signed this 6th day of September, 2002.
TRENWICK GROUP LTD.
By: /s/ Paul Feldsher
---------------------------------
Name: Paul Feldsher
Title: Executive Vice President and
Chief Underwriting Officer
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