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EXEL LIMITED
and
ChaseMellon Shareholder Services, L.L.C., Rights Agent
RIGHTS AGREEMENT
Dated as of September 11, 1998
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Table of Contents
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RIGHTS AGREEMENT
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................7
Section 3. Issue of Right Certificates......................................7
Section 4. Form of Right Certificates.......................................9
Section 5. Countersignature and Registration...............................10
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates....................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...13
Section 8. Cancellation and Destruction of Right Certificates..............15
Section 9. Reservation and Availability of Ordinary Shares.................15
Section 10. Ordinary Shares Record Date.....................................17
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights.............................................18
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......29
Section 13. Combination, Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.............................29
Section 14. Fractional Rights and Fractional Shares.........................32
Section 15. Rights of Action................................................33
Section 16. Agreement of Right Holders......................................34
Section 17. Right Certificate Holder Not Deemed a Shareholder...............35
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Section 18. Concerning the Rights Agent.....................................35
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......36
Section 20. Duties of Rights Agent..........................................37
Section 21. Change of Rights Agent..........................................40
Section 22. Issuance of New Right Certificates..............................41
Section 23. Redemption and Termination......................................41
Section 24. Exchange........................................................43
Section 25. Notice of Certain Events........................................44
Section 26. Notices.........................................................45
Section 27. Supplements and Amendments......................................45
Section 28. Successors......................................................46
Section 29. Determinations and Actions by the Board of Directors, etc.......46
Section 30. Benefits of This Agreement......................................47
Section 31. Severability....................................................47
Section 32. Governing Law...................................................47
Section 33. Counterparts....................................................48
Section 34. Descriptive Headings............................................48
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Ordinary Shares
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RIGHTS AGREEMENT
Rights Agreement, dated as of September 11, 1998 (the "Agreement"), between
EXEL Limited, a company incorporated with limited liability under the Cayman
Islands Companies Act (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company on September 11, 1998 (the
"Rights Dividend Declaration Date") authorized and declared a dividend
distribution (the "Distribution") of one Right for each outstanding ordinary
share, U.S. $.01 par value, of the Company (the "Ordinary Shares") outstanding
at the close of business on October 30, 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(i) hereof) in respect of each Ordinary
Share issued (whether originally issued or delivered from the Company's treasury
shares) between the Record Date and the earlier of the Distribution Date or the
Expiration Date (as such terms are hereinafter defined), each Right initially
representing the right to purchase, under certain circumstances, one Ordinary
Share, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
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 (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities of the Company constituting a
Substantial Block (as such term is hereinafter defined), but shall not
include (i) the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company or of any
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Subsidiary of the Company or any Person organized, appointed or established
by the Company or any Subsidiary of the Company for or pursuant to the
terms of any such plan, (ii) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of a
Substantial Block solely as a result of a change in the aggregate number of
Ordinary Shares or other voting securities of the Company outstanding since
the last date on which such Person acquired Beneficial Ownership of any
securities of the Company constituting such Substantial Block, or (iii) any
Person who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a Substantial Block in the good
faith belief that such acquisition would not (x) cause such Person and its
Affiliates and Associates to become the Beneficial Owner of a Substantial
Block and such Person relied in good faith in computing the percentage of
its voting power on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (y) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (iii) of the prior sentence, if any Person that is
not an Acquiring Person due to such clause (iii) does not cease to be the
Beneficial Owner of a Substantial Block by the close of business on the
last Business Day of a period to be determined by the Board of Directors of
the Company and specified in a notice from the Company that such Person is
the Beneficial Owner of a Substantial Block, such Person shall, at the end
of such specified period, become an Acquiring Person (and such clause (iii)
shall no longer apply to such Person). No failure by the Board of Directors
of the Company to give such notice for a period of time, and no notice
specifying a particular time period by which such Person must cease to be
the Beneficial owner of a Substantial Block, shall be deemed a waiver of
the right of the Board of Directors to subsequently give or modify such
notice. For purposes of this definition, the determination whether any
Person acted in good faith shall be conclusively determined by the Board of
Directors of the Company, acting by a vote of those directors of the
Company whose approval would be required to redeem the Rights under Section
23 hereof.
(b) "Act" shall have the meaning set forth in Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
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(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date hereof.
(e) "Agreement" shall have the meaning set forth in the introduction
hereto.
(f) 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 has, directly or indirectly, the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the occurrence of an event) 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," (1)
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, (2)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event or (3) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering Event
(as such term is hereinafter defined), 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) hereof ("Original
Rights") or pursuant to Section 11(i) or Section 22 hereof in
connection with an adjustment made with respect to Original Rights; or
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations 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
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own," any security under this subparagraph (ii) if the agreement,
arrangement or understanding to vote such security (1) 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
rules and regulations of the Exchange Act and (2) is not then
reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report);
(iii) which are beneficially owned, directly or indirectly, by
any other Person 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 proviso to subparagraph (ii) of this paragraph (f))
or disposing of any securities of the Company; or
(iv) which are directly, indirectly or constructively owned by
such Person or any of such Person's Affiliates or Associates, within
the meaning of Section 958 of the U.S. Internal Revenue Code of 1986,
as amended.
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in a bona fide firm commitment underwriting pursuant to
an underwriting agreement with the Company.
(g) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York, U.S.A.,
are authorized or obligated by law or executive order to close.
(h) "Certification" shall have the meaning set forth in Section 18
hereof.
(i) "close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date, provided, however, if such date is a Business
Day it shall mean 5:00 P.M. on the next succeeding not Business Day.
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(j) "Company" shall have the meaning set forth in the introduction
hereto.
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(l) "Distribution" shall have the meaning set forth in the recitals
hereto.
(m) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(n) "equivalent ordinary shares" shall have the meaning set forth in
Section 11(b) hereof.
(o) "Exchange Act" shall have the meaning set forth in the definitions
of "Affiliate" and "Associate" above.
(p) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(q) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(r) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Independent Director" shall mean 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 or nominee of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board prior to the
time that any Person becomes an Acquiring Person, and any successor of an
Independent Director while such successor is a member of the Board, who is
not an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and is recommended or elected to succeed the
Independent Director by a majority of the Independent Directors.
(t) "ordinary share equivalent" shall have the meaning set forth in
Section 11(a)(iii).
