EXHIBIT 4.2
RIGHTS AGREEMENT DATED AS OF JUNE 14, 1997 BY AND BETWEEN
THE REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
AS RIGHTS AGENT
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MMI COMPANIES, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JUNE 14, 1997
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TABLE OF CONTENTS
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SECTION PAGE
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 3. Issue of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 4. Form of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 5. Countersignature and Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates . . . . . . . . . .8
Section 7. Exercise of Rights: Purchase Price: Expiration Date of Rights. . . . . . . . . . . . . . .9
Section 8. Cancellation and Destruction of Rights Certificates. . . . . . . . . . . . . . . . . . . .10
Section 9. Reservation and Availability of Capital Stock. . . . . . . . . . . . . . . . . . . . . . .11
Section 10. Preferred Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . .21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . .22
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 16. Agreement of Rights Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 17. Rights Certificate Holder Not Deemed a Stockholder . . . . . . . . . . . . . . . . . . . .26
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 19. Merger or Consolidation or Change of Name of Rights Agent. . . . . . . . . . . . . . . . .27
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 22. Issuance of New Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 29. Determinations and Actions by the Board of Directors etc.. . . . . . . . . . . . . . . . .35
Section 30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Section 32. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
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EXHIBIT 4.2
RIGHTS AGREEMENT DATED AS OF JUNE 14, 1997 BY AND BETWEEN
THE REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
AS RIGHTS AGENT
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 14, 1997 (the "Agreement"), between MMI
Companies, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services L.L.C. (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on June 14, 1997 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, par value $0.10 per
share, of the Company (the "Common Stock") outstanding at the close of business
on June 30, 1997 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date, each Right initially representing
the right to purchase one one-hundredth of a share of Series B Junior
Participating Preferred Stock (the "Preferred Stock") of the Company having the
rights, powers and preferences set forth in the Form of Certificate of
Designation, Preferences and Rights attached to this Agreement as Exhibit A,
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 who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan, or (iv) any person holding Common Stock issued to
that Person by the Company in a transaction approved in advance by a majority of
Continuing Directors of the Company to the extent and only to the extent so
approved. Notwithstanding the foregoing, if (a) the Board of Directors of the
Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph, has become such inadvertently, and such Person divests as promptly as
practicable (and in any event within ten (10) business days after notification
by the Company) a sufficient number of Common Shares so that such Person would
no longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph, then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement; and (b) no Person shall
become an "Acquiring Person" as a result
of an acquisition of Common Stock by the Company which, by reducing the number
of such shares then outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the outstanding Common
Stock, except that if such Person, after such share purchases by the Company,
becomes the Beneficial Owner of any additional shares of Common Stock, such
Person shall be deemed to be an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and in effect on the date of
this Agreement (the ''Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules
and 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
own," any security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to vote such
security if such
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agreement, arrangement or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange
Act, and (B) is not also then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company; provided, however, that
nothing in this paragraph (c) shall cause a person engaged
in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any
securities acquired through such person's participation in
good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition;
and provided further, however, that nothing in this
paragraph (c) shall cause a person to be the "Beneficial
Owner" of, or to "beneficially own," any securities held by
any employee benefit plan of the Company or any trust
created pursuant thereto solely as a result of such person
being (A) a member of a committee which is authorized to
make decisions on behalf of any such plan or with respect to
securities held pursuant thereto or (B) a trustee of any
trust created pursuant thereto.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York or Illinois are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Chicago time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Chicago time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the common stock, par value $0.10 per
share, of the Company, except that "Common Stock'' when used with reference to
any Person other than the Company shall mean the capital stock (or equity
interest) of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
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(g) "Continuing Director" shall mean a member of the Board of
Directors as of the Rights Dividend Declaration Date, and any successor to a
Continuing Director if the successor was recommended for election or elected to
succeed the prior Continuing Director by a majority of the Continuing Directors
or, if applicable under the Company's by-laws at such time, by a majority of
Continuing Directors on the Company's Nominating Committee.
(h) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor (by merger or
otherwise) of such entity.
(i) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, par value $20 per share, of the Company having
the rights, powers and preferences set forth in the Form of Certificate of
Designation, Preferences and Rights attached to this Agreement as Exhibit A,
and, to the extent that there are not a sufficient number of shares of Series B
Junior Participating Preferred Stock authorized to permit the full exercise of
the Rights, any other series of Preferred Stock, par value $20 per share, of the
Company designated for such purpose containing terms substantially similar to
the terms of the Series B Junior Participating Preferred Stock.
