1
EXHIBIT 25
--------------------------------------------------------------------------------
RIGHTS AGREEMENT
Dated as of February 19, 1998
Between
AMERICAN BANKERS INSURANCE GROUP, INC.
And
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
As Rights Agent
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Section 1. Certain Definitions ................................................ 2
Section 2. Appointment of Rights Agent ........................................ 8
Section 3. Issue of Rights Certificates ....................................... 9
Section 4. Form of Rights Certificates ........................................ 12
Section 5. Countersignature and Registration .................................. 13
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates ........... 14
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights ...... 15
Section 8. Cancellation and Destruction of Rights Certificates ................ 18
Section 9. Reservation and Availability of Capital Stock ...................... 19
Section 10. Preferred Stock Record Date ........................................ 21
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights .......................................................... 22
Section 12. Certificate of Adjusted Purchase Price or Number of Shares ......... 40
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power ...................................................... 40
Section 14. Fractional Rights and Fractional Shares ............................ 46
Section 15. Rights of Action ................................................... 48
Section 16. Agreement of Rights Holders ........................................ 49
Section 17. Rights Certificate Holder Not Deemed a Shareholder ................. 50
3
Section 18. Concerning the Rights Agent ........................................ 50
Section 19. Merger or Consolidation or Change of Name of Rights Agent .......... 51
Section 20. Duties of Rights Agent ............................................. 52
Section 21. Change of Rights Agent ............................................. 55
Section 22. Issuance of New Rights Certificates ................................ 56
Section 23. Redemption and Termination ......................................... 57
Section 24. Notice of Certain Events ........................................... 59
Section 25. Notices ............................................................ 60
Section 26. Supplements and Amendments ......................................... 61
Section 27. Exchange ........................................................... 62
Section 28. Successors ......................................................... 64
Section 29. Determinations and Actions by the Board of Directors, etc. ......... 64
Section 30. Benefits of this Agreement ......................................... 65
Section 31. Severability ....................................................... 66
Section 32. Governing Law ...................................................... 66
Section 33. Counterparts ....................................................... 66
Section 34. Descriptive Headings ............................................... 67
Section 35. Effective Date ..................................................... 67
EXHIBIT A Form of Certificate of Designation ............................ A-1
EXHIBIT B Form of Rights Certificate .................................... B-1
ii
4
EXHIBIT C Summary of Rights to Purchase Series C Participating Preferred
Stock ......................................................... C-1
iii
5
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 19, 1998 (this "Agreement"),
between American Bankers Insurance Group, Inc., a Florida corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New York banking
corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 19, 1998 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one right (a "Right") for each share of common stock, par value
$1.00 per share, of the Company (the "Common Stock") outstanding at the close
of business on March 10, 1998 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted pursuant to
the provisions of Section 11(p) hereof) for each share of Common Stock of the
Company issued between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date, with each Right
initially representing the right to purchase one one-hundredth (1/100) of a
share of Series C Participating Preferred Stock of the Company having the
rights, powers and preferences set forth in the form of Certificate of
Designation of Series C Participating Preferred Stock attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors desires that this Agreement be effective
immediately upon the expiration of the Series A Participating Preferred Stock
Purchase Rights (the "Series A Purchase Rights") issued pursuant to the Rights
Agreement dated as of February 24, 1988, as amended and restated as of November
14, 1990, and as further amended on December 19, 1997 and February 5, 1998,
between the Company and ChaseMellon Shareholder Services, L.L.C., as successor
Rights Agent.
6
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
fifteen percent (15%) or more of the shares of Common Stock then outstanding,
but shall not include the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan. Notwithstanding anything to the contrary contained
herein, American International Group, Inc. ("AIG"), AIGF, Inc., a wholly-owned
subsidiary of AIG ("AIGF"), or any of their Affiliates shall not be deemed to be
an Acquiring Person for any purpose of this Agreement solely by reason of the
execution, delivery or consummation of the transactions contemplated by the
Agreement and Plan of Merger dated as of December 21, 1997, as amended and
restated as of January 7, 1998, and as amended by Amendment No. 1 thereto dated
as of January 28, 1998, among the Company, AIG and AIGF (the "Merger
Agreement"), the Stock Option Agreement dated as of December 21, 1997, between
the Company and AIG (the "Stock Option Agreement") and the Voting Agreement
dated as of December 21, 1997, among AIG and certain stockholders of the Company
(the "Voting Agreement"); provided, however, that AIG, AIGF or any of their
Affiliates shall be deemed to be an Acquiring Person if any of them acquire
Beneficial Ownership of any shares of Common Stock other than pursuant to the
Merger Agreement, Stock Option Agreement, or Voting Agreement.
2
7
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule l2b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulation under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under
3
8
this subparagraph (ii) as a result of an agreement, arrangement or understanding
to vote such security if such agreement, arrangement or understanding: (A)
arises solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and (B)
is not also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person (or any of
such Person's Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
provision to subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company; provided, however, that nothing in this paragraph (c)
shall cause a person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition;
(iv) notwithstanding anything herein to the contrary, AIG, AIGF or any of
their Affiliates shall not be deemed to be a Beneficial Owner for any purpose of
this Agreement of any shares of Common Stock acquired or to be acquired pursuant
to the execution, delivery or consummation of the transactions contemplated by
the Merger Agreement, the Voting Agreement or the Stock Option Agreement,
including without limitation the granting of an irrevocable proxy pursuant to
the Stock Option Agreement, but shall be deemed to be the Beneficial Owner of
any shares of Common
4
9
Stock acquired otherwise than pursuant to the Merger Agreement, Stock
Option Agreement, or Voting Agreement.