(u) "Ordinary Shares" when used with reference to the Company shall
mean the ordinary shares, U.S. $.01 par value, of the Company. "Ordinary
Shares" when used with
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reference to any Person other than the Company shall mean the capital stock
with the greatest voting power of such Person or the equity securities or
other equity interest having power to control or direct the management of
such Person.
(v) "Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner" above.
(w) "Person" shall mean any individual, firm, corporation, partnership
or other entity, including any "group" within the meaning of Section
13(d)(3) of the Exchange Act and the General Rules and Regulations
thereunder.
(x) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(y) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(z) "Record Date" shall have the meaning set forth in the recitals
hereto.
(aa) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(bb) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(cc) "Rights" shall have the meaning set forth in the recitals hereto.
(dd) "Rights Agent" shall have the meaning set forth in the
introduction hereto.
(ee) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals hereto.
(ff) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii).
(gg) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11a(iii).
(hh) "Section 13 Event" shall mean any event described in Section
13(a).
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(ii) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, includes a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(jj) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(kk) "Subsidiary" shall mean, with reference to any Person, any
company (or other entity) of which an amount of voting securities (or
comparable ownership interests) sufficient to elect at least a majority of
the directors (or comparable persons) of such company (or other entity) is
beneficially owned or otherwise controlled, directly or indirectly, by such
Person.
(ll) "Substantial Block" shall mean a number of Ordinary Shares equal
to or in excess of 20% of the number of Ordinary Shares then outstanding.
(mm) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(nn) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(oo) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(pp) "Triggering Event" shall mean any Section 11(a)(ii) Event or
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 appointment. The
Company shall act as Co-Rights Agent and may from time to time appoint such
other Co-Rights Agents as it may deem necessary or desirable upon ten calendar
days' written notice to the Rights Agent. In no event shall the Rights Agent
have any duty to supervise or in any way be liable for such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
close of Business on the tenth calendar day after the Shares Acquisition Date
(or, if the tenth day after the Shares Acquisition Date occurs before the Record
Date, the close of business on the Record Date) or (ii) the close of
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business on the tenth calendar day after the date of the commencement of, or
first public announcement of the intent of any Person to commence, a tender or
exchange offer if, upon consummation thereof, such Person would be an Acquiring
Person (the earlier of the dates in subsection (i) and (ii) hereof being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Ordinary Shares registered in the names of the holders of
the Ordinary Shares (which certificates for the Ordinary Shares shall be deemed
also to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of the Ordinary Shares. As soon as practicable after receipt
by the Rights Agent of written notice from the Company of the Distribution Date,
the Rights Agent, at the Company's expense, will send by first-class, postage
prepaid mail, to each record holder of Ordinary Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto, evidencing one Right for each Ordinary Share so held, subject
to adjustment as provided herein. As of the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the Company will send
a copy of a Summary of Rights to Purchase Ordinary Shares, in substantially the
form attached hereto as Exhibit B (the "Summary of Rights"), by first-class,
postage prepaid mail, to each record holder of Ordinary Shares as of the close
of business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Ordinary Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates for the Ordinary Shares, and the registered
holders of Ordinary Shares shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the certificates
for the Ordinary Shares outstanding on the Record Date shall also constitute the
transfer of the Rights associated with the Ordinary Shares represented by such
certificate.
(c) Rights shall be issued in respect of all Ordinary Shares issued after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date (as such term is defined in Section 7), or, in certain
circumstances provided in Section 22 hereof, after the Distribution Date.
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Certificates representing such Ordinary Shares shall have impressed on, printed
on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between EXEL Limited and
ChaseMellon Shareholder Services, L.L.C. dated as of September 11, 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 executive
offices of EXEL Limited. 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. EXEL Limited will mail
to the holder of this certificate a copy of the Rights Agreement as in
effect on the date of mailing without charge within five Business Days
after receipt of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights may become null and void.
After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Ordinary Shares
represented by certificates containing the foregoing legend shall be evidenced
by such certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Ordinary Shares represented by such certificate.
Section 4. Form of Right Certificates. (a) The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A 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 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. The Right
Certificates shall be in machine-printable format and in a form reasonably
satisfactory to the Rights Agent. Subject to the provisions of Section 11 and
Section 22 hereof, the Right Certificates, whenever distrib-
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uted, shall be dated as of the Record Date, shall show the date of
countersignature, and on their face shall entitle the holders thereof to
purchase such, number of Ordinary Shares (or following a Triggering Event, other
securities, cash or other assets, as the case may be) as shall be set forth
therein at the price per Ordinary Share set forth therein (the "Purchase
Price"), but the number of such shares and the Purchase Price shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any
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 (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding (whether or not
in writing) which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Right Certificate issued pursuant to Section 6 or 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Right 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 Right Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by one of its authorized officers, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by an authorized signatory of the Rights Agent either manually or
by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of
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the Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless may
be countersigned by the Rights Agent, issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
In case any authorized signatory of the Rights Agent who shall have
countersigned any of the Right Certificates shall cease to be so authorized
before delivery by the Company, such Right Certificates, nevertheless, may be
issued and delivered by the Company with the same force and effect as though the
person who countersigned such Right Certificates had not ceased to be so
authorized; and any Right Certificates may be countersigned on behalf of the
Rights Agent by any person who, at the actual date of the countersignature of
such Right Certificate, shall be properly authorized to countersign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not so authorized.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates, the date of each of the Right Certificates and
the date of countersignature of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of 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 Right Certificate or Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Ordinary Shares (or
following a Triggering Event, other securities, cash or other
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assets, as the case may be) as the Right Certificate or Right 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 Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such additional evidence,
as the Company shall reasonably request of the identity of the Beneficial Owner,
Affiliates or Associates of such Beneficial Owner or holder, or of any other
Person with which such holder or any of such holder's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting or disposing of securities of the
Company. Thereupon the Rights Agent shall, subject to Section 14 and Section
20(k) hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment from a Right Certificates holder 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 Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, along with a signature guarantee and
such other and further documentation as the Rights Agent may reasonably request,
and if requested by the Company, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii), 23(a) and 24(b) hereof)
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the designated office of the
Rights Agent, together with payment of the aggregate Purchase Price for the