(j) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(l) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(m) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(n) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities sufficient
to elect at least a majority of the directors of such corporation is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(o) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
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SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth business day (or such
later date as the Board shall determine) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would become an Acquiring Person (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) The Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights") to
each holder of the Common Stock promptly after the close of business on the
Record Date (other than any Acquiring Person), at the address of such holder
shown on the records of the Company. With respect to certificates for the
Common Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as such term is defined in Section 7 hereof), the transfer of
any certificates representing shares of Common Stock in respect of which Rights
have been issued shall also constitute the transfer of the Rights associated
with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Record Date
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but prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such shares of Common Stock shall also be deemed to be
certificates for Rights, and shall bear a legend substantially equivalent to the
following:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between MMI Companies, Inc. (the "Company") and
the Rights Agent thereunder (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may
expire, or may be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and
void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per one
one-hundredth of a share, the "Purchase Price"), but the amount and
type of securities
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purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by: (i)
an Acquiring Person or 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 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 which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible
and otherwise reasonably identifiable as such) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented
hereby may become null and void in the
circumstances specified in Section 7(e) of such
Agreement.
The provisions of Section 7(e) shall apply whether or not any
Rights Certificate actually contains the foregoing legend.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its Chief Executive Officer,
its President, or an Executive Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by 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 the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature
by the Rights Agent and issuance and delivery by the Company, such
Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had
not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who,
at the actual
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date of the execution of such Rights Certificate, shall be a proper officer
of the Company to sign such Rights Certificate, although at the date
of the execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of
the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHTS CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates,
as the case may be, as so requested. The Company may require payment
of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and 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 Rights
Certificate if mutilated, the Company will execute and deliver a new
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Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS: PURCHASE PRICE: EXPIRATION
DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder
of any Rights Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation,
the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-hundredths of a share of
Preferred Stock (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable,
at or prior to the earlier of (i) the close of business on June 30,
2007 (the "Final Expiration Date"), or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the earlier of
(i) and (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right shall
initially be $75, and shall be subject to adjustment from time to time
as provided in Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per one one-hundredth
of a share of Preferred Stock (or other securities, cash or other
assets, as the case may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) (A)
requisition from any transfer agent of the shares of Preferred Stock
(or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the
total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depository agent, requisition from the
depository agent depository receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent
with the depository agent) and the Company will direct the depository
agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights
-9-
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash
or by certified bank check or bank draft payable to the order of the
Company. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the
right to require prior to the occurrence of a Triggering Event that,
upon any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to 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 the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights, 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 Rights Certificates or other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS
CERTIFICATES. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or
-10-
exchange shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and
no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled
Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the
Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued
shares of Preferred Stock the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities
or out of its authorized and issued shares held in its treasury) that,
as provided in this Agreement including Section 11(a)(iii) hereof,
will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights has been
determined in accordance with Section 11(a)(iii) hereof, a
registration statement under the Securities Act of 1933 (the "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 date of the expiration of
the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for
a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement
-11-
is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time
as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-hundredths
of a share of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates
for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a
number of one one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case
may be) in respect of a name other than that of the registered holder
of the Rights Certificates evidencing Rights surrendered for exercise
or to issue or deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall
have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose
name any certificate for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional
shares of Preferred Stock (or Common Stock and/or other securities, as
the case may be) represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred
Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall
-12-
not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends
or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of
shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section
11.
(a)(i) In the event the Company shall at
any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable
in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number
of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock
(including any such reclassification in connection
with a consolidation or merger in which the
Company is the continuing or surviving
corporation), 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 shares of Preferred
Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred
Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior
to such date and at a time when the Preferred
Stock transfer books of the Company were open, 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) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event that any Person, alone or
together with its Affiliates and Associates,
shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person,
then, promptly following the occurrence of any
such event, proper provision shall be made so that
each holder of a Right
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(except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase
Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which,
following such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market
Price (determined pursuant to Section 11(d) hereof) per
share of Common Stock on the date of such first occurrence
(such number of shares, the "Adjustment Shares").
