CHARTWELL RE CORPORATION
and
FLEET NATIONAL BANK OF CONNECTICUT,
Rights Agent
RIGHTS AGREEMENT
--------------------------------------------------------
Dated as of May 22, 1997
TABLE OF CONTENTS
Page
-----
Section 1. Certain Definitions............................... ...............2
Section 2. Appointment of Rights Agent......................................10
Section 3. Issue of Right Certificates......................................10
Section 4. Form of Right Certificates.......................................14
Section 5. Countersignature and Registration................................16
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates...............................................17
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights........................................19
Section 8. Cancellation and Destruction of Right
Certificates.....................................................23
Section 9. Reservation and Availability of Capital Stock....................24
Section 10. Preferred Shares Record Date....................................27
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights..............................28
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares................................................47
Section 13. Consolidation, Merger or Sale or Transfer
of Assets, Cash Flow or Earning Power...........................48
Section 14. Fractional Rights and Fractional Shares.........................53
Section 15. Rights of Action................................................56
Section 16. Agreement of Right Holders......................................57
Section 17. Right Certificate Holder Not Deemed a
Shareholder.....................................................58
Section 18. Concerning the Rights Agent.....................................59
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.................................................60
Section 20. Duties of Rights Agent..........................................61
-i-
Section 21. Change of Rights Agent..........................................66
Section 22. Issuance of New Right Certificates..............................68
Section 23. Redemption......................................................69
Section 24. Exchange........................................................70
Section 25. Notice of Certain Events........................................73
Section 26. Notices.........................................................74
Section 27. Supplements and Amendments......................................75
Section 28. Successors......................................................76
Section 29. Determinations and Actions by the Board
of Directors, etc...............................................77
Section 30. Benefits of this Agreement......................................78
Section 31. Severability....................................................78
Section 32. Governing Law...................................................78
Section 33. Counterparts....................................................79
Section 34. Descriptive Headings............................................79
Signatures...................................................................80
Exhibit A - Resolutions Setting Forth Rights and
Preferences of Preferred Shares
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
-ii-
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of May 22, 1997 (this "Agreement"),
between Chartwell Re Corporation, a Delaware corporation (the "Company"), and
Fleet National Bank of Connecticut, as rights agent (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one purchase right (a "Right") for each share of common
stock, par value $.01 per share, of the Company ("Common Share") outstanding at
the Close of Business (as hereinafter defined) on May 22, 1997 (the "Record
Date"), each Right initially representing the right to purchase (subject to the
limitations set forth in Sections 7 and 14(b) hereof) one one-hundredth
(1/100th) of a share of Junior Participating Cumulative Preferred Stock, par
value $1.00 per share, of the Company having the rights and preferences set
forth in the resolutions adopted by the Board of Directors of the Company, a
copy of which is attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights"), and has further authorized the
issuance of one Right (subject to adjustment) with respect to each Common Share
that shall become outstanding between the Record Date (whether originally issued
or delivered from the Company's treasury) and the earlier of the Distribution
Date, the Expiration Date and the Final Expiration Date (as such terms are
defined in Section 7(a) hereof) and, to the extent provided in Section 22
hereof, with respect to each such share issued after the Distribution Date and
-1-
prior to the earlier of the Expiration Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
20% or more of the Common Shares then outstanding, but shall not
include (i) the Company or any Subsidiary (as such term is hereinafter
defined) of the Company, (ii) any employee benefit plan (including, but
not limited to, any employee stock ownership plan) of the Company or
any Subsidiary of the Company or any Person organized, appointed or
established by the Company or such Subsidiary as a fiduciary for or
pursuant to the terms of any such employee benefit plan or (iii) any
Person who would otherwise be an "Acquiring Person" but for the good
faith determination by the Board of Directors of the Company that such
Person has become an "Acquiring Person" inadvertently, provided that
such Person together with its Affiliates and Associates divest
themselves as promptly as practicable of beneficial ownership of a
sufficient number of Common Shares so that
-2-
such Person together with its Affiliates and Associates beneficially
own less than 20% of the Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as
amended.
(c) "Adjustment Shares" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the Record Date.
(e) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, has directly or indirectly, the
right to 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 or arrangement (whether or not in writing);
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if
the agreement or arrangement (whether or not in writing) to
vote such security (A)(1) arises solely from a revocable proxy
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2)
is
-3-
not also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report) or (B) arises
solely from the Stockholders' Agreement, dated as of December
13, 1995, by and between the Company and the security holders
named in the Schedule of holders attached thereto as such
Agreement is in effect as of the date hereof or as is amended
or modified after the date hereof with the approval of a
majority of the members of the Board of Directors of the
Company;
(ii) which such Person or any of such Person's Affiliates
or Associates has, directly or indirectly, the right to
acquire (whether such right is exercisable immediately or only
after the passage of time or upon the occurrence of an event)
pursuant to any agreement or arrangement (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 or on behalf of
such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange, (B) securities which such Person has a right to
acquire upon the exercise of Rights at any time prior to the
time a Person becomes an Acquiring Person or (C) securities
-4-
issuable upon exercise of Rights from and after the time a
Person becomes an Acquiring Person if such 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; 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 or arrangement (whether or not in
writing) for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in subparagraph (i)
of this paragraph (e)) or disposing of any securities of the
Company. Notwithstanding the foregoing, nothing contained in
this paragraph (e) shall cause a Person ordinarily engaged in
business as an underwriter of securities to be the Beneficial
Owner of, or to beneficially own, any securities acquired
through such person's participation in good faith in a firm
commitment underwriting until the expiration of 40 days after
the date of such acquisition. (f) "Business Day" shall mean
any day other than a Saturday, Sunday, or a day on which
-5-
banking instructions in the State of New York are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., New York City time,
on the next succeeding Business Day.
(h) "Common Shares" when used with reference to the Company
shall mean the shares of common stock, par value $.01 per share, of the
Company. "Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock with the greatest voting
power, or the equity securities or other equity interest having power
to control or direct the management, of such Person, or, if such Person
is a Subsidiary of another Person, the capital stock with the greatest
voting power of the Person which ultimately controls such
first-mentioned Person. "Common Shares" when used with reference to any
Person which is not organized in corporate form shall mean units of
beneficial interest which (i) shall represent the right to participate
generally in the profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from an ownership
interest in such Person) and (ii) shall be entitled to exercise the
greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner or
partners.
-6-
(i) "Common Share Equivalents" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(j) "Company" shall have the meaning set forth in the
first paragraph of this Agreement.
(k) "Current Market Price" shall have the meaning set
forth in Section 11(d) hereof.
(l) "Current Value" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(n) "Equivalent Preference Shares" shall have the meaning set
forth in Section 11(b) hereof.
(o) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(p) "Exchange Ratio" shall have the meaning set forth
in Section 24(a) hereof.
(q) "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(r) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(s) "NASDAQ" shall have the meaning set forth in
Section 11(d) hereof.