total number of Ordinary Shares (or other securities, cash or other assets, as
the case may be) as to which the Rights are then exercisable, at or prior to the
earliest of (i) the close of business on September 15, 2008 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof or (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24 hereof (such earliest date being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each ordinary Share pursuant to the exercise of
a Right shall initially be U.S. $350, shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed and
completed accompanied by payment of the Purchase Price for the number of
Ordinary Shares (or other securities, cash or other assets, as the case may be)
to be purchased and an amount equal to any applicable transfer tax, the Rights
Agent shall thereupon, subject to Section 20(k), promptly (i) requisition from
the Company certificates for the number of Ordinary Shares to be purchased, (ii)
if the Company shall have elected to deposit the total number of Ordinary Shares
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of Ordinary Shares as are to be purchased (in which case certificates for
the Ordinary Shares represented by such receipts shall be deposited by the
transfer agent with the depository agent) and the Company hereby directs the
depository agent to comply with such request, (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14, (iv) promptly af-
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ter receipt of such certificates or depository receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (v) when appropriate, after receipt promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate. The payment
of the then Purchase Price must be made in cash or by certified bank check or
bank draft or money order payable to the order of the Company or the Rights
Agent. In the event that the Company is obligated to issue securities,
distribute property or pay cash pursuant to Section 11(a)(iii) hereof, the
Company will make all arrangements necessary so that cash, property or
securities are available for issuance, distribution or payment by the Rights
Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, 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 which whom the
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect the 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 insure
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 Right Cer-
-15-
tificates or other Person as a result of its failure to make any determinations
with respect to an Acquiring Person, or any of 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 Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner, Affiliates or Associates of such Beneficial Owner or holder,
or of any other Person with which such holder or any of such holder's Affiliates
or Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of any
securities of the Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to 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 Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Ordinary Shares. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Ordinary Shares (and following the occurrence of a
Triggering Event, out of its authorized and unissued other securities) or out of
its authorized and issued Ordinary Shares (and, following the occur-
-16-
rence of a Triggering Event, out of its authorized and issued other securities)
held in its treasury, the number of Ordinary Shares (and, following the
occurrence of a Triggering Event, Ordinary Shares and other securities) that
will be sufficient to permit the exercise in full of all outstanding Rights, (it
being understood that any of the foregoing shares or securities may also be
reserved for other purposes) or will take such other steps as are appropriate to
assure that the number of such shares or securities (or their equivalents)
sufficient to permit the exercise in full of all outstanding Rights will be
available upon such exercise.
(b) So long as the Ordinary Shares (and, following the occurrence of a
Triggering Event, other securities) issuable upon the exercise of Rights may be
listed on any U.S. national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable (but
only to the extent that it is reasonably likely that the Rights will be
exercised), 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 to (i) file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) Event, or as
soon as required by law, as the case may be, a registration statement under the
U.S. Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also, take such action as may be appropriate under the blue sky laws of the
various states. 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 and
shall give simultaneous written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement and notice to the Rights Agent at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualifications in such jurisdiction shall have been obtained.
-17-
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Ordinary Shares (and following the
occurrence of a Triggering Event, 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 Right Certificates or of
any Ordinary Shares (or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required (a) to pay any transfer
tax which may be payable in respect of any transfer involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates for
the Ordinary Shares (or other securities, as the case may be) in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or (b) to issue or deliver any certificates for
Ordinary Shares (or other securities, as the case may be) upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right 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. Ordinary Shares Record Date. Each person in whose name any
certificate for any number of Ordinary Shares (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 whole and/or fractional Ordinary
Shares (or other securities, as the case may be) represented thereby on, and
such certificate shall be dated the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made and shall show the date of
countersignature; provided, however, that if the date of such surrender and
payment is a date upon which the Ordinary Shares (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 on, and such certificate
shall be dated, the next succeeding Business Day on which the Ordinary Shares
(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
Right Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be
-18-
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 of Shares or Number of
Rights. The Purchase Price, the number 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 Ordinary Shares payable in Ordinary
Shares, (B) subdivide the outstanding Ordinary Shares, (C) combine the
outstanding Ordinary Shares into a smaller number of shares or (D) issue any
share capital in a reclassification of the Ordinary Shares (including any such
reclassification in connection with a combination, consolidation or merger in
which the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase
Price in effect 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 Ordinary Shares or share capital, 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 payment of
the Purchase Price then in effect the aggregate number and kind of share capital
which, if such Right had been exercised immediately prior to such date and at a
time when the Ordinary Shares (or other securities) transfer books of the
Company were open, he 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), 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).
(ii) Subject to Section 24 of this Agreement, in the event
(A) any Person who or which is an Acquiring Person or any Associate or
Affiliate of any such Person, at any time after the date of this Agreement,
directly or indirectly, (1) merges into the Company or otherwise combines
-19-
or consolidates with the Company and the Company is the continuing or
surviving corporation of such merger, combination or consolidation and the
Ordinary Shares of the Company remain outstanding and unchanged, (2)
transfers any assets (in one transaction or a series of transactions) to
the Company or to any of its Subsidiaries in exchange (in whole or in part)
for Ordinary Shares, for shares of other equity securities of the Company,
or for securities exercisable for or convertible into shares of equity
securities of the Company (Ordinary Shares or otherwise) or otherwise
obtains from the Company, with or without consideration, any additional
shares of such equity securities or securities exercisable for or
convertible into shares of such equity securities (other than pursuant to a
pro rata distribution to all holders of Ordinary Shares), (3) sells,
purchases, leases, exchanges, mortgages, pledges, transfers or otherwise
acquires or disposes of (in one transaction or a series of transactions)
to, from or with the Company or any of its Subsidiaries, assets on terms
and conditions less favorable to the Company than the Company would be able
to obtain through arm's-length negotiation with an unaffiliated third
party, other than pursuant to a transaction set forth in Section 13(a)
hereof, (4) sells, purchases, leases, exchanges, mortgages, pledges,
transfers or otherwise acquires or disposes of (in one transaction or a
series of transactions) to, from or with the Company or any of its
Subsidiaries (other than incidental to the lines of business, if any,
engaged in as of the date hereof between the Company and such Acquiring
Person or Associate or Affiliate) assets having an aggregate fair market
value of more than U.S. $5,000,000 other than pursuant to a transaction set
forth in Section 13(a) hereof, (5) receives any compensation from the
Company or any of its Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the Company's
(or its Subsidiaries') past practices, or (6) receives a direct or indirect
benefit (except proportionately as a shareholder and except if resulting
from a requirement of law or government regulation) of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its Subsidiaries, or