(iii) In the event that the number of
shares of Common Stock which are authorized by the
Company's certificate of incorporation but not
outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not
sufficient to permit the exercise in full of the
Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the value of the
Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), and (B) with respect
to each Right (subject to Section 7(e) hereof),
make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right
and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the
Company (including, without limitation, shares, or
units of shares, of preferred stock, such as the
Preferred Stock, which the Board has deemed to
have essentially the same value or economic rights
as shares of Common Stock (such shares of
preferred stock being referred to as "Common Stock
Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination
of the foregoing, having an aggregate value equal
to the Current Value (less the amount of any
reduction in the Purchase Price), where such
aggregate value has been determined by the Board
based upon the advice of a nationally recognized
investment banking firm selected by the Board;
PROVIDED, HOWEVER, that 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
-14-
pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to deliver, upon
the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the
Spread. For purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board determines in good
faith that it is likely that sufficient additional shares of
Common Stock 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 thirty (30) day period, as it may be extended, is
herein called the "Substitution Period"). To the extent that
action is to be taken pursuant to the first and/or third
sentences of this Section 11(a)(iii), the Company (1) shall
provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (2) may
suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such
shareholder approval for such authorization of additional
shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall
be the Current Market Price per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the per share or per
unit value of any Common Stock Equivalent shall be deemed to
equal the Current Market Price per share of the Common Stock
on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share
of equivalent preferred stock (or having a conversion price per share,
if a security convertible into Preferred Stock or equivalent preferred
stock) less than the Current Market Price (as determined
-15-
pursuant to Section 11(d) hereof) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of shares of Preferred Stock which
the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration
part or all of which may 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 and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by 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 cash,
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Preferred
Stock and the denominator of which shall be such Current Market Price
(as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution
is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had
not been fixed.
(d)(i) For the purpose of any computation
hereunder, other than computations made pursuant
to Section 11(a)(iii) hereof, the Current Market
Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing
-16-
prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the ten (10)
consecutive Trading Days immediately following such date;
PROVIDED, HOWEVER, that in the event that the Current Market
Price per share of the Common Stock is determined during a
period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and the
tax-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten
(10) Trading Day period, as set forth above, then, and in
each such case, the Current Market Price shall be properly
adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to
trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any
such date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by
the Board of Directors
-17-
of the Company shall be used. The term "Trading Day" shall
mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business
Day. If the Common Stock is not publicly held or not so
listed or traded, Current Market Price per share shall mean
the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock of
the Company in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the
Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause
(i) of this Section 11(d), the Current Market
Price per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100
(as such number may be appropriately adjusted for
such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock
occurring after the date of this Agreement)
multiplied by the Current Market Price per share
of the Common Stock of the Company. If neither the
Common Stock nor the Preferred Stock is publicly
held or so listed or traded, Current Market Price
per share of the Preferred Stock shall mean the
fair value per share as determined in good faith
by the Board of Directors of the Company, whose
determination shall be described in a statement
filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of
this Agreement, the Current Market Price of one
one-hundredth of a share of Preferred Stock shall
be equal to the Current Market Price of one share
of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken 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 a share
of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the
-18-
first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment,
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and
the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-hundredths of a share
of Preferred Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated
to the nearest one one-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 adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date
for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later
than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant
-19-
to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on
such record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredths of a share and the number of
one one-hundredths of a share which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of
the number of one one-hundredths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths of a
share of Preferred Stock at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-hundredths of a
share of Preferred Stock (or other securities of the Company, if any)
issuable upon such exercise over and above the number of one
one-hundredths of a share of Preferred Stock (and other capital stock
or securities of the Company, if any), issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment the Board of Directors of the Company shall determine
to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the Current Market Price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance of rights,
-20-
options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, 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(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the
occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. Whenever an adjustment is made as provided in Section 11
and Section 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the
Rights Agent, and with each transfer agent for the Preferred Stock and
the Common Stock, a copy of such
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certificate, and (c) mail a brief summary thereof to each holder of a
Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment
therein contained.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (x) the Company shall consolidate with,
or merge with and into, any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock 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 transaction or
a series of related 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 Person or Persons (other than
the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then,
and in each such case except as may be contemplated by Section 13(d)
hereof, proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, 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 authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of 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 one one-hundredths of
a share of Preferred Stock for which a Right is 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 one
one-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event
by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the Current Market Price (determined pursuant
to Section 11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event;
(ii) such 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
hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take
-22-
such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with
the consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (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
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of
Section 13(a), the Person that is the issuer of
any securities into which shares of Common Stock
of the Company are converted in such merger or
consolidation, and if no securities are so issued,
the Person that is the other party to such merger
or consolidation; and
(ii) in the case of any transaction described
in clause (z) of the first sentence of 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, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party
shall have a sufficient number of authorized shares of its Common
Stock which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto 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 (b)
of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party
will:
(i) 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, and
will use its best efforts to cause such
registration statement to (A) become effective as
soon as practicable after such filing and (B)
remain
-23-
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and take
any necessary action under applicable blue sky laws; 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
mergers or consolidations or sales or other transfers. 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).