(t) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
-7-
(u) "Preferred Shares" shall mean shares of Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of
the Company, having the rights, preferences and limitations set forth
in the resolutions adopted by the Board of Directors of the Company, a
copy of which is attached hereto as Exhibit A, and, to the extent there
are not a sufficient number of shares of Junior Participating
Cumulative Preferred Stock authorized to permit the full exercise of
the then outstanding Rights, any other series of preferred shares of
the Company designated for such purpose by the Board of Directors of
the Company containing terms substantially similar to the terms of the
Junior Participating Cumulative Preferred Stock.
(v) "Principal Party" shall have the meaning set forth
in Section 13(b) hereof.
(w) "Purchase Price" shall have the meaning set forth
in Section 4(a) hereof.
(x) "Record Date" shall have the meaning set forth in the
second paragraph of this Agreement.
(y) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(z) "Right" shall have the meaning set forth in the
second paragraph of this Agreement.
(aa) "Right Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(bb) "Rights Agent" shall have the meaning set forth in
the first paragraph of this Agreement.
-8-
(cc) "Section 11(a)(ii) Event" shall have the meaning
set forth in Section 11(a)(ii) hereof.
(dd) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(ee) "Section 13 Event" shall have the meaning set
forth in Section 13(a) hereof.
(ff) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, includes a
report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become
such.
(gg) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(hh) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of directors or other
persons performing similar functions are at the time beneficially
owned, directly or indirectly, by such Person, or otherwise controlled
by such person.
(ii) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(jj) "Summary of Rights" shall have the meaning set
forth in Section 3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
-9-
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) 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.
Section 3. Issue of Right Certificates. (a) Until the earlier
of the Close of Business on (i) the tenth Business Day after the Shares
Acquisition Date or (ii) the tenth Business Day, or such specified or
unspecified later date as may be determined by action of the Board of Directors
of the Company, after the date of the commencement of (as determined by
reference to Rule 14d-2(a), as now in effect under the Exchange Act), or first
public announcement of the intent of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan, including, but not limited
to, an employee stock ownership plan, of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or established by the Company or
such Subsidiary as a fiduciary pursuant to the terms of any such employee
benefit plan) to commence (which intention to commence remains in effect for
five Business Days after such announcement), a tender or exchange offer for an
amount of Common Shares of the Company which, together with the Common Shares
already beneficially owned by such Person, constitutes 20% or more of the
outstanding Common Shares (including any such date
-10-
which is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates described in clauses (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates for Common Shares shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the rights to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send, by first-class, postage prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held, subject to
adjustment as provided herein and to the provisions of Section 14(a) hereof. As
of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date at the address of such
holder shown on the records of the Company. With respect to
-11-
certificates for Common Shares outstanding as of the Record Date, until the
earlier of the Distribution Date, the Expiration Date and the Final Expiration
Date (as such terms are defined in this Section 3 and in Section 7 hereof), the
Rights will be evidenced by such certificates for Common Shares registered in
the names of the holders thereof (together with a copy of the Summary of
Rights). Until the earlier of the Distribution Date, the Expiration Date and the
Final Expiration Date, the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares issued after the Record
Date but prior to the earlier of the Distribution Date, the Expiration Date and
the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Chartwell Re Corporation and Fleet National Bank of
Connecticut dated as of May 22, 1997 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Chartwell Re Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Chartwell Re
Corporation will mail to the holder of this certificate a copy
of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, Rights
issued to Acquiring
-12-
Persons or any Affiliates or Associates thereof (as defined in
the Rights Agreement) may become null and void. The Rights
shall not be exercisable, and shall be void so long as held,
by a holder in any jurisdiction as long as the requisite
qualification for the issuance to such holder, or the exercise
by such holder of the Rights in such jurisdiction, shall not
have been obtained.
After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Common Shares represented
by certificates containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any such certificates
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding. The failure to print the
foregoing legend on any such certificate for Common Shares or any other defect
therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
-13-
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares, certificate and
assignment to be printed on the reverse thereof) shall be substantially the same
as 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 Sections 7, 11, 14(b) and 22 hereof, the
Right Certificates, whenever issued, 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 Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Affiliate or Associate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee after the Acquiring Person becomes such, or
-14-
(iii) a transferee of an Acquiring Person (or of any such Affiliate or
Associate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect the avoidance of the provisions of Section 7(e), Section
11(a)(ii) or Section 13 hereof with respect to the limitation of the Rights
beneficially owned by an Acquiring Person (or any Affiliate or Associate
thereof), and any Right Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend modified as necessary to apply to such Person:
The Rights represented by this Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement). Accordingly, this
Certificate and the Rights represented hereby may become null
and void in the circumstances specified in Section 7(e) of the
Rights Agreement.
The provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Right Certificate.
-15-
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company by (i) its Chairman of
the Board or President or any Vice President and its Secretary or any Assistant
Secretary or Treasurer or any Assistant Treasurer or (ii) any two officers of
the Company so authorized to sign by a resolution of the Board of Directors of
the Company, either manually or by facsimile signature, and have affixed thereto
the Company's seal or a facsimile thereof which shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
-16-
person was not such an officer. In case any authorized signatory of the
Rights Agent who shall have countersigned any of the Right Certificates shall
cease to be such a signatory before delivery by the Company, such Right
Certificates, nevertheless, may be issued and delivered by the Company with the
same force and effect as though the person who countersigned such Right
Certificates had not ceased to be such a signatory; and any Right Certificates
may be countersigned on behalf of the Rights Agent by any person who, at the
actual date of the countersignature of such Right Certificate, shall be a proper
signatory of the Rights Agent to countersign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not such
a signatory. (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate place for
surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates. Section 6.
Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of
Sections 4(b), 7(e) and 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 earlier
of the Expiration Date and the Final Expiration Date, any Right Certificate
-17-
or Right Certificates may be transferred,split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a Preferred Share (or
other shares, securities, cash or assets, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder, or in
the case of a transfer, such former holder, to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate or Right Certificates until the registered holder
shall have completed and signed the form of assignment and the certificate
contained in the form of assignment on the reverse side of such Right
Certificate or Right Certificates 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 Sections 4(b), 7(e) and 14 hereof,
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
-18-
payment of a sum sufficientto cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of
Right 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 Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated. Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the
Distribution Date, for the purchase of Preferred Shares (if, pursuant to Section
14(b), such exercise is for the purchase of whole Preferred Shares and not
fractional Preferred Shares) or, pursuant to Section 14(b), for the purchase
price payable by the Company for Rights to purchase fractional Preferred Shares,
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
-19-
Agent at the office or offices of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each Preferred Share as
to which the Rights are exercised, at or prior to the earliest of (i) the Close
of Business on May 22, 2007 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof and (iii) the
time at which the Rights are exchanged as provided in Section 24 (such earliest
time being herein referred to as the "Expiration Date"). (b) The Purchase Price
for each Preferred Share issued pursuant to the exercise of Rights shall
initially be $120.00 per one one-hundredth of a Preferred Share, shall be
subject to adjustment from time to time as provided in Sections 11, 13 and 14
hereof and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below. (c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for each Preferred Share
(or other shares, securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its
-20-
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of Preferred Shares issuable upon
exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of Preferred
Shares as are to be purchased, in which case certificates for the Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent, and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the amount of consideration to be paid in lieu of issuance of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder and, (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate. In the
event that the Company is obligated to issue other securities 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.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
-21-
shall be issued by the Rights Agent and delivered to the registered holder
of such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof. (e) Notwithstanding anything in this Agreement
to the contrary, from and after the time a Person becomes an Acquiring Person,
any Rights beneficially owned by (i) an Acquiring Person or any Affiliate or
Associate of an Acquiring Person, (ii) a transferee of any such Acquiring Person
(or of any such Affiliate or Associate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) a transferee of any such Acquiring
Person (or of any such Affiliate or Associate) who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding (whether or not
in writing) which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
and the Board of Directors shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
-22-
shall have no liability to any holder of Right Certificates or any other
Person as a result of having made or having failed to make any determinations
with respect to an Acquiring Person or any of its Affiliates, Associates or
transferees hereunder. (f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificate upon the occurrence of any purported transfer or exercise as set
forth in this Section 7 unless such registered holder shall have (i) completed
and signed the certificate following the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such assignment or 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 Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel
-23-
and retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares (and, following
the occurrence of a Section 11(a)(ii) Event or a Section 13 Event, out of its
authorized and issued Common Shares or other securities or out of its authorized
and issued shares held in its treasury), the number of Preferred Shares (and,
following the occurrence of a Section 11(a)(ii) Event or a Section 13 Event,
Common Shares of the Company or other securities) that, as provided herein, will
be sufficient to permit the exercise in full of all outstanding Rights (it being
understood that any of the foregoing shares or securities may also be reserved
for other purposes) or will take such other steps as are appropriate to assure
that the number of such shares or securities (or their equivalents) sufficient
to permit the exercise in full of all outstanding Rights will be available upon
such exercise.
(b) So long as the Preferred Shares (and, following the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event, Common Shares of
the Company or other securities) issuable and deliverable upon the exercise of
-24-
the Rights may be listed ortraded on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed or admitted to trading on such exchange upon official notice of issuance
upon such exercise. (c) The Company covenants and agrees that it will take all
such actions as may be necessary to ensure that all Preferred Shares (and,
following the occurrence of a Section 11(a)(ii) Event or a Section 13 Event,
Common Shares of the Company or other securities) delivered upon exercise of the
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. (d) The Company further covenants and
agrees that, except as set forth in Section 6(a) hereof, it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Shares (or Common Shares of the Company or other securities, as
the case may be) upon the exercise of the 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 certificates or depositary receipts for a number of
Preferred Shares (or Common Shares of the Company or other securities, as the
case may be) in the name other than that of, the registered holder of the
-25-
Right Certificate evidencing the Rights surrendered for exercise or to issue or
deliver any certificates for Preferred Shares (or Common Shares of the Company
or other securities, as the case may be) or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
(e) 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, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Act
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the Expiration
Date. The Company will also take such action as may be appropriate under, 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, acting by
-26-
resolution of its Board of Directors, temporarily suspend, for a period of time
not to exceed 90 days after the date set forth in clause (i) of the first
sentence of this Section 9(e), 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.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualifications
in such jurisdiction shall have been obtained, the exercise thereof shall be
permitted under applicable law and a registration statement shall have been
declared effective.
Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for a number of the Preferred Shares (or Common Shares of
the Company or other securities, as the case may be) is issued upon the exercise
of the Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares (or Common Shares of the Company or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such surrender
and payment is a date upon which the Preferred Shares (or Common
-27-
Shares of the Company or other securities, as the case may be) transfer books of
the Company are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares of the
Company or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any meetings or other 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,
or fractions thereof, 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 Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred Shares into a smaller
number of shares or (D) issue any shares of its other capital stock in
a reclassification of the Preferred Shares (including any
-28-
such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except
as otherwise provided in Section 7(e) and this Section 11(a), 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 Preferred Shares or shares
of other 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
Preferred Shares or shares of other 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 Shares or other capital stock, as the
case may be, transfer books of the Company were open, the holder 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 Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event
(a "Section 11(a)(ii) Event") that any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring Person, then
-29-
then proper provision shall be made so that each holder of a Right,
except as provided below and in Section 7(e), shall, subject to
Section 14(c), thereafter have a 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 Preferred Share, such number of Common Shares 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 Preferred
Share of the Company for which a Right was exercisable immediately
prior to the first occurrence of such Section 11(a)(ii) Event whether
or not such Right was then exercisable, 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 per share of the
Common Shares of the Company (determined pursuant to Section 11(d))
on the date of the occurrence of such Section 11(a)(ii) Event (such
number of shares being hereinafter referred to as the "Adjustment
Shares"). The Company shall notify the Rights Agent in writing as to
any Persons w ho are deemed by the Company to be Acquiring Persons or
Affiliates, Associates or transferees (as described in subparagraphs
(ii) and (iii) of Section 7(e) hereof) of such Persons and shall
identify any Rights pertaining thereto.
-30-
(iii) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company, acting by
resolution of its Board of Directors, may, and, in the event that the
number of Common Shares which are authorized by the Company's
certificate of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance
with Section 11(a)(ii) hereof, shall, (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), over (2) the Purchase Price attributable
to each Right (such excess, the "Spread") and (B) with respect to each
Right (subject to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Shares or other equity securities of the Company (including,
without limitation, shares, or units of shares issuable only if
aggregated as whole shares, of preferred stock which the Board of
Directors of the Company has deemed to have substantially the same
value as Common Shares of the Company (such shares or units of
preferred stock hereinafter called "Common Share Equivalents")), (4)
debt securities of the Company, (5) other assets or (6) any combination
of the foregoing having an aggregate value equal to the Current Value,
where such aggregate value has been determined by
-31-
action of the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the
Board of Directors of the Company which has theretofore performed no
services for the Company or any Subsidiary of the Company in the past
five years; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
30 days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the first date on which the Company's rights of
redemption pursuant to Section 23 hereof, as such date may be amended
pursuant to Section 27 hereof, shall expire (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, Common Shares of the Company (to the extent available) and then,
if necessary, cash, which shares or cash have an aggregate value equal
to the Spread. If, after the occurrence of a Section 11(a)(ii) Event,
the number of Common Shares that are authorized by the Company's
certificate of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance
with Section 11(a)(ii) hereof and the Company, acting by resolution of
its Board of Directors shall determine in good faith that it is likely
that sufficient additional Common Shares could be authorized for
-32-
issuance upon exercise in full of the Rights, the 30 day period set
forth above may be extended to the extent necessary, but not more than
90 days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such
additional shares(such period, as it may be extended,the "Substitution
Period"). To the extent that the Company determines that some action
is to be taken pursuant to the terms of this Section 11(a)(iii),
the Company (x) shall provide, subject to Sections 7(a) and 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek such shareholder
approval for the authorization of additional shares and/or to decide
the appropriate form of distribution to be made pursuant to the
first sentence of this Section 11(a)(iii) and to determine the
value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Shares of the
Company shall be the Current Market Price (as defined in Section 11
(d)) per share of the Common Shares of the Company on the date of the
first occurrence of the Section 11(a)(ii) Event, and the per share or
-33-
per unit value of any CommonShare Equivalents shall be deemed to equal
the Current Market Price per share of the Common Shares of the Company
on such date.