(d) "Book Value" when used with reference to Common Stock issued by any
Person shall mean the amount of equity of such Person applicable to each share
of Common Stock, determined (i) in accordance with generally accepted accounting
principles in effect of the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a Section 13 Event and (iii) after giving effect to
(A) the exercise of all rights, options and warrants to purchase shares of such
Common Stock (other than the Rights), and the conversion of all securities
convertible into shares of such Common Stock, at an exercise or conversion
price, per share of Common Stock, which is less than such Book Value before
giving effect to such exercise or conversion, (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action prior to the date as of which such Book
Value is to be determined which would have the effect of thereafter reducing
such Book Value.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Cendant Offer" shall mean the tender offer by Season Acquisition
Corp., a New Jersey corporation and a wholly-owned subsidiary of Cendant
Corporation, a Delaware corporation, to purchase fifty-one percent (51%) of the
Common Stock of the Company, including the Series A Purchase Rights, as
disclosed in the Tender Offer Statement on Schedule 14D-1, dated January 27,
1998, filed by Season Acquisition Corp. and Cendant
5
10
Corporation with the Securities and Exchange Commission, upon the terms and
subject to the conditions set forth in the Offer of Purchase, dated January 27,
1998, and the related Letter of Transmittal, together with any amendments or
supplements thereto.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.
(h) "Common Stock" shall mean the common stock, par value $1.00 per share,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(i) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company (while such Person is a member of the Board) who is not
an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
who was a member of the Board prior to the time that any Person became an
Acquiring Person, or (ii) any member of the Board (while such Person is a member
of the Board) who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and who became a member of the Board subsequent to the
time that any Person became an Acquiring Person, if such Person's nomination for
election or election to the Board was recommended or approved by a majority of
the Continuing Directors.
(j) "Disinterested Director" shall mean, with respect to any matter or
transaction then being considered by the Board of Directors, any member of the
Board of Directors who is not a party to, or otherwise has no direct or indirect
financial interest in, such matter or transaction.
6
11
(k) "Effective Date" shall mean the Close of Business on March 10, 1998.
(1) "Major Part" when used with reference to the assets of the Company and
its Subsidiaries as of any date shall mean assets (i) having a fair market value
aggregating 50% or more of the total fair market value of all the assets of the
Company and its Subsidiaries (taken as a whole) as of the date in question, (ii)
accounting for 50% or more of the total value (net of depreciation and
amortization) of all the assets of the Company and its Subsidiaries (taken as a
whole), as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (iii)
accounting for 50% or more of the total amount of net income of the Company and
its Subsidiaries (taken as a whole), as would be shown on a consolidated or
combined statement of income of the Company and its Subsidiaries for the period
of twelve (12) months ending on the last day of the Company's monthly accounting
period next preceding the date in question, prepared in accordance with
generally accepted accounting principles then in effect.
(m) "Person" shall mean any individual, firm, corporation, partnership or
other entity.
(n) "Preferred Stock" shall mean shares of Series C Participating
Preferred Stock, no par value, of the Company.
(o) "Principal Party" shall mean the Surviving Person in a Section 13
Event; provided, however, that if such Surviving Person is a direct or indirect
Subsidiary of any other Person, "Principal Party" shall mean the Person which is
the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
(p) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) (A), (B), (C) or (D) hereof.
7
12
(q) "Section 13 Event" shall mean any event described in clauses (x), (y)
or (z) of Section 13(a) hereof.
(r) "Subsidiary" shall mean, with reference to any Person, any corporation
of which an amount of voting securities to elect at least a majority of the
directors of such corporation is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(s) "Surviving Person" shall mean (1) in case of any transaction specified
in clause (x) or (y) of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation, or (2) the Person to
which the Major Part of the assets of the Company and its Subsidiaries (taken as
a whole) are sold, leased, exchanged or otherwise transferred or disposed of in
a transaction specified in clause (z) of Section 13(a), provided, however, that
if the Major Part of the assets of the Company and its Subsidiaries (taken as a
whole) are sold, leased, exchanged or otherwise transferred or disposed of in
one or more transactions specified in clause (z) of Section 13(a) to more than
one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions, as determined in good faith by
a majority of the Disinterested Directors, with a concurrence of a majority of
the Continuing Directors, voting separately.
(t) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such
8
13
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the Close of Business on the day (or such later date as may be
determined by action of the Board of Directors, upon approval by a majority of
the Continuing Directors) which is the earlier of (i) the tenth (10th) day after
the first date of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such (or, if the tenth (10th) day after such date occurs
before the Record Date, the Close of Business on the Record Date), or (ii) the
tenth (10th) Business Day after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
fifteen percent (15%) or more of the shares of Common Stock then outstanding
(the earlier of (i) and (ii) being herein referred to as the "Distribution
Date") (except that no Distribution Date shall occur until such date as may be
determined by action of the Board of Directors, upon approval by a majority of
the Continuing Directors, as a result of the Cendant Offer), (x) the Rights will
be evidenced (subject to the provisions of paragraph (b) of this Section 3) by
the certificates for the Common Stock registered in the names of the holders of
the Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including
9
14
a transfer to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of Exhibit B
hereto (the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by the Rights Certificates. Notwithstanding
anything herein to the contrary, the date of execution, delivery or consummation
of the transactions contemplated by the Merger Agreement, the Stock Option
Agreement and the Voting Agreement shall not be deemed to be a Distribution Date
for any purpose of this Agreement solely by reason of such execution, delivery
or consummation; provided, however, that any other acquisition of Beneficial
Ownership of Common Stock by AIG, AIGF or any of their Affiliates otherwise than
pursuant to the Merger Agreement, the Stock Option Agreement or the Voting
Agreement shall give rise to a Distribution Date.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form attached hereto as
Exhibit C (the "Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the Record
Date, at the address of such holder then shown on the records of the Company.
With respect to certificates for the Common Stock that was outstanding as of the
Record Date or was issued subsequent to the Record Date, unless and until the
Distribution Date shall occur, the Rights will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date (as such term is defined in Section 7
hereof), the transfer of any
10
15
certificates representing shares of Common Stock shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificates.