(d) Notwithstanding anything herein to the contrary, if any
Person shall merge with and into the Company without any change in any
shares of Common Stock, but under circumstances in which if shares of
Common Stock were changed or exchanged in whole or in part then the
provisions of this Section 13 would apply, then for purposes of this
Section 13 the Common Stock shall be deemed changed, the provisions of
this Section 13 shall be deemed to apply and the Company shall be
deemed to be the Principal Party after such merger.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount
in cash equal to the same fraction of the current market value of a
whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed
or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in
the Rights
-24-
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
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred
Stock). In lieu of fractional shares of Preferred Stock that are not
integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a
share of Preferred Stock shall be one one-hundredth of the closing
price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue or deliver fractions of shares
of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu
of fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock.
For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of
Common Stock (as determined pursuant to Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives such holder's right to receive any fractional Rights
or any fractional shares upon exercise of a Right, except as permitted
by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement are vested in the respective registered holders of
the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of
any Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his or her own behalf and for his
or her own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act
in respect of, such holder's right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled
to specific performance
-25-
of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person
subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent), subject to the last sentence of Section
7(e) hereof, for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; PROVIDED, HOWEVER, the
Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the
holder of the number of one one-hundredths of a share of Preferred
Stock (or any other securities) of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to
any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or
-26-
otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the
provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. Except as provided
in Section 20(c), in no case will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if
the Rights Agent has been advised of the possibility of such loss or
damage. 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, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any
claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock
or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto; PROVIDED, HOWEVER, that such corporation would
be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent;
and in all
-27-
such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement (and
only such duties and obligations) upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of Current Market Price) be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, Chief Executive Officer, President, or an
Executive Vice President of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate
-28-
(except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
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 shares of Common Stock or
Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the Chief Executive Officer,
the President, an Executive Vice President, the Secretary, any
Assistant Secretary, or the Treasurer, and to apply to such officers
for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct; PROVIDED, HOWEVER, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
-29-
(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 to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise of transfer
without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed
to the Company, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30)
days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and
reasonably promptly to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection by the
Company), then any registered holder of no less than 100 Rights 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 any state of the
United States, in good standing, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock,
and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by 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 Rights
Certificates
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made in accordance with the provisions of this Agreement. In addition,
in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon the exercise, conversion
or exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; PROVIDED, HOWEVER, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company
or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the close of business
on the tenth day following the Stock Acquisition Date (or, if the
Stock Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth day following the Record Date), or
(ii) the Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.01 per Right, as
such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"). Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until such time as
the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price, as defined in Section
11(d)(i) hereof, of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
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(c) Notwithstanding the provisions of Section 23(a) hereof,
in the event that a majority of the Board is elected by stockholder
action by written consent, or is comprised of persons elected at a
meeting of stockholders who were not nominated by the Board in office
immediately prior to such meeting, then for a period of one hundred
and eighty (180) days following the effectiveness of such election,
the Rights shall not be redeemed if such redemption is reasonably
likely to have the purpose or effect of allowing any Person to become
an Acquiring Person or otherwise facilitating the occurrence of a
Triggering Event or a transaction with an Acquiring Person.