(b) In the event that the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("Equivalent Preference Shares")) or securities
convertible into Preferred Shares or Equivalent Preference Shares at a
price per Preferred Share or Equivalent Preference Shares (or having a
conversion price per share, if a security convertible into shares of
Preferred Shares or Equivalent Preference Shares) less than the Current
Market Price per share of the Preferred Shares or Equivalent Preference
Shares on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, of which
the numerator shall be the number of Preferred Shares outstanding on
such record date plus the number of additional Preferred Shares or
Equivalent Preference Shares which the aggregate subscription or
purchase price of the total number of Preferred or Equivalent
Preference Shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
-34-
purchase at such Current Market Price and the denominator of which
shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred or Equivalent Preference Shares
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
holders of the Rights. Common Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular periodic cash
dividend or a dividend payable in Preferred Shares, but including any
dividends payable in stock other than
-35-
Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of the
Preferred Shares 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 which shall be binding on the holders of the Rights) of
the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to
one Preferred Share, and the denominator of which shall be such Current
Market Price per share of the Preferred Shares. Such adjustments shall
be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the
"Current Market Price" per share of the Common Shares on any date shall
be deemed to be the average of the daily closing prices per share of
such Common Shares for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
-36-
that in the event that the Current Market Price per share of the Common
Shares is determined during a period following the announcement by the
issuer of such Common Shares of (i) a dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible
into such Common Shares or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of
30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market
Price" shall be appropriately adjusted to take into account the
ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in the 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 Common Shares are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Common Shares are listed or admitted to trading
or, if the Common Shares 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
-37-
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 Common Shares 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 Shares selected
by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Shares, the fair value of such
shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in
the State of New York are not authorized or obligated by law or
executive order to close. If the Common Shares are not publicly held or
not so listed or traded, Current Market Price 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.
(d)(ii) For the purpose of any computation
hereunder, the Current Market Price per share of Preferred
-38-
Shares shall be determined in the same manner as set forth for the
Common Shares of the Company in Section 11(d)(i) hereof (other than the
last sentence thereof). If the current Market Price per Preferred Share
cannot be determined in the manner provided above or if the Preferred
Shares are not publicly held or listed or traded in a manner described
in Section 11(d)(i) hereof, the Current Market Price per Preferred
Share 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 Shares of the Company occurring after the date of this
Agreement) multiplied by the then Current Market Price per Common Share
of the Company. If neither the Common Shares of the Company nor the
Preferred Shares are publicly held or so listed or traded, the Current
Market Price per Preferred 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. For all purposes
of this Agreement, the Current Market Price of one one-hundredth of a
Preferred Share shall be equal to the Current Market Price of one
Preferred Share 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 1% in such
-39-
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 Common share or other share or the nearest
one-millionth of a Preferred Share, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment
and (ii)the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m) inclusive, and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Shares shall apply
on like terms to any such other shares; provided, however, that the
Company shall not be liable for its inability or failure to reserve and
keep available for issuance upon exercise of the Rights pursuant to
-40-
Section 11(a)(ii) a number of its Common Shares greater than the
number the authorized by the Certificate of Incorporation of the
Company but not outstanding or reserved for any other purpose.
(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 Preferred Share (subject to Sections 7(a) and
14(b)) 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 11(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 Preferred Share
(calculated to the nearest one-millionth of a Preferred Share and
subject to Sections 7(a) and 14(b)) 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
-41-
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after 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 Right Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed
-42-
to holders of record of Right Certificates on such record date Right
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 Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Preferred Shares issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
one one-hundredths of a Preferred Share issuable upon exercise of the
-43-
Rights, the Company shall take any corporate action which may, in the
opinion of counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preferred Shares at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date the Preferred Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares 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 upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company, acting by resolution of its Board of
Directors, 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 it in its sole discretion shall
determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, the issuance wholly for cash of
-44-
any of the Preferred Shares at less than the Current Market Price, the
issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares,
stock dividends or the issuance of rights, options or warrants referred
to hereinabove in this Section 11, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which does not
violate Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which does not
violate 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, cash flow or earning power aggregating
more than 50% of the assets, cash flow 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 does not violate 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
-45-
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 eliminate the benefits
intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, in the event the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare or pay
any dividend on its Common Shares payable in Common Shares of the
Company or (ii) subdivide its outstanding Common Shares into a greater
number of shares (by reclassification or otherwise than by payment of
dividends in Common Shares) or (iii) combine or consolidate its
outstanding Common Shares into a smaller number of shares, then in any
such case, (x) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right
(without giving effect to Section 7(a) or 14(b)) shall be determined by
-46-
multiplying the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares of the Company
outstanding immediately before such event and the denominator of which
is the number of such Common Shares outstanding immediately after such
event and (y) action shall be taken such that each Common Share of the
Company outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share of the
Company outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(p)
shall be made successively whenever such a dividend is declared or
paid or such a subdivision, combination or consolidation is effected.
If an event occurs which would require an adjustment under Section 11
(a)(ii) and this Section 11(p), the adjustments provided for in this
Section 11(p) shall be in addition and prior to any adjustment required
pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and 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
Common Shares and Preferred Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
-47-
with Section 25 hereof. Notwithstanding the foregoing sentence, the failure
of the Company to make such certificates or give such notice shall not affect
the validity or the force or effect of the requirement for such adjustment. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Any adjustment to be made pursuant to Sections 11 and 13 shall be effective as
of the date of the event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow
or Earning Power. (a) In the event (a "Section 13 Event") that, following the
Shares Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with or into, any other Person or Persons and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any other Person or Persons shall consolidate,
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 common stock shall be changed
into or exchanged for stock or other securities of any other Person or Persons
or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets, cash flow or earning power aggregating more
-48-
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis of the Company's most
recent regularly prepared financial statement) to any other Person or Persons in
one or more transactions (each of which does not violate Section 11(o) hereof),
provided, however, that this clause (z) of Section 13(a) shall not apply to the
pro rata distribution by the Company of assets (including securities) of the
Company or any of its Subsidiaries to all holders of the Company's common stock;
then, and in each such case, proper provisions 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 tradable
Common Shares of the Principal Party (as hereinafter defined), not subject to
any liens, encumbrances, rights of call, 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 Preferred
Share for which a Right was 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
one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
-49-
Purchase Price in effect immediately prior to such first occurrence), and
(2) 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 50% of the Current Market Price per share of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (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 such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing.