(c) Rights shall be issued in respect of all shares of Common Stock which
are issued (whether as an original issuance or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between American
Bankers Insurance Group, Inc. (the "Company") and ChaseMellon Shareholder
Services, L.L.C. (the "Rights Agent") dated as of February 19, 1998, (the
"Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes
an Acquiring Person or any Affiliate or Associate thereof (as such terms
are defined in the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may become null and
void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
11
16
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall each be substantially in
the form set forth in Exhibit B hereto and may have such marks of identification
or designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section II and Section 22 hereof,
the Rights Certificates, whenever initially distributed, shall be dated as of
the Distribution Date and on their face shall entitle the holders thereof to
purchase such number of one one-hundredth (1/100) of a share of Preferred Stock
as shall be set forth therein at the price set forth therein (such exercise
price per one one-hundredth (l/l00) of a share, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Disinterested Directors or
Continuing Directors have determined is part of a plan,
12
17
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
13
18
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer,books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-hundredth (1/100) of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine, or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined, or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
14
19
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination, or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and deliver to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to the total number of one
one-hundredth (1/100) of a share of Preferred Stock (or other securities, cash
or other assets, as the case may be) as to which such surrendered Rights are
then exercisable, at or prior to the earlier of (i) the Close
15
20
of Business on March 10, 2003 (the "Final Expiration Date"), or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the earlier of
(i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth (1/100) of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
seventy-five dollars ($75), and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-hundredth(1/100) of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for such
number of one one-hundredth (1/100) of a share of Preferred Stock as are to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredth (1/100)
of a share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon the order of
the registered
16
21
holder of such Rights Certificates, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other assets pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other assets are available for distribution by the Rights Agent, if and
when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Disinterested Directors or Continuing Directors have determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
17
22
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company,
18
23
destroy such cancelled Rights Certificates, and in such cases shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11
(a)(iii) hereof, a registration statement under the Securities Act of 1933 (the
"1933 Act"), with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) to cause such registration statement to
become effective as soon as practicable after such filing, and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the
19
24
1933 Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, or (B) the date of the expiration of the
Rights. The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the Company shall
determine that a registration statement is required following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights until
such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained, the exercise thereof shall be
permitted under applicable law or a registration statement shall have been
declared effective under applicable law.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-hundredth (1/100) of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a
20
25
number of one one-hundredth (1/100) of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one one-hundredth
(1/100) of a share of Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for a number of one one-hundredth (1/100)
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
SECTION 10. PREFERRED STOCK RECORD DATE.
Each person in whose name any certificate for a number of one one-
hundredth(1/100) of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of such shares
(fractional or otherwise) of Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (fractional or otherwise) on, and such certificate shall be dated, the
next
21
26
succeeding Business Day on which the Preferred Stock (or Common Stock and/or
other securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR NUMBER OF
RIGHTS.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) --
(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then, except
as otherwise provided in this Section 11(a) and Section 7(e) hereof,
the Purchase Price in affect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon
22
27
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the company were open, the holder of such
right would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event of any of the following:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and the Common
Stock of the Company shall remain outstanding and no shares thereof
shall be changed into or exchanged for stock or other securities of the
Company or of any other Person or cash or any other property;
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan), alone or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date, is or becomes the
Beneficial Owner of fifteen percent (15%) or more of the shares of
Common Stock then outstanding, unless the event
23
28
causing the fifteen percent (15%) threshold to be crossed is a transaction set
forth in Section 13(a) hereof;
(C) any Acquiring Person, or any Associate or Affiliate of such
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly,
(1) shall, in one or more transactions, other than in
connection with the exercise of a Right or Rights and other than in
connection with the exercise or conversion of securities exercisable
for or, convertible into securities of the Company or of any Subsidiary
of the Company, transfer any assets or property to the Company or any
of its Subsidiaries in exchange for shares of any class of capital
stock of the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries or otherwise obtain
from the Company or any of its Subsidiaries, with or without
consideration, any additional shares of any class of capital stock of
the Company or any of its Subsidiaries or other securities exercisable
for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries (other than as part of a pro rata
offer or distribution by the Company or such Subsidiary to all holders
of such stock),
(2) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of (in one or more transactions), to,
from or with, as the case may be, the Company or any of its
Subsidiaries, assets (including securities) on terms and conditions
less favorable to the Company or such Subsidiary than the Company or
such Subsidiary
24
29
would be able to obtain in arm's-length negotiation with an
unaffiliated third party,
(3) shall receive any compensation for services from the
Company or from any Subsidiary of the Company other than compensation
for employment as a regular employee, or fees for serving as a
director, at rates in accordance with the Company's (or such
Subsidiary's) past practices, or
(4) shall receive the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance provided by the Company or any of
its Subsidiaries on terms and conditions less favorable to the Company
or such Subsidiary than the Company or such Subsidiary would be able to
obtain in arm's-length negotiation with an unaffiliated third party; or
(D) during any such time after the date of this Agreement as
there is an Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), recapitalization of the Company, any merger
or consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an Acquiring
Person or any Affiliate or Associate of such Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than one percent (1%) the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its Subsidiaries or of securities exercisable for or
convertible into securities of the Company or any of its Subsidiaries which is
25
30
directly or indirectly owned by any Acquiring Person or any Associate
or Affiliate of any Acquiring Person,
then, and in any such case, proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof) shall on or
after the later of (x) the date of the occurrence of a Section 11(a)(ii) Event
or (y) the date of the expiration of the period within which the Rights may be
redeemed pursuant to Section 23 (as the same may have been amended as provided
in Section 26) have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-hundredth (1/100) of a share of Preferred Stock, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredth (1/100) of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (which, following such first occurrence,
shall thereafter be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company by a
majority of the Disinterested Directors, with the concurrence of a majority of
the Continuing Directors, voting separately, shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over
26
31
(2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred stock
which a majority of the Disinterested Directors, with the concurrence of a
majority of the Continuing Directors, voting separately, has deemed to have the
same value as shares of Common Stock (such shares of preferred stock, "common
stock equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the majority of
the Disinterested Directors, with the concurrence of a majority of the
Continuing Directors, voting separately, based upon the advice of a nationally
recognized investment banking firm selected by a majority of the Disinterested
Directors, with the concurrence of a majority of the Continuing Directors,
voting separately; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If a majority of the Disinterested
Directors, with the concurrence of a majority of the Continuing Directors,
voting separately, shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon
27
32
exercise in full of the Rights, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (90) days after
the Section 11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that it
is determined that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company, by a majority of the
Disinterested Directors, with the concurrence of a majority of the Continuing
Directors, voting separately, (x) shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value of any "common
stock equivalent" shall be deemed to have the same value as the Common Stock on
such date.