SECTION 24. EXCHANGE. (a) The Board of Directors of the
Company may, at its option, at any time after a Triggering 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 Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Affiliate of
the Company, any employee benefit plan of the Company or any such
Affiliate, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (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 shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall
not affect the validity of any such exchange. The Company shall
promptly 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 of shares of Common Stock for the Rights
will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights
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 Preferred Stock (or equivalent preferred
stock, as such term is defined in Section 11(b) hereof) for Common
Stock exchangeable for Rights, at the initial rate of one
one-hundredth of a share of Preferred Stock (or equivalent preferred
stock) for each share of
-32-
Common Stock, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Stock pursuant to the terms thereof, so
that the fraction of a share of Preferred Stock delivered in lieu of
each share of Common Stock shall have the same voting rights as one
share of Common Stock.
(d) In the event that there shall not be sufficient Common Stock
or Preferred Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional Common Stock or
Preferred Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractional shares
of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares
of Common Stock, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to
the same fraction of the Current Market Value of a whole share of
Common Stock. For the purposes of this paragraph (e), the Current
Market Value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS. In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any class
or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred
Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one transaction or a series of related
transactions, of 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(o)
hereof), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for
-33-
determining holders of the shares of Preferred Stock for purposes of
such action, and in the case of any such other action, at least twenty
(20) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier.
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 Rights Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
MMI Companies, Inc.
000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the 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.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxx Xxxx, XX 00000
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the
Company so directs by resolution of its Board of Directors (which
resolution shall be effective only with the concurrence of a majority
of the Continuing Directors and only if the Continuing Directors
constitute a majority of the number of directors then in office),
supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common
Stock. From and after the Distribution Date, the Company and the
Rights Agent shall, if the Company so directs by resolution of its
Board of Directors (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the number of directors
then in office), supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
-34-
hereunder 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 Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); PROVIDED, from and after the
Distribution Date, this Agreement may not be supplemented or amended
to lengthen any time period hereunder pursuant to clause (iii) of this
sentence unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may not be amended at a time
when the Rights are not redeemable.
SECTION 28. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS ETC. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3 (d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of a majority of the
Continuing Directors and only if the Continuing Directors constitute a
majority of the number of directors then in office), shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of
Directors or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this Agreement,
and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem
or not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors (with,
where specifically provided for herein, the concurrence of a majority
of the Continuing Directors and only if the Continuing Directors
constitute a majority of the number of directors then in office), in
good faith, shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors to any liability to the holders
of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered holders
of the
-35-
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; PROVIDED, HOWEVER, that
notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and 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, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts made and to be performed
entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above
written.
Attest: MMI COMPANIES, INC.
By By
------------------------ --------------------------------------
Name: Xxxxxx X. Xxxxx Name: Xxxx X. Xxxxxx
Title: Ass't. Secretary Title: Executive Vice President and
Chief Executive Officer
Attest: CHASEMELLON SHAREHOLDER
SERVICES L.L.C.
-36-
By By
------------------------------ ------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx Xxxxxxxx
Title: Account Representative Title: Account Administrator
-37-
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES
AND OTHER RIGHTS
OF THE
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
MMI COMPANIES, INC.
-------------------------
Pursuant to Section 151(g) of the
Delaware General Corporation Law
MMI Companies, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), hereby
certifies that, pursuant to the authority conferred upon the Board of
Directors of the Corporation (the "Board of Directors") by the
Restated Certificate of Incorporation of the Corporation and in
accordance with Section 151(g) of the Delaware General Corporation
Law, the Board of Directors at a meeting held on June 14, 1997 duly
adopted the following resolution, which resolution remains in full
force and effect as of the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors and in accordance with the provisions of the Corporation's
Restated Certificate of Incorporation, there is hereby created and
authorized a series of Preferred Stock of the Corporation, and the
designation and amount thereof and the powers, preferences and rights
of the shares of such series, and the qualification, limitations or
restrictions thereof are as follows:
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
SECTION 1. DESIGNATION AND AMOUNT. There shall be a series
of Preferred Stock of the Corporation which shall be designated as
"Series B Junior Participating Preferred Stock," par value $20.00 per
share (hereinafter called "Series B Preferred Stock"), and the number
of shares constituting such series shall be 300,000. Such number of
shares may be increased or decreased by resolution of the Board of
Directors and by the filing of a certificate pursuant to the
provisions of the General Corporation Law of the State of Delaware
stating that such increase or reduction has been so authorized.