-50-
(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) hereof, the
Person that is the issuer of any securities into which Common Shares 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) hereof, the Person
that is the party receiving the greatest portion of the assets, cash
flow or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Shares of such
Person are not at any time and have not been continuously over the preceding 12
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person, the Common Shares of which
are and have 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 Shares 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 Shares having the greatest aggregate market value.
(c) The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number of authorized
-51-
Common Shares 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 the Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement containing the provisions
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any such Section 13 Event, 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 effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
-52-
been exercised shall thereafter become exercisable in the manner described in
Section 13(a) hereof.
(d) The Company covenants and agrees that it will not, after
the Shares Acquisition Date, engage in any Section 13 Event if at the time of or
after such event there are any charter or by-law provisions or any rights,
warrants or other instruments outstanding or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not issue fractions of Rights or distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount, which the
Company may, at its option, pay in cash, Common Shares or other equity
securities of the Company, debt securities of the Company, or any other form of
consideration or combination of the foregoing deemed appropriate by the Board of
Directors of the Company, equal to the same fraction of the current market value
of a whole Right. For the purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular
-53-
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
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 issue fractions of Preferred Shares
upon exercise of the Rights or distribute certificates which evidence fractional
Preferred Shares. Preferred Shares shall be issued only upon the exercise of
Rights to purchase integral multiples of 100 one-hundredths of a Preferred
Share. In lieu of fractional Preferred Shares, the Company shall pay to the
registered holders of Right Certificates at the time such
-54-
Right Certificates are exercised as provided in Section 7 an amount, which the
Company may, at its option, pay in cash, Common Shares or other equity
securities of the Company, debt securities of the Company, or any other form of
consideration or combination of the foregoing deemed appropriate by the Board of
Directors of the Company, equal to the same fraction of the current market value
of one Preferred Share. For purposes of this Section 14(b), the current market
value of a Preferred Share shall be the closing price of a Preferred Share (as
determined pursuant to Section 11(d)(i) hereof), for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, the Company shall not issue fractions of its Common Shares
upon exercise of the Rights or distribute certificates which evidence fractional
Common Shares. In lieu of fractional Common Shares, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount, which the Company may, at its option, pay in cash,
other equity securities of the Company, debt securities of the Company, or any
other form of consideration or combination of the foregoing deemed appropriate
by the Board of Directors of the Company, equal to the same fraction of the
current market value of one Common Share. For purposes of this Section 14(c),
the current market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)(i)
-55-
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, except the rights of action vested in the Rights Agent
pursuant to Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date of the Common Shares), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Shares), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
-56-
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Shares;
(b) after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly completed
and fully executed;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, the Company, its Board of Directors and the Rights Agent
shall not have any liability to any holder of a Right or other Person
-57-
as a result of any inability to perform any of their 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 and its Board of Directors
must use their best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-hundredths of a Preferred Share or any other securities of the Company which
may at any time be issuable on the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or otherwise, until the
-58-
Right or Rights evidenced by such Right 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 other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, 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 arising under this
Agreement.
(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 Right
Certificate or certificate for the Preferred Shares or the Common Shares 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
-59-
the proper person or Persons or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
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 shareholder services business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. The purchase of all or substantially all of the Rights Agent's assets
employed in the performance of transfer agent activities shall be deemed a
merger or consolidation for purposes of this Section 19. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the
-60-
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without
-61-
limitation, the identity of an Acquiring Person and the determination
of the Current Market Price per Preferred Share and Common Share) be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (including the Rights becoming
void pursuant to Section 7(e) hereof) (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a person
reasonably believed by the Rights Agent to be any one of the Chairman
of the Board, the President, a Vice President, or the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except as to its countersignature
thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
-62-
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
ny adjustment required under the provisions of Section 11 or 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 Right Certificates after receipt of a certificate describing such
adjustment, delivered pursuant to Section 12); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or
Common Shares or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preferred
Shares or Common Shares or other securities 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.
-63-
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the persons reasonably believed by the Rights
Agent to be the Chairman of the Board, the President, a Vice President,
the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by
it in good faith in accordance with instructions of a person reasonably
believed by the Rights Agent to be any such officer. Any application by
the Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing (i) any action
proposed to be taken or omitted by the Rights Agent with respect to its
duties and obligations under this Agreement and (ii) the date on and/or
after which such action shall be taken or omitted, which date shall not
be less than five business days after the date the Company actually
receives such application, unless the Company shall consent in writing
to an earlier date. If the application contains in writing the matters
described in items (i) and (ii) then the Rights Agent shall not be
liable for any action taken or omitted in accordance with a proposal
described in any such application on or after the date specified
therein unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such application
-64-
specifying what action shall be taken or omitted.
(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, except it may not act for an
Acquiring Person in an investment banking capacity, or otherwise assist
an Acquiring Person in ways hostile to the Company, without the consent
of the Company.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either by itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect
or misconduct, provided, however, that reasonable care was exercised in
the selection 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
-65-
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer
without first consulting 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 30 days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares and Common Shares by registered,
certified or express mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 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
Preferred Shares and Common Shares by registered, certified or express mail, and
to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice
-66-
of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the Company shall become the
temporary Rights Agent and the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of any state of the United States, in good standing, which is
authorized under such laws to exercise corporate trust powers or provide
shareholder services 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 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
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 Preferred Shares and Common Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
-67-
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by resolution of its Board of
Directors to reflect any adjustment or change in the Purchase Price per share
and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (i) shall, with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (ii) may, in any other case,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (x) no such Right
Certificates 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
-68-
Right Certificates would be issued, and (y) no such Right Certificates 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. (a) The Board of Directors of the
Company may, by resolution, at its option, at any time prior to such time as any
Person becomes an Acquiring Person, redeem all but not less than all of the then
outstanding Rights at a redemption price of 1/10th of $.01 per Right, as
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"). To the extent that a holder
of Rights holds a number of Rights not evenly divisible by ten, the total price
at which such Rights shall be redeemed shall be rounded to the nearest whole
cent. To the extent that a holder of Rights holds fewer than ten Rights, such
Rights shall be redeemed at a total price of $.01. The Board of Directors may,
in its discretion, at any time prior to such time as any Person becomes an
Acquiring Person, extend the time within which to redeem the then outstanding
Rights prior to their exercise. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the Current Market Price of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by the Board
-69-
of Directors of the Company.
(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 the Rights shall be to receive the Redemption
Price. Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
-70-
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
wholly owned Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding Common Shares as a fiduciary 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 Shares 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, evidence of which shall have been filed with the Rights Agent,
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 Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company 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
-71-
of the Common Shares for the Rights will be effected and, in the event of
any partial exchange, the number of the Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of the Rights
(other than the Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of the Rights.