(B) any Person, alone or together with its Affiliates and Associates,
becomes at any time after the Rights Dividend Declaration Date, an
Acquiring Person except as
-20-
the result of a transaction set forth in Section 13(a) hereof, or
(C) during such time as there is an Acquiring Person, (1) there is any
failure to declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding preference shares
of the Company (except to the extent such declaration or payment would be
prohibited under the laws of the Company's jurisdiction of incorporation or
as approved by a majority of the Independent Directors and the Independent
Directors constitute a majority of the Board of Directors or by the holders
of 66 2/3% or more of the then outstanding Ordinary Shares beneficially
owned by Persons other than the Acquiring Person or its Affiliates or
Associates), (2) there is any reduction in the annual rate of dividends
paid on the Ordinary Shares (except to reflect any subdivision of the
Ordinary Shares or as required under the laws of the Company's jurisdiction
of incorporation or as approved by a majority of the Independent Directors
and the Independent Directors constitute a majority of the Board of
Directors or by the holders of 66 2/3% or more of the then outstanding
Ordinary Shares beneficially owned by Persons other than the Acquiring
Person or its Affiliates or Associates), (3) there is a failure to increase
the annual rate of dividends as necessary to reflect reclassification
(including any reverse stock split), recapitalization, reorganization or
any similar transaction which has the effect of reducing the number of
outstanding Ordinary Shares (except to the extent such increase in the rate
of dividends would be prohibited under the laws of the Company's
jurisdiction of incorporation or as approved by a majority of the
Independent Directors and the Independent Directors constitute a majority
of the Board of Directors or by the holders of 66 2/3% or more of the then
outstanding Ordinary Shares beneficially owned by Persons other than the
Acquiring Person or its Affiliates or Associates), or (4) there is any
reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger, combination or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Company or any of its Sub-
-21-
sidiaries which is directly or indirectly owned by any Acquiring Person or
any Associate or Affiliate of any Acquiring Person,
then, (x) prior to the date on which the Company's right of redemption pursuant
to Section 23(a) expires (as the same may be extended pursuant to Section 27)
with respect to an event described in Section 11(a)(ii)(B) hereof and (y)
promptly following the occurrence of any event described in Section 11(a)(ii)(A)
or (C) hereof, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of Ordinary Shares of the Company
as shall equal the result obtained by (x) multiplying the then current Purchase
Price by the number of Ordinary Shares for which a Right is then exercisable and
dividing that product by (y) 50% of the current market price per Ordinary Share
of the Company (determined pursuant to Section 11(d)) on the date of the
occurrence of any one of the events listed above in this subparagraph (ii) (such
number of shares is hereinafter referred to as the "Adjustment Shares"),
provided that the Purchase Price and the number of Adjustment Shares shall be
further adjusted as provided in this Agreement to reflect any events occurring
after the date of such first occurrence.
(iii) in the event that the number of Ordinary Shares 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 is not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (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 exercise of the Rights and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3) other
equity securities of the Company (including, without limitation, preference
shares, or units of preference shares, which a majority of the Independent
Directors and the Board of Directors of the Company have deemed to have the same
value as Ordinary Shares (such preference shares, "ordinary share
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 a majority of the
Independent Di-
-22-
rectors and the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of Directors
of the Company; 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, as the same may be extended pursuant to Section 27 (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, Ordinary Shares
(to the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional Ordinary Shares could be authorized for issuance upon 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 the Company determines
that some action need be taken pursuant to the first and/or second sentences of
this Section 11(a) (iii), 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 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 and shall give
concurrent written notice to the Rights Agent stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement and
notice to the Rights Agent at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Ordinary
Shares shall be the current market price (as determined pursuant to Section
11(d) hereof) per Ordinary Share on the Section 11(a)(ii) Trigger Date and the
value of any "ordinary share equivalent" shall be deemed to be the same as the
value of the Ordinary Shares on such date. The Company shall give the Rights
Agent notice of the selection of any "ordinary share equivalent" under this
Section 11(a)(iii).
-23-
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Ordinary Shares entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Ordinary Shares (or securities having substantially the same rights,
privileges and preferences as the Ordinary Shares ("equivalent ordinary shares")
or convertible into the Ordinary Shares or equivalent ordinary shares) at a
price per Ordinary Share or equivalent ordinary share (or having a conversion
price per share, if a security convertible into the Ordinary Shares or
equivalent ordinary shares) less than the current market price (as defined in
Section 11(d) per Ordinary Share or equivalent ordinary share, as the case may
be) 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, of which the numerator shall be the
number of Ordinary Shares outstanding on such record date plus the number of
Ordinary Shares or equivalent ordinary shares which the aggregate offering price
of the total number of Ordinary Shares or equivalent ordinary shares 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 of
which the denominator shall be the number of Ordinary Shares outstanding on such
record date plus the number of additional Ordinary Shares and/or equivalent
ordinary shares 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 or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Ordinary Shares 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, options 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 the making of a
distribution to all holders of Ordinary Shares (including any such distribution
made in connection with a combination, consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular periodic cash dividend or a dividend payable in
Ordinary Shares) or subscription rights
-24-
or warrants (excluding those referred to in Section 11(b)), 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, of
which the numerator shall be the current market price per Ordinary Share (as
defined in Section 11(d)) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Ordinary Share and of
which the denominator shall be such current market price per Ordinary Share.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations
made pursuant to Section 11(a)(iii), the "current market price" per Ordinary
Share on any date shall be deemed to be the average of the daily closing prices
per Ordinary Share for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined in this paragraph (d)) immediately prior to such date and,
for purposes of computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per Ordinary Share on any date shall be deemed to be the
average of the daily closing prices per Ordinary Share for the ten (10)
consecutive Trading Days immediately following such date; provided, however,
that in the event that the current market price per Ordinary Share is determined
during the period following the announcement by the issuer of such Ordinary
Shares of (A) a dividend or distribution on such Ordinary Shares payable in
Ordinary Shares or securities convertible into Ordinary Shares (other than the
Rights) or (B) any subdivision, combination or reclassification of such Ordinary
Shares, and prior to the expiration of the requisite 30 Trading Day or 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
appropriately 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 securi-
-25-
ties listed or admitted to trading on the New York Stock Exchange or, if the
Ordinary Shares 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 U.S. national securities
exchange on which the Ordinary Shares are listed or admitted to trading or, if
the Ordinary Shares are not listed or admitted to trading on any U.S. 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 Nasdaq Stock Market, Inc. ("Nasdaq") or such other system then in use, or,
if on any such date the Ordinary Shares are not quoted by such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Ordinary Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making a market
in the Ordinary Shares, the fair value of such shares on such date shall be as
determined in good faith by the Independent Directors if the Independent
Directors constitute a majority of the Board of Directors or, in the event the
Independent Directors do not constitute a majority of the Board of Directors, by
an independent investment banking firm selected by the Board of Directors, 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 U.S. national securities exchange on which the Ordinary
Shares are listed or admitted to trading is open for the transaction of business
or, if the Ordinary Shares are not listed or admitted to trading on any U.S.
national securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of New York, U.S.A., are not
authorized or obligated by law or executive order to close. If the Ordinary
Shares are 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 the
Independent Directors if the Independent Directors constitute a majority of the
Board of Directors or, in the event the Independent Directors do not constitute
a majority of the Board of Directors, by an independent investment banking firm
selected by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
(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 1% in such price; provided, however, that any
adjustments
-26-
which by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of an Ordinary Share. 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 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) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any share capital other than Ordinary Shares, 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 shares contained in Section 11(a) through (p), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Ordinary Shares
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 Ordinary Shares
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 Section 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 shares (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number of shares
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 substitution for any
adjustment in the number of Ordinary Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number
-27-
of Rights shall be exercisable for the number of Ordinary Shares 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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after the adjustment of the Purchase
Price. The Company shall make a public announcement and shall give simultaneous
written notice to the Rights Agent of its election to adjust the number of
Rights, indicating the record date for 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 Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right 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 Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, 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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right 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 Right 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 Ordinary Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of an Ordinary Share 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 such number of fully paid
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and nonassessable Ordinary Shares 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 of the
Ordinary Shares and other share capital or securities of the Company, if any,
issuable upon such exercise over and above the Ordinary Shares and other share
capital 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,
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 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 the Board of Directors of the Company shall determine to be
advisable in order that any consolidation or subdivision of Ordinary Shares,
issuance wholly for cash of any Ordinary Shares at less than the current market
price, issuance wholly for cash of Ordinary Shares or securities which by their
terms are convertible into or exchangeable for Ordinary Shares, dividends of
shares or issuance of rights, options or warrants referred to hereinabove in
this Section 11 hereafter made by the Company to holders of its Ordinary Shares
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Sections 23, 24 and 27 hereof, take (nor will
it permit any of its Subsidiaries 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.
(o) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) combine or consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n)), (ii) merge with or into any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(n)), or (iii) sell or
transfer (or permit any of its
-29-
Subsidiaries to sell or transfer), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning power 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 (n)) if (x) at the time of
or immediately after such combination, 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 with or immediately after such combination, consolidation, merger
or sale, the stockholders 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.
(p) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date, the Company may, in lieu of making any adjustment to the
Purchase Price, the number of Ordinary Shares eligible for purchase on exercise
of each Right or the number of Rights outstanding, which adjustment would
otherwise be required by Sections 11(a)(i), 11(b), 11(c), 11(h) or 11(i), make
such other equitable adjustment or adjustments thereto as the Board of Directors
(whose determination shall be conclusive) deems appropriate in the circumstances
and not inconsistent with the objectives of the Board of Directors in adopting
this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment and the adjusted
Purchase Price, (b) promptly file with the Rights Agent and with each transfer
agent for the Ordinary Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
26. The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
Section 13. Combination, Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, following the Shares Acquisition
Date, directly or indirectly, (x) the Company shall combine or consolidate with,
or merge with or into, any other Person (other than a Subsidiary
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of the Company in a transaction which complies with Section 11(n)) and the
Company shall not be the continuing or surviving corporation of such
combination, consolidation or merger, (y) any Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(n)) shall combine,
consolidate or merge with or into the Company and the Company shall be the
continuing or surviving corporation of such combination, consolidation or merger
and, in connection with such combination, consolidation or merger, all or part
of the Ordinary Shares shall be changed into or exchanged for shares or other
securities 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 or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(n) hereof), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right (except as provided
in Section 7(e)) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly issued, fully paid, nonassessable and freely
tradeable Ordinary Shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of call or first refusal, or other
adverse claims as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Ordinary Shares for which a Right
is then exercisable immediately prior to the first occurrence of a 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 shares 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 current
market price per Ordinary Share of such Principal Party (determined in the
manner described in Section 11(d)) on the date of consummation of such
combination, consolidation, merger, sale or transfer; (ii) the Principal Party
shall thereafter 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;
(iii) the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11
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shall thereafter apply to such Principal Party, (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Ordinary Shares in accordance with Section 9) 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
Ordinary Shares thereafter deliverable upon the exercise of the Rights; and (v)
the provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which Ordinary Shares of the company are converted in such
merger, combination or consolidation and, if no securities are so issued,
the Person that is the other party to the merger, combination or
consolidation; and
(2) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (x) if the Ordinary Shares of such
Person are not at such time and have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another corporation the Ordinary Shares of
which are and have been so registered, "Principal Party" shall refer to such
other corporation; and (y)) if such Person is a Subsidiary, directly or
indirectly, of more than one corporation, the Ordinary Shares of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such corporations is the issuer of the Ordinary Shares having the
greatest market value.