A-1
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series B Preferred Stock with respect to dividends,
the holders of shares of Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable
in cash to holders of record on the last business day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series B Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends,
and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock (hereinafter defined) or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock, par
value $0.10 per share, of the Corporation (the "Common Stock") since
the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Preferred
Stock. In the event the Corporation shall at any time following June
14, 1997 (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series
B Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
each such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series B Preferred Stock as provided in paragraph (A) above at the
time it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock).
(C) No dividend or distribution (other than a dividend payable
in shares of Common Stock) shall be paid or payable to the holders of
shares of Common Stock unless, prior thereto, all accrued but unpaid
dividends to the date of such dividend or distribution shall have been
paid to the holders of shares of Series B Preferred Stock.
(D) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Series B Preferred Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such
A-2
dividends shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series B Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be no more than thirty (30) days prior to the date fixed
for the payment thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Except as otherwise required by law and subject to the
provisions for adjustment hereinafter set forth, each share of Series
B Preferred Stock shall entitle the holder thereof to 100 votes on
each matter submitted to a vote of the stockholders of the Corporation
at the record date for the determination of stockholders entitled to
vote on such matters or, if no such record date is established, at the
date such vote is taken or any written consent of the stockholders is
solicited. In the event the Corporation shall at any time following
June 14, 1997 (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes
per share to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
on Stock that were outstanding immediately prior to such event.
Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(B) (i) If at any time dividends on any Series B Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period") which shall
extend until such time when all accrued and unpaid dividends, whether
or not declared and whether or not consecutive, for all previous
quarterly dividend periods and for the current quarterly dividend
period on all shares of Series B Preferred Stock then outstanding
shall have been declared and paid or set apart for payment. During
each default period, all holders of Preferred Stock (including holders
of the Series B Preferred Stock) with dividends in arrears in an
amount equal to six (6) quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect two (2)
Directors.
(ii) During any default period, such voting right of the
holders of Series B Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section
3(B) or at any annual meeting of stockholders, and thereafter at
annual meetings of stockholders, provided that neither such voting
right nor the right of the holders of
A-3
any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless
the holders of ten percent (10%) in number of shares of Preferred
Stock outstanding shall be present in person or by proxy. The absence
of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At
any meeting at which the holders of Preferred Stock shall exercise
such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill
such vacancies, if any, in the Board of Directors as may then exist up
to two (2) Directors or, if such right is exercised at an annual
meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number,
the holders of the Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit
the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in
any default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by vote
of the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or PARI PASSU
with the Series B Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the Chief Executive Officer, the President, any
Executive Vice President or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this paragraph
(B)(iii) shall be given to each holder of record of Preferred Stock by
mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than twenty (20) days and not later than sixty
(60) days after such order or request or in default of the calling of
such meeting within sixty (60) days of such order or request, such
meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less then ten percent (10%)
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (B)(iii), no such
special meeting shall be called during the period within sixty (60)
days immediately preceding the date fixed for the next annual meeting
of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of Directors until
the holders of Preferred Stock shall have exercised their right to
elect two (2) Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of Preferred Stock
shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided
in paragraph (B)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall
have become vacant. References in this paragraph (B) to Directors
elected by the holders of a particular class of
A-4
stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period,
(x) the right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in the
certificate of incorporation or by-laws irrespective of any increase
made pursuant to the provisions of paragraph (B)(ii) of this Section 3
(such number being subject, however, to change thereafter in any
manner provided by law or in the certificate of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series B Preferred
Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, and whether or
not consecutive, on shares of Series B Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except dividends paid ratably
on the Series B Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series B Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series B Preferred
Stock; or
A-5
(iv) purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section, purchase or otherwise acquire such
shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series B
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series B Preferred
Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received $20.00 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series B
Liquidation Preference"). Following the payment of the full amount of
the Series B Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series B Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series B Liquidation Preference
by (ii) 100 (as appropriately adjusted as set forth in subparagraph C
below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series B Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series B Preferred
Stock and Common Stock, respectively, holders of Series B Preferred
Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be
distributed in the ratio, on a per share basis, of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on
a per share basis, respectively.
A-6
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, which rank on a parity with the Series B
Preferred Stock, then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences.