(c) In the event that there shall not be sufficient Common
Shares 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 Shares for issuance upon exchange of the Rights.
(d) The Company shall not issue fractions of Common Shares or
distribute certificates which evidence fractional Common Shares. In lieu of such
fractional shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise be
issuable an amount, which the Company may, at its option, pay in cash, other
equity securities of the Company, debt securities of the Company, or any other
form of consideration or combination of the foregoing deemed appropriate by the
Board of Directors of the Company, equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this paragraph (d),
the current market value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 11(d)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
-72-
Section 25. Notice of Certain Events. (a) In case the Company
shall propose (1) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last regular periodic cash dividend
theretofore paid) or (ii) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any merger, consolidation or other combination into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power or assets
representing 50% or more of the cash flow of the Company and its Subsidiaries
(taken as a whole) to, any other Person, 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 Right, 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,
-73-
sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the Preferred Shares or
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 20
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares or Common Shares
whichever shall be earlier. The failure to give notice required by this Section
25 or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) In case any Section 11(a)(ii) Event or Section 13 Event
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) or Section 13(a) hereof, and (ii) all references in Section
25(a) hereof to Preferred Shares shall be deemed thereafter to refer also to
Common Shares or other securities issuable in respect of the Rights.
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 holder
of any Right Certificate to or on the Company shall be sufficiently given or
-74-
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Chartwell Re Corporation
Four Stamford Plaza
000 Xxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Fleet National Bank of Connecticut
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may, by
resolution of its Board of Directors, and the Rights Agent shall, if the Company
so directs, from time to time supplement or amend this Agreement in any respect
whatsoever (including without limitation any extension of the period in which
the Rights may be redeemed) at any time prior to such time as any Person becomes
-75-
an Acquiring Person, without the approval of any holders of certificates
representing Common Shares or, after the Distribution Date, of Right
Certificates. From and after such time as any Person becomes an Acquiring
Person, the Company may, by resolution of its Board of Directors, and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of certificates representing Common Shares
or of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or supplant or make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Rights Agent may deem necessary or desirable, which shall not
adversely affect the interests of the holders of Right Certificates and, prior
to the Distribution Date, the Common Shares (other than an Acquiring Person or
an Affiliate or Associate of any such Person). Upon the delivery of a
certificate from an officer of the Company referred to in Section 20(b) hereof
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 Right
Certificates shall be deemed coincident with the interests of the holders of
Common Shares. Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
-76-
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 Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Shares 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 shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to such Board of Directors,
or as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights or to amend this 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 of the Company or the Company in good
faith, (x) shall be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Right Certificates and all other parties and (y) shall
not subject the Board of Directors of the Company to any liability to the
-77-
holders of the Rights and Right Certificates.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Shares).
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.
Without limiting the foregoing, if any provision of this Agreement requiring
that a determination be made by the Board of Directors is held by a court of
competent jurisdiction or other authority to be invalid, void, or unenforceable,
such determination shall then be made by the Board of Directors in accordance
with applicable law and the Company's certificate of incorporation and by-laws
Section 32. Governing Law. This Agreement and each Right
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
-78-
in accordance with the laws of such State applicable to contracts to be made
and 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.
-79-
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: CHARTWELL RE CORPORATION
By: By:
Name: Name:
Title: Title:
ATTEST: FLEET NATIONAL BANK OF
CONNECTICUT
By: By:
Name: Name:
Title: Title:
-80-
EXHIBIT A
Form of
Certificate of Designation, Preferences and
Rights of Junior Participating Cumulative Preferred Stock
of
Chartwell Re Corporation
(pursuant to ss. 151 of the Delaware
General Corporation Law)
Chartwell Re Corporation, a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in its Certificate of
Incorporation and in accordance with Section 151 of the General Corporation Law
of the State of Delaware, its Board of Directors (the "Board of Directors") has
adopted the following resolution creating a series of its Preferred Stock, $1.00
par value, designated as Junior Participating Cumulative Preferred Stock:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company in accordance with the provisions of
the Certificate of Incorporation, the Board of Directors hereby creates
a series of Junior Participating Cumulative Preferred Stock, with a par
value of $1.00 per share of the Company and hereby states the
designation and number of shares, and fixes the relative rights,
preferences and limitations thereof (in addition to the provisions in
the Certificate of Incorporation that are applicable to the Preferred
Stock of all series as follows:
Junior Participating Cumulative Preferred Stock
Section 1. Designation and Amount. The shares of such series shall be
designated as Junior Participating Cumulative Preferred Stock, with a par value
of $1.00 per share (the "Junior Preferred Shares"), and the number of shares
constituting such series shall be 125,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
however, that no decrease shall reduce the number of shares of Junior Preferred
Shares to a number less than the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Company convertible into Junior
Preferred Shares.
-1-
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
preferred stock (or any similar stock) ranking prior and superior to the Junior
Preferred Shares with respect to dividends, the holders of Junior Preferred
Shares, in preference to the holders of shares of the Company's common stock,
$.01 par value per share (the "Common Shares"), and of any other junior stock
which may be outstanding, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of January, April, July and
October 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 Junior Preferred Share, in an amount per share
(rounded to the nearest cent) equal to the greater of (i)$25.00 per share
($100.00 per annum), and (ii) subject to the provision for adjustment
hereinafter set forth, the sum of 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 Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any Junior
Preferred Shares. In the event the Company shall at any time declare or pay any
dividend on Common Shares payable in Common Shares, or effect a subdivision or
combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
amount to which holders of Junior Preferred Shares were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Junior
Preferred Shares as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares); provided, however, that in the event no
dividend or distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $25.00 per share ($100.00 per
annum) on the Junior Preferred Shares shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
-2-
(C) Dividends shall begin to accrue and be cumulative on outstanding
Junior Preferred Shares from the Quarterly Dividend Payment Date next preceding
the date of issue of such Junior Preferred Shares, unless (i) the date of issue
of such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or (ii) the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of Junior Preferred Shares entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall accumulate but shall not bear
interest. Dividends paid on the Junior Preferred Shares 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 Junior Preferred Shares entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be not more than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights.
The holders of Junior Preferred Shares shall have the following voting
rights:
(A) Subject to the provisions for adjustment as hereinafter
set forth, each Junior Preferred Share shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of
the Company. In the event the Company shall at any time declare or pay
any dividend on Common Shares payable in Common Shares or effect a
subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend
in Common Shares) into a greater or lesser number of Common Shares,
then in each such case the number of votes per share to which holders
of Junior Preferred Shares 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 Common Shares outstanding
immediately after such event and the denominator of which is the number
of Common Shares that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation, as from time to time amended, and/or in any other
resolutions adopted by the Board of Directors creating a series of
preferred stock or any similar stock, or by law, the holders of Junior
Preferred Shares and the holders of Common Shares and any other
-3-
capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of
shareholders of the Company.