(iv) If the rules of the national securities exchange, registered as
such pursuant to Section 6 of the Exchange Act, or of the national securities
association, registered as such pursuant to Section 15A of the Exchange Act, on
which the Common Stock is principally traded would prohibit such exchange or
association from listing or continuing to list, or from authorizing for or
continuing quotation
28
33
and/or transaction reporting through an inter-dealer quotation system, the
Common Stock or other equity securities of the Company if the Rights were to be
exercised for shares of Common Stock in accordance with subparagraph (ii) of
this Section 11(a) because such issuance would nullify, restrict or disparately
reduce the per share voting rights of holders of Common Stock, the Company
shall: (A) determine the Spread, and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) equity securities of the Company,
including, without limitation, "common stock equivalents", other than securities
which would have the effect of nullifying, restricting or disparately reducing
the per share voting rights of holders of Common Stock, (3) debt securities of
the Company, (4) other assets, or (5) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of
Directors; provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the Section 11(a)(ii) Trigger Date, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, cash having an aggregate value equal to
the Spread. To the extent that the Company determines that some action need be
taken pursuant to the first sentence of this Section 11(a)(iv), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights, but not longer than ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public
29
34
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section
11(a)(iv), the value of the Common Stock shall be the current market
price (as determined pursuant to Section 11(d) hereof) per share of
the Common Stock on the Section 11(a)(ii)Trigger Date and the value of
any "common stock equivalent" shall be deemed to have the same value as
the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part
30
35
or all of which may be in form other than cash, the value of such consideration
shall be as determined in good faith by a majority of the Disinterested
Directors, with a concurrence of a majority of the Continuing Directors, voting
separately, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current market price (as determined pursuant
to Section 11(d) hereof) per share of Preferred Stock on such record date,
less the fair market value (as determined in good faith by a majority of the
Disinterested Directors, with a concurrence of a majority of the Continuing
Directors, voting separately, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock. Such adjustments shall be made
31
36
successively whenever such a record date is fixed, and in the event that such
distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) --
(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the
current market price per share of the Common Stock is determined during
a period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to the
expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
"current market price" shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to
32
37
securities listed or admitted to trading on the New York Stock Exchange
or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by a majority of the
Disinterested Directors, with a concurrence of a majority of the
Continuing Directors voting separately. If on any such date no market
maker is making a market in the Common Stock, the fair value of such
shares an such date as determined in good faith by the majority of the
Disinterested Directors, with the concurrence of the majority of the
Continuing Directors, voting separately, of the Company shall be used,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of common stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share as determined in good
faith by a majority of the Disinterested Directors, with a concurrence
of a majority of the Continuing Directors,
33
38
voting separately, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
one hundred (100) (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of the Common Stock.
If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, "current market price" per share of the Preferred
Stock shall mean the fair value per share as determined in good faith
by a majority of the Disinterested Directors, with a concurrence of a
majority of the Continuing Directors, voting separately, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of
this Agreement, the "current market price" of one one-hundredth (1/100)
of a share of Preferred Stock shall be equal to the "current market
price" of one (1) share of Preferred Stock divided by one hundred
(100).
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%)in the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken
34
39
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one ten-thousandth
(1/10,000) of a share of Common Stock or other share or one one-millionth
(1/1,000,000) of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years from
the date of the transaction which mandates such adjustment, or (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredth
(1/100) of a share of Preferred Stock purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredth
(1/100) of a share of Preferred Stock (calculated to the nearest
35
40
one millionth) obtained by (i) multiplying (x) the number of one one-hundredth
(1/100) of a share covered by a Right immediately prior to this adjustment, by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-hundredth (1/100) of a share of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of one
one-hundredth (1/100) of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one thousandth (1/1,000)) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment,
36
41
and upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredth (1/100) of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-hundredth (1/100) of a share and the number of one one-hundredth (1/100) of
a share which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of one
one-hundredth (1/100) of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one one-hundredth
(1/100) of a share of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-hundredth (1/100) of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-hundredth (1/100) of a share of Preferred
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided,
37
42
however, that the Company shall deliver to such holder a due ββββ or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Disinterested
Directors, with the concurrence of a majority of the Continuing Directors,
voting separately, shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11 (o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11 (o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, the Major Part of assets of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11 (o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously
38
43
with or immediately after such consolidation, merger or sale, the shareholders
of the Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
39
44
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, on or after the Distribution Date, (x) the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section 11
(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11 (o)
hereof) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, either less than
all of the outstanding shares of Common Stock shall remain outstanding or shares
thereof shall be changed into or exchanged for stock or other securities of the
Company or of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
the Major Part of the assets of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons (other than the Company or any Subsidiary of the
Company
40
45
in one or more transactions each of which complies with Section 11 (o) hereof),
then, and in any such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall on or after the later of (A) the date of the occurrence
of a Section 13 Event, or (B) the date of the expiration of the period
within which the Rights may be redeemed pursuant to Section 23 (as the
same may have been amended as provided in Section 26) shall have the
right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, the
securities specified below:
(1) If the Principal Party in any Section 13 Event
has shares of Common Stock that are as of the date of the
consummation of such Section 13 Event, and have been
continuously during the preceding 12 months, registered under
Section 12 of the Exchange Act ("Registered Common Stock")
outstanding, each Right shall thereafter represent the right
to receive, upon the exercise thereof at the Purchase Price in
accordance with the terms of this Rights Agreement, such
number of shares of Registered Common Stock of such Principal
Party, free and clear of all liens, encumbrances or other
adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number
of one one-hundredth (1/100) of a share of Preferred Stock
for which a Right was exercisable immediately prior to
consummation of such Section 13 Event (or, if a Section 11
(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one
one-hundredth (1/100) of a share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence) and dividing that
product (which, following the first occurrence
41
46
of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement)
by (2) 50% of the current market price of each share of
Registered Common Stock of such Principal Party on the date of
such Section 13 Event.