(C) In the event the Corporation shall at any time following
June 14, 1997 (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock (by reclassification or otherwise), or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series B Preferred Stock
shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock (by reclassification or
otherwise), or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of
shares of Series B Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
SECTION 8. REDEMPTION. The shares of a Series B Preferred
Stock shall not be redeemable by the Corporation. The preceding
sentence shall not limit the ability of the Corporation to purchase or
otherwise deal in such shares of stock to the extent permitted by law.
SECTION 9. RANKING. As to distributions upon any
liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the Series B Preferred Stock shall rank
senior to the Common Stock of the Corporation, par value $0.10 per
share, but shall rank junior to all other series of the Corporation's
preferred stock (whether with or without par value), unless the terms
of any such series shall provide otherwise.
A-7
SECTION 10. AMENDMENT. The Restated Certificate of
Incorporation of the Corporation or any certificate, amendment or
supplement thereto (including any Certificate of Designation or any
similar document relating to any series of preferred stock) shall not
be amended, altered or repealed in any manner which would adversely
change the powers, preferences or rights of the Series B Preferred
Stock without the affirmative vote or consent of the holders of a
majority of the outstanding shares of such series, voting separately
as a series. For purposes of this Section 10, creation of additional
classes of preferred stock ranking senior to or equal to the Series B
Preferred Stock shall not be deemed to be a change adversely altering
the preferences and special rights of the Series B Preferred Stock.
SECTION 11. FRACTIONAL SHARES. Series B Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have
the benefit of all other rights of holders of Series B Preferred
Stock.
IN WITNESS WHEREOF, MMI Companies, Inc. has caused this
Certificate to be signed by Xxxxxx X. Xxxxx, its Assistant Secretary,
this ____ day of _________, 1997.
MMI COMPANIES, INC.
BY:
---------------------------
Xxxxxx X. Xxxxx
Assistant Secretary
A-8
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- _____________ Rights
NOT EXERCISABLE AFTER JUNE 30, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.](1)
Rights Certificate
MMI COMPANIES, INC.
This certifies that ___________________________, or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of June
14, 1997 (the "Rights Agreement"), between MMI Companies, Inc., a
Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services L.L.C. (the "Rights Agent"), to purchase from the Company at
any time prior to 5:00 PM (Chicago time) on June 30, 2007 at the
office or offices of the Rights Agent designated for such purpose, or
its successors as Rights Agent, one one-hundredth of a full share of
Series B Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of $75 per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of June
30, 1997, based on the Preferred Stock as constituted at such date.
The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement)
that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
-----------------
(1) The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
B-1
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of any
such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an
Affiliate or Associate of 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 shares of Preferred Stock or other securities which
may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events (as such term
is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set
forth in the Rights Agreement. A copy of the Rights Agreement is on
file at the principal office of the Company and are also available
upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the
Rights Agent designated for such purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate
number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Rights Certificate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $0.01 per Right at any time prior to
the earlier of the close of business on (i) the tenth day following
the Stock Acquisition Date, and (ii) the Final Expiration Date. The
foregoing notwithstanding, the Rights generally may not be redeemed
for one hundred eighty (180) days following a change in a majority of
the Board as a result of stockholder written consent or a proxy
contest.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions
which are integral multiples of one one-
B-2
hundredth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depository receipts), but in lieu thereof
a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or 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 stockholder of
the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or, to receive
notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced
by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officer of the
Company and its corporate seal.
MMI COMPANIES, INC.
By:
---------------------------
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES L.L.C., as Rights Agent
By:
--------------------------------
Name:
Title:
B-3
EXHIBIT 4.2
RIGHTS AGREEMENT DATED AS OF JUNE 14, 1997 BY AND BETWEEN
THE REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
AS RIGHTS AGENT
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________________________________________
hereby sells, assigns and transfers unto _____________________________
(Please print name and address of transferee)
______________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_______________ attorney, to transfer the within Rights Certificate on
the books of the within-named Company, with full power of
substitution.
Dated:________________
_________________________
Signature
Medallion Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved by
the Securities Transfer Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated:___________________
_________________________
Signature
Medallion Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
EXHIBIT 4.2
RIGHTS AGREEMENT DATED AS OF JUNE 14, 1997 BY AND BETWEEN
THE REGISTRANT AND CHASEMELLON SHAREHOLDER SERVICES L.L.C.,
AS RIGHTS AGENT
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: MMI COMPANIES, INC.