(C) If at any time the Company shall not have declared and
paid all accrued and unpaid dividends on the Junior Preferred Shares as
provided in Section 2 hereof for four consecutive quarterly dividend
payment dates, then, in addition to any voting rights provided for in
paragraphs (A) and (B), the holders of the Junior Preferred Shares
shall have the exclusive right, voting separately as a class, to elect
two directors to the Board of Directors of the Company (such directors,
the "Preferred Directors"). The right of the holders of the Junior
Preferred Shares to elect the Preferred Directors shall continue until
all such accrued and unpaid dividends shall have been paid. At such
time, the terms of any of the Preferred Directors shall terminate. At
any time when the holders of the Junior Preferred Shares shall have
thus become entitled to elect Preferred Directors, a special meeting of
the holders of the Junior Preferred Shares shall be called for the
purpose of electing such Preferred Directors, to be held within 30 days
after the right of the holders of the Junior Preferred Shares to elect
such Preferred Directors shall arise, upon notice given in the manner
provided by law or the by-laws of the Company for giving notice of a
special meeting of shareholders; provided, however, that such a special
meeting shall not be called if the annual meeting of shareholders is to
convene within such 30-day period. At any such special meeting or at
any annual meeting at which the holders of the Junior Preferred Shares
shall be entitled to elect Preferred Directors, the holders of a
majority of the then outstanding Junior Preferred Shares present in
person or by proxy shall be sufficient to constitute a quorum for the
election of such directors. The persons elected by the holders of the
Junior Preferred Shares at any meeting in accordance with the terms of
the preceding sentence shall become directors on the date of such
election.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on Junior Preferred Shares outstanding shall have been paid in
full, the Company shall not:
(i) declare or pay dividends or make any other distributions
on any shares or stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding-up) to the Junior Preferred Shares;
-4-
(ii) declare or pay dividends 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 Junior Preferred
Shares except dividends paid ratably on the Junior Preferred Shares 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 or junior to the Junior
Preferred Shares; provided, however, that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding-up)
to the Junior Preferred Shares; or
(iv) purchase or otherwise acquire for consideration any Junior
Preferred Shares, or any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding-up) with the
Junior Preferred Shares, 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 or classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Junior Preferred Shares purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired
promptly after the acquisition thereof. All such shares shall upon their
retirement become authorized but unissued shares of preferred stock, without
designation as to series, 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, in the Certificate of Incorporation, in any other resolution of the
Board of Directors creating a series of preferred stock or any similar stock or
as otherwise required by law.
-5-
Section 6. Liquidation, Dissolution or Winding-Up. Upon any voluntary
or involuntary liquidation, dissolution or winding-up of the Company, no
distribution shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding-up) to the
Junior Preferred Shares unless prior thereto, the holders of Junior Preferred
Shares shall have received the greater of (i)$100.00 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, and (ii) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of Common
Shares, or (b) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding-up) with the Junior
Preferred Shares, except distributions made ratably on the Junior Preferred
Shares and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding-up. In the event the Company shall at any time declare or
pay any dividend on Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in Common Shares)
into a greater or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Junior Preferred Shares are entitled
immediately prior to such event under the provisions in clause (a) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
Common Shares are exchanged for or changed into other stock or securities, cash
and/or any other property, or otherwise changed, then in any such case each
Junior Preferred Share shall at the same time be similarly exchanged for or
changed into 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 Common Share is changed or exchanged. In the
event the Company shall at any time declare or pay any dividend on Common Shares
payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater or lesser number
of Common Shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of Junior Preferred Shares shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of
-6-
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
Section 8. No Redemption. The Junior Preferred Shares
shall not be redeemable.
Section 9. Rank. Unless otherwise provided in the Certificate of
Incorporation, as it may be from time to time amended, or in resolutions by the
Board of Directors relating to a subsequent series of preferred stock of the
Company, the Junior Preferred Shares shall rank junior to all other series of
the Company's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding-up, and senior to
the Common Shares.
Section 10. Amendment. The Certificate of Incorporation of the Company
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Junior Preferred Shares so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding Junior Preferred Shares, voting together as a
single series.
Section 11. Fractional Shares. Junior Preferred Shares
shall not be issued in fractions of a share.
RESOLVED, that the proper officers of the company be, and each of them
hereby is, authorized to execute a Certificate of Designation with
respect to the Junior Preferred Stock pursuant to Section 151 of the
General Corporation Law of the State of Delaware and to take all
appropriate action to cause such Certificate to become effective,
including, but not limited to, the filing and recording of such
Certificate with and/or by the Secretary of State of the State of
Delaware.
IN WITNESS WHEREOF, I have executed and subscribed to this
Certificate and to affirm the foregoing as true under penalty of perjury this __
day of _________, 1997.
-----------------------------------
Name:
Title:
-7-
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER MAY 22, 2007 OR EARLIER IF THE BOARD OF DIRECTORS ORDERS
THE REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT 1/10TH OF $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS
HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS
REPRESENTED BY THIS 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
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1
Right Certificate
Chartwell Re Corporation
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 May 22, 1997 (the "Rights Agreement"), between Chartwell Re
Corporation, a Delaware corporation (the "Company"), and Fleet National Bank of
Connecticut (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M.
-----------------
1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
-1-
(New York time) on May 22, 2007, at the office of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-hundredth of a
fully paid nonassessable share of Junior Participating Cumulative Preferred
Stock, par value $1.00 per share (the "Preferred Shares"), of the Company, at a
purchase price of $120.00 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and the Certificate contained therein duly
executed, provided that only whole Preferred Shares shall be issued upon the
exercise of Rights (i.e., upon the exercise of Rights to purchase 100
one-hundredths of a Preferred Share and integral multiples thereof) and that
Rights exercised for the purchase of fractional Preferred Shares shall be
purchased by the Company pursuant to the Rights Agreement at a purchase price
equal to an equivalent fraction of the current market value of one Preferred
Share at the time of exercise. The number of Rights evidenced by this Right
Certificate (and the number of one-hundredths of a Preferred Share which may be
purchased upon exercise hereof) set forth above, and the Purchase Price per
one-hundredths of a Preferred Share set forth above, are the number and Purchase
Price as of May 22, 1997, based on the Preferred Shares as constituted at such
date.