(2) If the Principal Party in such Section 13 Event
does not have Registered Common Stock outstanding, each Right
shall thereafter represent the right to receive, upon the
exercise thereof at the Purchase Price in accordance with the
terms of this Rights Agreement, at the election of the holder
of such Right at the time of the exercise thereof, either:
(x) such number of shares of Common Stock of
the Surviving Person in such Section 13 Event as
shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the
number of one one-hundredth (1/100) of a share of
Preferred Stock for which a Right was exercisable
immediately prior to the consummation of such Section
13 Event (or, if a Section 11 (a)(ii) Event has
occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such one
one-hundredth (1/100) of a share for which a Right
was exercisable immediately prior to the first
occurrence of a Section 11 (a)(ii) Event by the
Purchase Price in effect immediately prior to such
first occurrence) and dividing that product (which,
following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2)
50% of the Book Value of each share of Common Stock
of such Surviving Person immediately after giving
effect to the Section 13 Event;
42
47
(y) such number of shares of Common Stock of
the Principal Party in such Section 13 Event (if the
Principal Party is not also the Surviving Person in
such Section 13 Event) as shall be equal to the
result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredth
(1/100) of a share of Preferred Stock for which a
Right was exercisable immediately prior to the
consummation of such Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredth (1/100) of a
share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately
prior to such first occurrence) and dividing that
product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all purposes
of this Agreement) by (2) 50% of the Book Value of
each share of Common Stock of the Principal Party
immediately after giving effect to such Section 13
Event; or
(z) if the Principal Party in such Section
13 Event is an Affiliate of one or more Persons which
has Registered Common Stock outstanding, such number
of shares of Registered Common Stock of whichever of
such Affiliates of the Principal Party has Registered
Common Stock with the greatest aggregate market value
on the date of consummation of such Section 13 Event
as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the
number of one one-hundredth (l/100) of a share of
Preferred Stock for which a Right was exercisable
immediately prior to the consummation
43
48
of such Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one
one-hundredth (1/100) of a share for which a Right
was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such
first occurrence) and dividing that product (which,
following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2)
50% of the Market Value of each share of Registered
Common Stock of such Affiliate on the date of such
Section 13 Event;
(ii) All shares of Common Stock of any Person for which any
Right may be exercised after consummation of a Section 13 Event shall,
when issued upon exercise thereof in accordance with this Agreement, be
validly issued, fully paid and nonassessable and free of preemptive
rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof; and
(iii) After consummation of any Section 13 Event (1) each
issuer of Common Stock for which Rights may be exercised as set forth
in paragraph (a) of this Section 13 shall be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement, (2) the term
"Company" shall thereafter be deemed to refer to such issuer, (3) each
such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon the exercise
of the Rights, and
44
49
(4) the number of shares of Common Stock of each such issuer thereafter
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock
contained in sections 7, 9, 10, 11 and 13.
(b) The Company shall not consummate any Section 13 Event unless each
issuer of shares of Common Stock for which Rights may be exercised, as set forth
in Section 13(a), shall have sufficient authorized Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto:
(i) a registration statement under the 1933 Act on an
appropriate form, with respect to the Rights and the Common Stock of
such issuer purchasable upon exercise of the Rights pursuant to Section
13(a) shall be effective under the 1933 Act; and
(ii) the Company and each such issuer shall have: (A) executed
and delivered to the Rights Agent a supplemental agreement providing
for the obligation of such issuer to issue Common Stock upon the
exercise of Rights in accordance with the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that such issuer,
at its own expense, will: (I) use its best efforts to cause a
registration statement under the 1933 Act on an appropriate form, with
respect to the Rights and the securities of such issuer purchasable
upon exercise of the Rights, to remain effective (with a prospectus at
all times meeting the requirements of the 1933 Act) until the
Expiration Date; (II) use its best efforts to qualify or register the
Rights and the securities of such issuer purchasable upon exercise of
the Rights under the blue sky laws of such jurisdictions as may be
necessary or appropriate; and (III) use its best efforts to list (or
continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on each national securities exchange (or other
trading facility) on which the Common Stock was listed prior to the
consummation of the
45
50
Section 13 Event; (B) furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and (C) filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each
Right after the consummation of such Section 13 Event.
(c) In the event a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights that have not been exercised
prior to such time shall thereafter become exercisable solely in the manner set
forth in paragraph (a) of this Section 13.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect
46
51
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading, or if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by a majority of the
Disinterested Directors, with a concurrence of a majority of the Continuing
Directors, voting separately. If on any such date no such market maker is making
a market in the Rights the fair value of the Rights on such date as determined
in good faith by a majority of the Disinterested Directors, with a concurrence
of a majority of the Continuing Directors, voting separately, shall be used, and
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth (1/100) of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
(1/100) of a share of Preferred Stock). In lieu of fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth (1/100) of
a share of Preferred Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
one-hundredth (1/100) of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth (1/100) of a share
of Preferred Stock shall be one one-hundredth (1/100) of the closing price of a
share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
47
52
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be
48
53
entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder of
any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency
49
54
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
one one-hundredth (1/100) of a share of Preferred Stock or any other securities
of the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 24 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith
50
55
or willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any
claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of
51
56
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT.