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise of
the Rights (or such other securities 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
and delivered to:
Please insert social security or other identifying number
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Rights Certificate, a new Rights Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
_____________________________________________________________________
Dated:__________________
________________________
Signature
Medallion Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved by
the Securities Transfer Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being
exercised, sold, assigned and transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated:_____________________
________________________
Signature
Medallion Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust
company, broker, dealer, or other eligible institution which is a
member in good standing of a medallion guaranty program approved by
the Securities Transfer Association, Inc.
NOTICE
The signature to the foregoing Election to Purchase must
correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On June 14, 1997, the Board of Directors of MMI Companies, Inc.
(the "Company") adopted a Shareholder Rights Plan, and declared a
dividend distribution of one Right for each outstanding share of
Common Stock, payable to stockholders of record at the close of
business on June 30, 1997 (the "Record Date"). One Right will be
attached to each share of Common Stock and each Right will entitle the
registered holder to purchase from the Company a unit consisting of
one one-hundredth of a share (a "Unit") of Series B Junior
Participating Preferred Stock, par value $20 per share (the "Preferred
Stock") at a purchase price of $75 per Unit (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.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
Rights Certificates will be distributed. Any shares issued by the
Company following the Record Date will bear a legend indicating that
the Rights are attached to such Common Stock certificates. Shares
issued and owned by stockholders prior to the Record Date will be
deemed to have Rights attached. STOCKHOLDERS SHOULD NOT SURRENDER
SUCH CERTIFICATES FOR LEGENDING. The Rights will separate from the
Common Stock upon the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the right to
acquire, Beneficial Ownership of 15% or more of the outstanding shares
of Common Stock (the "Stock Acquisition Date"), or (ii) 10 business
days (or such later date as the Board of Directors may determine)
following the commencement of a tender offer or exchange offer that
would result in a person or group becoming an Acquiring Person (a
person or group of affiliated or associated persons who has acquired
Beneficial Ownership of 15% or more of the outstanding Common Stock of
the Company). The earlier of (i) and (ii) is known as the
"Distribution Date." Until the Distribution Date, (i) the Rights will
be evidenced by the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii) new Common
Stock certificates will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock represented by
such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on June 30, 2007, unless earlier
redeemed or extended by the Company.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter,
the separate Rights Certificates alone will represent the Rights.
Except as
otherwise determined by the Board of Directors, only shares of Common
Stock issued prior to the Distribution Date will be issued with
Rights.
In the event that any person becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive upon
exercise Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the
Purchase Price. Notwithstanding any of the foregoing, following the
occurrence of the event 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. However, Rights are not exercisable following the occurrence of
any of the Flip-in Events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event that following the Stock Acquisition Date, (i) the
Company engages in a merger or business combination transaction in
which the Company is not the surviving corporation; (ii) the Company
engages in a merger or business combination transaction in which the
Company is the surviving corporation and the Common Stock of the
Company is changed or exchanged; or (iii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a Right
(except Rights which have previously been voided as set forth above)
shall thereafter have the right to receive, upon exercise of the
Right, common stock of the acquiring company having a value equal to
two times the Purchase Price.
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of, the Preferred Stock, (ii) if holders of the
Preferred Stock are granted certain rights or warrants to subscribe
for Preferred Stock or convertible securities at less than the Current
Market Price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price
of the Preferred Stock at the close of the last trading date prior to
the date of exercise.
Generally, at any time until ten days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but not
in part, at a price of $0.01 per Right. Immediately upon the action of
the Board of Directors ordering redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to
receive the $0.01 redemption price. The foregoing notwithstanding, the
Rights generally may not be redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a result of a proxy
contest or consent solicitation.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the Rights will not be taxable to stockholders or to
the Company, stockholders may, depending upon the circumstances,
recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the acquiring
company as set forth above.
Any of the provisions of the Rights Agreement may be amended by
the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement
may be amended by the Board in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement;
PROVIDED, HOWEVER, that no amendment shall be made at such time as the
Rights are not redeemable.
Only Board action by a majority of Continuing Directors (a member
of the Board on June 14, 1997 and certain successors), as defined in
the Rights Agreement, can amend or supplement the Rights Agreement or
exclude from the definition of Acquiring Person any person receiving
Common Stock from the Company in a transaction approved in advance by
such Board action.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A. 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 incorporated herein by reference.