(c) The Company shall not consummate any Section 13. Event unless the
Principal Party shall have a sufficient number of authorized Ordinary Shares
which are neither outstanding nor reserved for issuance to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and
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(b) of this Section 13 and further providing that, as soon as practicable after
the date of any combination, consolidation, merger or sale of assets mentioned
in paragraph (a) of this Section 13, the Principal Party
(i) will prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, will use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
shall pay to the registered holders of the Right 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 the
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 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
-33-
respect to securities listed on the principal U.S. 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 U.S. 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 the
Board of Directors of the Company. 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 the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Ordinary Shares
on "ordinary share equivalents" upon exercise or exchange of the Rights or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, the Company may pay to the registered holders of Right Certificates at
the time the Rights evidenced thereby are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the current market
value of one Ordinary Share or "ordinary share equivalent." For purposes of this
Section 14(b), the current market value of one Ordinary Share shall be the
closing price of a share of the Ordinary Shares (as determined pursuant to
Section 11(d)) for the Trading Day immediately prior to the date of such
exercise or exchange, as the case may be, and the current market value of any
"ordinary share equivalent" shall be the same as the current market value of the
Ordinary Shares on such date.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right, except as otherwise permitted by this Section
14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Ordinary Shares); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of Ordinary Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of Ordinary Shares), 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 re-
-34-
spect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right 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 will be 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 Right 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 the Ordinary Shares;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request;
(c) subject to Sections 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Ordinary
Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Ordinary Share
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatever, and neither the Company nor the Rights Agent shall
be required to be affected by any notice to the contrary;
(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 prelimi-
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nary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency 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, that 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. Right Certificate Holder Not Deemed a Shareholder. No holder,
as such of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of Ordinary Shares 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 Right Certificate be construed to confer upon the holder of any Right
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 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised or exchanged for Ordinary Shares in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. 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 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 or willful misconduct on the part of the Rights Agent
(including the reasonable fees and expenses of counsel), 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.
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
-36-
Agreement in reliance upon any Right Certificate or certificate for Ordinary
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, instruction, adjustment notice, 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.
In addition to the foregoing, the Rights Agent shall be protected and shall
incur no liability for, or in respect of, any action taken or omitted by it in
connection with its administration of this Agreement in reliance upon (i) the
proper execution of the certification appended to the Form of Assignment and the
Form of Election to Purchase included as part of Exhibit A hereto (the
"Certification"), unless the Rights Agent shall have actual knowledge that, as
executed, the Certification is untrue or (ii) the non-execution or failure to
complete the Certification including, without limitation, any refusal to honor
any otherwise permissible assignment or election by reason of such non-execution
or failure.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. 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
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 that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
-37-
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right 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 Right 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
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 any one of the Chairman
of the Board, the President, any Vice President, the Treasurer or the
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, and the issuance or
non-issuance of a Right Certificate or Ordinary Shares or other security
issued in lieu of Ordinary Shares in accordance with instructions given to
the Rights Agent by the Company pursuant to Section 20(k) hereof or in
accordance with the terms hereof shall not constitute negligence, bad faith
or willful misconduct.
-38-
(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
Right Certificates (except its countersignature thereof) or be required to
verify the same, 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 hereto
(except the due execution hereof by the Rights Agent or in respect of the
validity or execution of any Right 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 Right
Certificate; nor shall it be responsible for any adjustment required under
the provisions of Section 11 or 13 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 Right Certificates after actual notice of any 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
Ordinary Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Ordinary Shares will, when 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 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 and
certificates delivered pursuant to any provision hereof from any one of the
Chairman of the Board, the President, any Vice President, the Secretary or
the Treasurer of the Company, and is authorized 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. An application by the
Rights Agent for in-
-39-
structions may set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties and obligations
under this Agreement and the date on and/or after which such action shall
be taken, and the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on
or after the date specified therein (which date shall not be less than one
Business Day after the Company receives such application) without the
consent of the Company unless, prior to taking or omitting such action, the
Rights Agent has received written instructions in response to an
application specifying the actions to be taken or omitted.
(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 by 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, that
reasonable care was exercised in the selection 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.
(k) If, with respect to any Right 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, the
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Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting the Company. The
Company shall give the Rights Agent prompt written instructions as to the
action to be taken regarding the Right Certificates involved. The Rights
Agent shall not be liable for acting in accordance with such instructions.
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 by registered or
certified mail, and, at the Company's expense, to the holders of the Right
Certificates by first class mail. 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 Ordinary Shares by registered or certified mail, and to the holders
of the Right 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
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the Company shall become the temporary Rights
Agent and the registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights 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 of the State of New York, U.S.A. (or of any other state of 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 powers and is subject to supervision or examination by federal
or state authority or which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least U.S. $25 million. 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
exe-
-41-
cute 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 Ordinary Shares, and mail a notice thereof in
writing to the registered holders of the Right 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 Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Ordinary Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
Ordinary Shares so issued or sold pursuant to the exercise of options or under
any employee plan or arrangement, 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 Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (i) no such Right
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
Right Certificate would be issued, and (ii) no such Right 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) The Board of Directors of the
Company may, at its option, at any time prior to the earlier of (x) the close of
business on the tenth day following the Shares Acquisition Date (or if the
Shares Acquisition Date shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date), or (y) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption
-42-
price of U.S. $.01 per Right as appropriately adjusted to reflect any stock
split, dividend of shares or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price"),
and the Company may, at its option, pay the Redemption Price either in Ordinary
Shares (valued at their current market price as defined in Section 11(d) on the
date of the redemption), other securities, cash or other assets; provided,
however, that if the Board of Directors of the Company authorizes redemption of
the Rights on or after the Shares Acquisition Date then there must be
Independent Directors in office and such authorization shall require the
concurrence of a majority of the Independent Directors. 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, as the same may be extended
pursuant to Section 27.
(b) In deciding whether or not to exercise the Company's right of
redemption hereunder, the directors of the Company shall act in good faith, in a
manner they reasonably believe to be in the best interests of the Company and
with such care, including reasonable inquiry, skill and diligence, as a person
of ordinary prudence would use under similar circumstances, and they may
consider the long-term and short-term effects of any action upon employees,
customers and creditors of the Company and upon communities in which offices or
other establishments of the Company are located, and all other pertinent
factors.