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, any Vice Chairman, the Chief Executive Officer, the
President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any
52
57
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11
or Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate described in Section 12
hereof setting forth such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or Preferred Stock will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other
53
58
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, any Vice Chairman, the Chief Executive Officer, the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights 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 its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
54
59
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company will bear the expense of
providing notice to each transfer agent of the Common Stock and Preferred Stock
and to the holders of Rights Certificates in the event the Rights Agent or any
successor Rights Agent resigns or is discharged from its duties under this
Agreement. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30) days after giving notice
of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights
55
60
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
the State of New York (or of any other state in the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having a principal office in the State of
New York, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by a majority of
the Disinterested Directors, with the concurrence of a majority of the
Continuing Directors, voting separately, to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other
56
61
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement granted or
awarded as of the Distribution Date, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) A majority of the Disinterested Directors, with the concurrence of
a majority of the Continuing Directors, voting separately, may, at their option,
at any time prior to the earlier of (i) the Close of Business on the tenth
(10th) day following the Distribution Date (as such period may be extended
pursuant to Section 26 hereof), or (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$.01 (one cent) per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that if following the occurrence of the
Distribution Date and following the expiration of the right
57
62
of redemption hereunder but prior to any Triggering Event, (i) a Person who is
an Acquiring Person shall have transferred or otherwise disposed of a number of
shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of ten percent (10%) or less of the outstanding
shares of Common Stock, and (ii) there are no other Persons, immediately
following the occurrence of the event described in clause (i), who are Acquiring
Persons, then the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11 (a)(ii) Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the "current
market price," as defined in Section 11 (d)(i) hereof, of the Common Stock at
the time of redemption) or any other form of consideration deemed appropriate by
the majority of the Disinterested Directors, with the concurrence of a majority
of the Continuing Directors, voting separately.
(b) Immediately upon the action of the majority of the Disinterested
Directors, with the concurrence of a majority of the Continuing Directors,
voting separately, ordering the redemption of the Rights as provided in Section
23(a) herein, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. Promptly after
the action of the majority of the Disinterested Directors, with the concurrence
of a majority of the Continuing Directors, voting separately, ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last
58
63
address as it appears upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11 (o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of the Major Part of the assets of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section 11
(o) hereof), or (v) to effect liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation,
59
64
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier.
(b) In case any Section 11 (a)(ii) Event shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11 (a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
SECTION 25. NOTICES.
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
American Bankers Insurance Group, Inc.
βββββ βββββ βββββ βββββ
βββββ, βββββββ βββββ
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the
60
65
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
βββ ββββ ββββ ββββββ
ββββ βββββ
βββ ββββ, ββ βββββ
Attention: βββ βββββββ
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS.
Prior to the Distribution Date and subject to the penultimate sentence
of this Section 26, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this Section 26, the Company and the Rights Agent shall, if the Company, based
upon a majority of the Disinterested Directors, with the concurrence of a
majority of the Continuing Directors, voting separately, so directs, supplement
or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder
or (iv) to change or supplement the provisions hereunder in any manner which the
Company, based upon a majority of the Disinterested Directors, with the
concurrence of a majority of the Continuing Directors, voting separately, may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of
61
66
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person);provided, however,this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable, or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment, provided that the Rights Agent may,
but shall not be obligated to, enter into any such supplement or amendment which
affects its own rights, duties or immunities under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of one one-hundredth
(1/100) of a share of Preferred Stock for which a Right is exercisable. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 27. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person
62
67
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), together with all Affiliates and Associates of such Person,
becomes Beneficial Owner of more than 50% of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 27 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
that is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights that have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at its
option, may substitute common stock equivalents (as such term is defined in
Section 11(a)(iii) hereof) for some or all of the shares of Common Stock
exchangeable for Rights.
(d) In the event that there shall not be sufficient shares of Common
Stock or common stock equivalents issued but not outstanding or authorized but
unissued to permit
63
68
any exchange of Rights as contemplated in accordance with this Section 27, the
Company shall take all such action as may be necessary to authorize additional
Common Stock or common stock equivalents for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractional shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional Common Stock, the Company shall pay to
the registered holders of the Rights Certificates with regard to which such
fractional Common Stock would otherwise be issued an amount in cash equal to the
same fraction of the current market value of one share of Common Stock. For the
purposes of this subsection (e), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section
27.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors (or when such
power and authority is lodged with the Disinterested Directors and/or the
Continuing Directors under this Agreement, the Disinterested Directors and/or
the
64
69
Continuing Directors, as the case may be) of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement as provided herein). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board (or when such rights and powers are lodged with
the Disinterested Directors and/or the Continuing Directors under this
Agreement, the Disinterested Directors and/or the Continuing Directors, as the
case may be) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board (or the Disinterested Directors and/or the Continuing
Directors, as the case may be) to any liability to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock).
65
70
SECTION 31. SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and a majority of the Disinterested Directors,
with the concurrence of a majority of the Continuing Directors, voting
separately, determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth (10th)
day following the date of such determination by the majority of the
Disinterested Directors, with the concurrence of a majority of the Continuing
Directors, voting separately.
SECTION 32. GOVERNING LAW.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Florida and
for all purposes shall be governed by and construed in accordance with the laws
of such State applicable to contracts made and to be performed entirely within
such State.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
66
71
SECTION 34. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
SECTION 35. EFFECTIVE DATE.
This Agreement shall be effective as of the Effective Date.
67
72
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: AMERICAN BANKERS INSURANCE
GROUP, INC.
/s/ βββ βββββ /s/ ββββββ β. ββββββ
By: ____________________________ By: ____________________________
βββ βββββ ββββββ β. ββββββ
Name: ____________________________ Name: ____________________________
Admin. Asst. President and CEO
Title: ____________________________ Title: ____________________________
ATTEST: CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
/s/ ββββββ βββββ /s/ ββββββ β. βββββββ
By: ____________________________ By: ____________________________
ββββββ βββββ ββββββ β. βββββββ
Name: ____________________________ Name: ____________________________
Assistant Vice President Relationship Manager
Title: ____________________________ Title: ____________________________
68
73
EXHIBIT A
[Form of Certificate of Designation]
We, the undersigned, R. ββββ ββββββ, Chairman of the Board of
Directors, and ββββββ β. ββββββ, Secretary, respectively, of American Bankers
Insurance Group, Inc. (hereinafter called the "Corporation"), a Florida
corporation, DO HEREBY CERTIFY that, at a meeting of the Board of Directors of
the Corporation duly convened and held on February 19, 1998, the following
resolution was duly adopted:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors in accordance with the provisions of the Third Amended and
Restated Articles of Incorporation of the Corporation, as amended (the "Articles
of Incorporation"), the Board of Directors hereby creates a series of shares of
preferred stock, without par value, of the Corporation and hereby fixes the
designation, the number of shares and the relative rights, preferences and
limitations thereof (in addition to the provisions set forth in the Articles of
Incorporation, which are applicable to all series of preferred stock of the
Corporation), as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series C Participating Preferred Stock." The shares constituting
such series shall be without par value. The number of shares constituting such
series shall be 1,000,000.