(c) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, 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 held. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing such
notice to the Rights Agent and to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Ordinary
Shares. 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. Neither the Company nor any of its Affiliates or Associates may
redeem, ac-
-43-
quire or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in connection with the
repurchase of Ordinary Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at its
option (provided that there are then Independent Directors in office and a
majority of the Independent Directors concur), at any time and from time to time
on or after a Section 11(a)(ii) Event, 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 Ordinary
Shares at an exchange ratio of one Ordinary Share per Right, appropriately
adjusted to reflect any stock split, dividend of shares or similar transaction
occurring after the date of this Agreement (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
(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
24 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 Ordinary Shares 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 which 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
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 which 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 24, the Company, at its
option, may substitute for any Ordinary Share exchangeable for a Right (i)
"ordinary share equivalents," (ii) cash, (iii) debt securities of the Company,
(iv) other assets, or (v) any combination of the foregoing, having an aggregate
value which a majority of the Independent Directors and the
-44-
Board of Directors of the Company shall have determined in good faith to be
equal to the current market price of one Ordinary Share (determined pursuant to
Section 11(d) hereof) on the Trading Date immediately preceding the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company shall propose at
any time following the Distribution Date (a) to pay any dividend payable in
shares of any class to the holders of Ordinary Shares or to make any other
distribution to the holders of Ordinary Shares (other than a regular periodic
cash dividend), or (b) to offer to the holders of Ordinary Shares rights or
warrants to subscribe for or to purchase any additional Ordinary Shares or share
capital of any class or any other securities, rights or options, or (c) to
effect any reclassification of Ordinary Shares (other than a reclassification
involving only the subdivision of outstanding Ordinary Shares), or (d) to effect
any combination, consolidation or merger into or with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(n) 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 or more
transactions, of more than 50% of the assets or earning power 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 Sections 11(n) hereof), or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and to each holders of a Right, in accordance
with Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such dividend of shares, distribution of rights
or Rights, or the date on which such reclassification, combination,
consolidation, merger, sale, transfer, liquidation dissolution, or winding up is
to take place and the date of participation therein by the holders of Ordinary
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (a) or (b) above at least twenty (20)
days prior to the record date for determining holders of Ordinary Shares 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 Ordinary Shares, whichever shall
be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in any such case, the
Company shall as soon as practicable
-45-
thereafter give to the Rights Agent and to each holder of a Right, to the extent
feasible and in accordance with Section 26, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event holders
of Rights under Section 11(a)(ii) and all references in the preceding paragraph
to Ordinary Shares shall be deemed to thereafter refer to other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right 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:
EXEL Limited
ββββββββββ βββββ, βββ βββββ
β ββββββββ ββββββ, ββββββββ ββ 11
Bermuda
Attention: General Counsel
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 Right
Certificate to or on the 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.
β βββββββ ββββββ
ββββββββββ, ββββββββββββ βββββ
Attention: Administration Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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 27. Supplements and Amendments. Prior to the earlier of the
Distribution Date or the Shares Acquisition Date and subject to the penultimate
sentence of this Section 27, the Company may from time to time supplement or
amend this Agreement without the approval of any holders of Right Certificates.
From and after the earlier of the Distribution Date or the Shares Acquisition
Date, and subject to the penultimate sentence of this Section 27, the Company
may from time to time
-46-
supplement or amend this Agreement without the approval of any holders of Right
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 lengthen the time period during which the
Rights may be redeemed following the Shares Acquisition Date for up to an
additional twenty days beyond the time period set forth in Section 23(a)
(provided, however, that any such lengthening shall be effective only if there
are Independent Directors and shall require the concurrence of a majority of
such Independent Directors) or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). 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 27, the Rights Agent shall execute
such supplement or amendment unless the Rights Agent shall have determined in
good faith that such supplement or amendment would adversely affect its
interests under this Agreement. Notwithstanding anything in this Agreement to
the contrary, no supplement or amendment shall be made on or after the earlier
of the Distribution Date or the Shares Acquisition Date which changes the
Redemption Price, the Final Expiration Date, the Purchase Price or the number of
Ordinary Shares for which a Right is then exercisable. Prior to the earlier of
the Shares Acquisition Date or the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Ordinary Shares.
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 Ordinary Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Ordinary Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the provisions of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company (and, where specifically provided for herein,
the Independent Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all
-47-
rights and powers specifically granted to the Board or the Company (or, as
expressly provided, the Independent Directors), 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). All such actions, calculations,
interpretations and determinations (including, for the purpose of clause (ii)
below, all omissions with respect to the foregoing) which are done or made by
the Board (or, as provided for, by the Independent Directors) in good faith,
shall (i) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Right Certificates and all other parties, and (ii) not subject
the Board or the Independent Directors to any liability to the holders of the
Right Certificates.
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 Right Certificates (and, prior to the Distribution
Date, Ordinary Shares) 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 Right Certificates
(and, prior to the Distribution Date, registered holders of Ordinary Shares).
Section 31. Severability. If any term, provision, covenant, or restriction
to 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 the Board of
Directors of the Company 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 day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a con-
-48-
tract made under the laws of the Cayman Islands and for all purposes shall be
governed by and construed in accordance with such laws, except that the rights,
duties and obligations of the Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York, U.S.A.
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.
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.
-49-
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.
[SEAL]
EXEL LIMITED
Attest:
By: __________________________________
Name:
Title:
By: ______________________________
Name:
Title:
[SEAL]
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Attest:
By: __________________________________
Name:
Title:
By: ______________________________
Name:
Title:
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 15, 2008 OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT U.S. $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES RIGHTS MAY NOT BE EXERCISABLE.
EXEL LIMITED
Right Certificate
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 September 11, 1998 (the "Rights Agreement") between EXEL Limited, a company
incorporated with limited liability under the Cayman Islands Companies Act (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York City time) on September 15, 2008 at the
designated office of the Rights Agent, or its successors as Rights Agent, in New
York, New York, U.S.A., one fully paid and nonassessable Ordinary Share, U.S.
$.01 par value (the "Ordinary Shares"), of the Company, at a purchase price of
U.S. $350 per share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and related
certificate duly executed, along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request. The number of
Rights evidenced by this Right 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 September 11,
1998, based on the Ordinary Shares of the Company 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 Right Certificate are
beneficially owned by
A-1
(i) an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Associate of Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who
after such transfer, became an Acquiring Person, 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 Ordinary Shares (or, in certain circumstances, other securities) which
may be purchased upon the exercise of the Rights evidenced by this Right
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 Right 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 Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent, and at the executive offices of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the designated office of the Rights Agent, along with a signature
guarantee and such other and further documentation as the Rights Agent may
reasonably request, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Ordinary Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof, along with a
signature guarantee and such other and further documentation as the Rights Agent
may reasonably request, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (a) may be redeemed by the Company at its option at a
redemption price of U.S. $.01 per Right prior to the earlier of the close of
business on (i) the tenth day following the Shares Acquisition Date and (ii)the
Final Expiration Date or (b) may be exchanged in whole or in
A-2
part for Ordinary Shares, and/or other securities, cash or other assets of the
Company deemed to have the same value as Ordinary Shares, at any time after a
Section 11(a)(ii) Event.
No fractional Ordinary Shares (or other securities) will be issued upon the
exercise or exchange of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Ordinary Shares 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 Right Certificate shall have been
exercised or exchanged for Ordinary Shares as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of October 30, 1998.
[SEAL]
EXEL LIMITED
ATTEST:
By: _________________________________
Name:
Title:
By: ________________________________
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
By: _________________________________
Authorized Signature
Date:
A-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ___________________ hereby sells,
assigns and transfers unto ___________________________________________________
______________________________________________________________________________
(please print name and address of transferee)
______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________________, ____
_____________________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate box that:
Exercising this Right Certificate will / / will not / / enable the
undersigned, its Affiliates, its Associates and/or any other Person with which
the undersigned or any of the undersigned's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of securities of the Company
to obtain individually or in the aggregate in excess of ___________ Ordinary
Shares of the Company.
Dated: ___________________________ ___________________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-6
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
A-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To EXEL Limited:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the Ordinary Shares
issuable upon the exercise of such Rights (or such other securities 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 be issued in the name of:
Please insert social security or
other taxpayer identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security or
other taxpayer identifying number
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Date: _____________, _________
______________________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-8
CERTIFICATE
The undersigned hereby certifies by checking the appropriate box that:
Exercising the Rights evidenced by this Right Certificate will / / will not
/ / enable the undersigned, its Affiliates, its Associates and or any other
Person with which the undersigned or any of the undersigned's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of
securities of the Company to obtain individually or in the aggregate in excess
of _________ Ordinary Shares of the Company.
Dated: ________, ___ _____________________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-9
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
ORDINARY SHARES
On September 11, 1998 the Board of Directors of EXEL Limited (the
"Company") declared a dividend distribution of one Right for each outstanding
Ordinary Share, U.S. $.01 par value (the "Ordinary Shares"), of the Company. The
distribution is payable on October 30, 1998 (the "Record Date") to the
shareholders of record on the Record Date. Each Right entitles the registered
holder to purchase from the Company one Ordinary Share at a price of U.S. $350
per share (the "Purchase Price"), subject to adjustment. The description and
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 (the "Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten days following the date (the "Shares
Acquisition Date") of the 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 a number of Ordinary
Shares equal to 20% or more of the outstanding Ordinary Shares or (ii) ten days
following the commencement or announcement of an intention to make a tender
offer or exchange offer if, upon consummation thereof, such person would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Company's
Ordinary Share certificates outstanding as of the Record Date, by such Ordinary
Share certificate. The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Company's Ordinary
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Ordinary Share certificates issued after the Record Date upon
transfer or new issuance of the Company's Ordinary Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any of the Company's Ordinary Share certificates outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Ordinary Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Company's
Ordinary Shares as
B-1
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on September 15, 2008, unless earlier redeemed
or exchanged by the Company as described below.
Exercise of Rights for Ordinary Shares of the Company
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Ordinary Shares are not changed or exchanged,
(ii) a Person becomes an Acquiring Person, (iii) an Acquiring Person engages in
one or more "self-dealing" transactions as set forth in the Rights Agreement, or
(iv) during such time as there is an Acquiring Person, an event occurs (e.g., a
reverse stock split) which results in such Acquiring Person's ownership interest
being increased by more than one percent, at any time following the Distribution
Date, each holder of a Right will thereafter have the right to receive, upon
exercise, Ordinary Shares (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 then in effect. 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.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction,
or (ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, ordinary shares of the acquiring company having a value equal to two
times the Purchase Price of the Right then in effect. The events set forth in
this paragraph and in the preceding paragraph are referred to as the "Triggering
Events."
Adjustments to Purchase Price
The Purchase Price payable and the number of Ordinary Shares (or other
securities, as the case may be) issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
dividend of shares on, or a subdivision, combination or reclassification of, the
Ordinary Shares, (ii) upon the grant to holders of the
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Ordinary Shares of certain rights or warrants to subscribe for Ordinary Shares
or convertible securities at less than the current market price of the Ordinary
Shares or (iii) upon the distribution to holders of Ordinary Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends or
dividends payable in Ordinary Shares) or of subscription rights or warrants
(other than those referred to above). Prior to the Distribution Date, the Board
of Directors of the Company may make such equitable adjustments as it deems
appropriate in the circumstances in lieu of any adjustment otherwise required by
the foregoing.
With certain exceptions, no adjustment in the Purchase Price will be
required until the earlier of (i) three years from the date of the event giving
rise to such adjustment or (ii) the time at which cumulative adjustments require
an adjustment of at least one percent in such Purchase Price. No fractional
shares will be issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Ordinary Shares on the last trading date prior
to the date of exercise.
Redemption and Exchange of Rights
At any time prior to 5:00 P.M. New York City time on the tenth day
following the Shares Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of U.S. $.01 per Right (the "Redemption
Price"). After the Shares Acquisition Date, the decision to redeem shall require
the concurrence of a majority of the Independent Directors. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights
with, if required, the concurrence of the Independent Directors, the Company
shall make announcement thereof, and upon such action, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time after the occurrence of any of the events set forth under the
heading "Exercise of Rights for Ordinary Shares of the Company" above, the Board
of Directors may exchange the Rights (other than Rights owned by an Acquiring
Person, which have become void), in whole or in part, at an exchange ratio of
one Ordinary Share, and of other securities, cash or other assets deemed to have
the same value as one Ordinary Share, per Right, subject to adjustment.
Until the Rights are exercised or exchanged for Ordinary Shares, the
holders thereof, as such, will have no rights as shareholders of the Company,
including, without limitation, the right to vote or to receive dividends.
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The term "Independent Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the time that any person
becomes an Acquiring Person, and any person who is subsequently elected to the
Board if such person is recommended or elected by a majority of the Independent
Directors, but shall not include an Acquiring Person or any representative
thereof.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the earlier of the Distribution Date or the
Shares Acquisition Date. After the earlier of the Distribution Date or the
Shares Acquisition Date, the provisions of the Rights Agreement may be amended
by the Board in order to cure any ambiguity, defect or inconsistency, or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interest of any Acquiring Person); provided, that no supplement
or amendment may be made on or after the Distribution Date which changes those
provisions relating to the principal economic terms of the Rights. The Board may
also, with the concurrence of a majority of the Independent Directors, extend
the redemption period for up to an additional 20 days.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
___________ , 1998. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
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