Section 2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series C Participating Preferred Stock with respect to dividends, the holders
of shares of Series C Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of March, June, September, and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series C Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $3.125 or (b)
subject to the provisions for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value
74
$1.00 per share, of the Corporation, (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series C Participating Preferred Stock. In the event the
Corporation shall at any time after February 19, 1998 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series C Participating Preferred Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series C Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $3.125 per share on
the Series C Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series C Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series C
Participating Preferred Stock, unless (i) the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or (ii) the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of shares of
Series C Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series C Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series C Participating Preferred Stock
entitled to receive payment of a dividend
A-2
75
or distribution declared thereon, which record date shall be no more than 60
days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series C
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series C Participating Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series C
Participating Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided by the Third Amended and Restated
Articles of Incorporation of the Corporation, as may be further amended,
modified, supplemented, restated or superseded from time to time, or by law, the
holders of shares of Series C Participating Preferred Stock and the holders of
shares of Common Stock (and any other capital stock of the Corporation at the
time entitled thereto) shall vote together as one class on all matters submitted
to a vote of shareholders of the Corporation.
(C) Except as set forth herein, holders of Series C Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on a Series C Participating Preferred Stock as provided in Section 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series C Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
A-3
76
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding-up) with the Series C Participating
Preferred Stock, except dividends paid ratably on the Series C
Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Participating
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series C Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series C Participating Preferred Stock, or any shares of stock ranking
on a parity with the Series C Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Re-acquired Shares. Any shares of Series C Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued
A-4
77
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding-Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Participating Preferred Stock unless,
prior thereto, the holders of shares of Series C Participating Preferred Stock
shall have received $100.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment (the "Series C Liquidation Preference"). Following the payment
of the full amount of the Series C Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series C Participating
Preferred Stock unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series C Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in paragraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii) the "Adjustment Number").
Following the payment of the full amount of the Series C Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series C
Participating Preferred Stock and Common Stock, respectively, holders of Series
C Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to one (1) with respect to
such Series C Participating Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series C Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series C Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect
A-5
78
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series C Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series C Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series C Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series C Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Third Amended and Restated Articles of
Incorporation of the Corporation, as may be further amended, modified,
supplemented, restated or superseded from time to time, and any certificate
amendatory thereof or supplemental thereto shall not be amended or further
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series C Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of such
percentage of the outstanding shares of Series C Participating Preferred Stock,
voting separately as a class, as may be required under (i) the Florida General
Corporation Act or (ii) the Third Amended and Restated Articles of Incorporation
of the Corporation, as may be further
A-6
79
amended, modified, supplemented, restated or superseded from time to time,
whichever requires a greater percentage.
Section 11. Fractional Shares. Series C Participating Preferred Stock
may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series C Participating Preferred Stock.
A-7
80
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this --- day of
February, 1998.
----------------------------------------
Chairman of the Board
Attest:
--------------------------------------
Secretary
A-8
81
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- __________________ Rights
NOT EXERCISABLE AFTER MARCH 10, 2003 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE, AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
AMERICAN BANKERS INSURANCE GROUP, INC.
This certifies that _____________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of February 19, 1998 (the "Rights Agreement"),
between American Bankers Insurance Group, Inc., a Florida corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New York banking
corporation (the "Rights Agent"), to purchase from the Company at any time prior
to 5:00 P.M. (New York City time) on March 10, 2003 at the principal office of
the Rights Agent in New York City, New York (or in the principal office of its
successors as Rights Agent), one one-hundredth of a fully paid, nonassessable
share of Series C Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $75 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this
82
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of March 10, 1998, based on the
Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11 (a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person becomes such,
or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11 (a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, cash or other assets
that may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredth of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender
B-2
83
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right, payable in cash, Common Stock or other consideration,
at any time until the earlier of: (i) ten days following the Distribution Date
(as such term is defined in the Rights Agreement), or as such time period may be
extended pursuant to the Rights Agreement, or (ii) the Final Expiration Date (as
such term is defined in the Rights Agreement). After the expiration of the
redemption period, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company or any of its Subsidiaries and there are no other
persons who are Acquiring Persons.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
B-3
84
WITNESS the facsimile signature of the proper officers of the Company and
its Corporate seal.
Dated as of ,19 .
-------------- ---
ATTEST: AMERICAN BANKERS INSURANCE
GROUP, INC.
By: ----------------------------------
--------------------------------
Secretary
Name:
----------------------------------
Title:
----------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
------------------------------
Authorized Signature
B-4
85
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells,
------------------------------------------------
assigns and transfers unto
-----------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
-----------------------------
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ,19
------------------------- -----
---------------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: , 19
------------------------- -----
B-5
86
---------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
B-6
87
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by the
Rights Certificate.)
To: AMERICAN BANKERS INSURANCE GROUP, INC.:
The undersigned hereby irrevocably elects to exercise ________________
__________________________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise of the Rights
(or such other securities, cash or other assets of the Company or of any other
person which may be issuable upon the exercise of the Rights) and requests that
certificates for such shares (or such cash or other assets) be issued in the
name of and delivered to:
Please insert social security or other identifying number______________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number______________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated:__________________, 19___
_______________________________________
B-7
88
Signature
Signature Guaranteed:
B-8
89
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate / / are / / are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
/ / did / / did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:________________________, 19___
___________________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-9
90
EXHIBIT C
[Summary of Rights to Purchase Series C Participating Preferred Stock]
On February 19, 1998, the Company declared a dividend distribution of
one Right (a "Right") for each outstanding share of the Company's Common Stock
to shareholders of record at the close of business on March 10, 1998 (the
"Record Date"). Except as described below, each Right, when exercisable,
entitles the registered holder thereof to purchase from the Company 1/100th of a
share (a "Unit") of Series C Participating Preferred Stock, no par value (the
"Preferred Stock"), at a Purchase Price of $75 per Unit, subject to adjustment.
The terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.
Initially, each Right will be a part of and trade with each share of
Common Stock outstanding. The Rights will separate from the Common Stock and a
Distribution Date will occur on the day (or such later date as may be determined
by action of the Board of Directors, upon approval by a majority of the
Continuing Directors (as such term is defined below)) which is the earlier of
(i) 10 days following a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding shares
of Common Stock, or (ii) 10 business days following the commencement of a tender
offer or exchange offer that would result in a person or group beneficially
owning 15% or more of such outstanding shares of Common Stock. No Distribution
Date shall occur until such date as may be determined by action of the Board of
Directors, upon approval by a majority of the Continuing Directors, as a result
of the Cendant Offer (as such term is defined in the Rights Agreement). Until
the Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates (and no separate Rights certificate will be issued) and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as set forth in the Rights
Agreement and except as otherwise determined by the Board of Directors, only
shares of Common Stock issued prior to the Distribution Date will be issued with
Rights.
91
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on March 10, 2003, unless earlier redeemed or
exchanged by the Company as described below.
If (i) the Company is the surviving corporation in a merger with an
Acquiring Person and the Company's Common Stock remains outstanding and
unchanged, (ii) an Acquiring Person is or becomes the beneficial owner of 15% or
more of the then outstanding shares of the Company's Common Stock, (iii) an
Acquiring Person engages in one or more of "self-dealing" transactions as set
forth in the Rights Agreement, or (iv) there is any recapitalization,
reclassification or similar transaction involving the Company, which has the
effect of increasing by more than 1% an Acquiring Person's proportionate share
of the beneficial ownership of the outstanding shares of any class of equity
securities or securities exercisable for or convertible into equity securities
of the Company or its subsidiaries, then each holder of a Right will thereafter
have the right to receive, upon exercise of the Right, Common Stock or, in
certain circumstances, cash, property or other securities of the Company having
a value equal to two times the Purchase Price of the Right; PROVIDED, HOWEVER,
that the Rights to purchase Common Stock (or cash, property or other securities
of the Company) are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable by
the Company as set forth below or until certain other events occur as set forth
in the Rights Agreement. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
If at any time on or after the Distribution Date (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation (or is the surviving corporation but
the Company's Common Stock is changed or exchanged), or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, then each holder
of a Right (except Rights which previously have been voided as set forth in the
second preceding paragraph) shall thereafter have the right to receive, upon
exercise of the Right, Common Stock of the acquiring entity having a value equal
to two times the Purchase Price of the Right. The events set forth in this
paragraph and in the second preceding paragraph are referred to as the
"Triggering Events." If any acquiring entity does not have Registered Common
Stock (as such term is defined in the Rights Agreement), each Right will entitle
its holder to purchase, for the Purchase Price; at such holder's option, (i) the
number of shares of such entity (or, at such holder's option, of the surviving
corporation in such acquisition, which could be the Company) which, at the time
of the transaction, would have a book value of two times the Purchase Price of
the Right or (ii) if such entity has an affiliate that has Registered Common
Stock, the number of shares of such affiliate which, at the time of the
transaction, would have a market value of two times the Purchase Price of the
Right.
C-2
92
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time after the acquisition by a Person or group of affiliated or
associated Persons of beneficial ownership of 15% or more of the outstanding
Common Stock and prior to the acquisition by such Person or group of 50% of the
outstanding Common Stock, the Board of Directors of the Company may exchange the
Rights (other than the Rights owned by such Person or group that have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
(or of a share of a class of series or the Company's preferred stock having
equivalent rights, preferences and privileges) per Right (subject to
adjustment).
At any time until 10 days following the Distribution Date, the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right,
payable in cash or stock. The redemption period may be extended by the Company
at any time prior to the expiration of such period. After the redemption period
has expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding
shares of Common Stock in a transaction or series of transactions not involving
the Company and there are no other persons who are Acquiring Persons.
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $.01 redemption price. The decision to redeem or to
extend the redemption period shall require the vote of a majority of the
Disinterested Directors, with the concurrence of a majority of the Continuing
Directors voting separately.
The term "Continuing Director" means any member of the Board of
Directors of the Company who was a member of the Board immediately prior to the
time that any person became an Acquiring Person, and any member of the Board
subsequent to the time that any
C-3
93
Person shall become an Acquiring Person if such person is recommended or
approved by a majority of the Continuing Directors, but shall not include an
Acquiring Person, or any representative of such Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Distribution Date. On and after the Distribution
Date, the provisions of the Rights Agreement may be amended by a majority of the
Disinterested Directors, with the concurrence of a majority of the Continuing
Directors voting separately, in order to cure any ambiguity, to make changes in
any manner which the Disinterested Directors and Continuing Directors may deem
necessary or desirable and which does not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; PROVIDED,
HOWEVER, that no amendment to adjust the time period governing redemption shall
be made at any time that the Rights are not redeemable.
The Rights Agreement provides that the Company may not consolidate or
merge with, or sell 50% or more of the Company's assets or earning power to, any
person that has securities or is bound by agreements which would substantially
diminish the benefits of the Rights.
The Rights Agreement provides that notwithstanding anything in the
Rights Agreement to the contrary, neither American International Group, Inc.
("AIG"), AIGF, Inc. ("AIGF") nor any of their Affiliates (as such term is
defined in the Rights Agreement) will be deemed an Acquiring Person solely by
reason of the execution, delivery or consummation of the transactions
contemplated by the Agreement and Plan of Merger, dated as of December 21, 1997,
among the Company, AIG and AIGF, and by certain related agreements.
The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement.
A copy of the Rights Agreement (and exhibits thereto) has been filed
with the Securities and Exchange Commission on Schedule 14D-9 dated February 20,
1998, and is hereby incorporated by reference. Copies of the Rights Agreement
are on file at the principal office of the Rights Agent and are also available
upon written request to the Rights Agent.
C-4