From and after the first occurrence of a Section 11(a)(ii) Event (as
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), (ii) a
-2-
transferee of any such Acquiring Person (or of any Associate or Affiliate
thereof who becomes a transferee after such Acquiring Person (or any Associate
or Affiliate thereof) becomes such or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of such Acquiring Person (or of
any Associate or Affiliate thereof) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
The Rights evidenced by this Right Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification for the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
As provided in the Rights Agreement, the Purchase Price and the number
of one one-hundredths of a Preferred Share or the number and kind of other
securities which may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events, including Section 11(a)(ii) Events and Section 13
Events (as defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
-3-
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent and are also
available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, with
the Form of Assignment and Certificate set forth on the reverse side duly
executed, may be exchanged for another Right Certificate or Right Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a Preferred Share as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be redeemed by the Company at a redemption price
of $0.001 per Right (payable, at the Company's option, in cash, Common Shares or
-4-
any other form of consideration deemed appropriate by the Board of Directors)
at any time prior to the time a person becomes an Acquiring Person (as defined
in the Rights Agreement). Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Right Certificate may be exchanged in whole or part
for Common Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a payment of consideration
will be made, as provided in the Rights Agreement.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company in any respect up until the time a person
becomes an Acquiring Person and thereafter in certain respects which do not
adversely affect the interests of holders of Right Certificates or Common
Shares, as the case may be (other than an Acquiring Person or the Affiliates or
Associates thereof).
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings
-5-
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of May 22, 1997
ATTEST: Chartwell Re Corporation
______________________ By______________________
Secretary Title:
Countersigned:
Fleet National Bank of
Connecticut,
as Rights Agent
By____________________
Authorized Signature
-6-
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED____________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint__________________________________Attorney, to transfer the within Right
Certificate on the books of the within named Company, with full
power of substitution.
Dated: _____________
__________________________________
Signature
Signature Guaranteed:
-7-
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are 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 thereof (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 evidence by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _____________
____________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment must correspond to
the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
-8-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by the Right Certificate.)
To Chartwell Re Corporation:
The undersigned hereby irrevocably elects to exercise
_________ Rights represented by this Right Certificate to purchase the Preferred
Shares issuable upon the exercise of such Rights (or such other securities of
the Company or of any other Person which may be issuable upon the exercise of
the Rights), or to receive the cash purchase price for Rights to purchase a
fractional Preferred Share, and requests, if applicable, that certificates for
such Preferred Shares or other securities 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 Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
Dated: _____________
___________________________________
Signature
(Signature must conform in all
respect to name of holder as
specified on the face of this Right
Certificate.)
Signature Guaranteed:
-9-
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (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 Right
Certificate from any Person who is, was or subsequently became in Acquiring
Person or an Affiliate or Associate thereof.
Dated: ____________
__________________________________
Signature
Signature Guaranteed:
NOTICE
In the event the certification set forth above in the Form of
Assignment or Election is not completed, the Company will be deemed the
beneficial owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights
Agreement) and, in the case of an Assignment, will affix a legend to that effect
on any Right Certificates issued in exchange for this Right Certificate.
-10-
EXHIBIT C
Chartwell Re Corporation
Summary of Shareholder Rights Plan
On May 22, 1997, the Board of Directors of Chartwell Re Corporation
(the "Company") authorized and declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.01 per share (the "Common Shares") of the Company. The dividend is payable on
May 22, 1997 to the shareholders of record on May 22, 1997 (the "Record Date").
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Cumulative Preferred Stock, par
value $1.00 per share ("Preferred Shares") of the Company at a Purchase Price
(the "Purchase Price") of $120.00, subject to adjustment in certain
circumstances (as defined below). The description and terms of the Rights are
set forth in the Rights Agreement (the "Rights Agreement") dated as of May 22,
1997 between the Company and Fleet National Bank of Connecticut, as Rights Agent
(the "Rights Agent").
Distribution Date; Transfer of Rights
Initially, the Rights will be attached to all Common Share certificates
representing shares then outstanding, and no separate certificates representing
the Rights ("Right Certificates") will be distributed. The Rights will separate
from the Common Shares and a "Distribution Date" will occur upon the earlier of
(i) ten business days following a public announcement (the "Shares Acquisition
Date") that a person or group of affiliated or associated persons has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more of the
outstanding Common Shares (an "Acquiring Person"), or (ii) ten business days (or
such specified or unspecified date as may be determined by action of the Board
of Directors of the Company) following the commencement or announcement of the
intent to commence a tender offer or exchange offer that would result in a
person or group of affiliated or associated persons beneficially owning 20% or
more of the outstanding Common Shares. Notwithstanding the foregoing, an
Acquiring Person does not include (A) the Company or any subsidiary of the
Company, (B) any employee benefit plan (including, but not limited to, any
employee stock ownership plan) of the Company or any subsidiary of the Company
or any person organized, appointed or established by the Company or such
subsidiary as a fiduciary for or pursuant to the terms of any such employee
benefit plan, or (C) any person who would otherwise be an Acquiring Person but
for the good faith determination by the Board of Directors of the Company that
such person has become an Acquiring Person inadvertently, provided that such
person together with its affiliates and associates divest themselves as promptly
as practicable of beneficial ownership of a sufficient number of Common Shares
so that such person together with its affiliates and associates beneficially own
less than 20% of the Common Shares.
The Rights Agreement provides that, until the Distribution Date, (i)
the Rights will be transferred with and only with the Common Shares, (ii) new
Common Share certificates issued after the Record Date but prior to the
Distribution Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any of the Common Shares will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Right Certificates will
be mailed to holders of record of Common Shares as of the close of business on
the Distribution Date, and thereafter the Rights will be evidenced solely by
such Right Certificates.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 22, 2007 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than rights beneficially owned by the Acquiring Person
(which will thereupon become void), will thereafter have a right to receive,
upon exercise thereof at the then current exercise price of the Right, that
number of Common Shares having a market value of two times the exercise price of
the Right ("Flip-In" Events). From and after the time a person becomes an
Acquiring Person all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by an Acquiring Person (or an
affiliate, associate or transferee thereof) will be null and void.
At any time after any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the then
outstanding and exercisable Rights (excluding Rights of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof. Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Acquiring Person, together with all affiliates and
associates of such Acquiring Person, becomes the Beneficial Owner of 50% or more
of the Common Shares then outstanding.
Exercise of Rights for Shares of the Acquiring Company
In the event that, after the Shares Acquisition Date, (a) the Company
shall consolidate with, or merge with or into, any other person or persons
(other than a subsidiary of the Company) and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (b) any
other person or persons (other than a subsidiary of the Company) shall
consolidate, 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 common stock
shall be changed into or exchanged for stock or other securities of any other
person or persons or cash or any other property, or (c) the Company shall sell
or otherwise transfer (or one or more of its subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets, cash flow or earning
power aggregating more than 50% of its assets, cash flow or earning power to any
other person or persons (other than the pro rata distribution by the Company of
assets (including securities) of the Company or any of its subsidiaries to all
holders of the Company's common stock), the Rights Agreement provides that each
holder of a Right (other than Rights owned by an Acquiring Person which will
have become void) shall be entitled to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction would have a
market value (as defined in the Rights Agreement) equal to twice the exercise
price of the Right ("Flip-Over" Events).
Adjustments to Purchase Price
The Purchase Price payable, and the number of Preferred Shares 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
Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of Preferred Shares, or (iii)
in case the Company shall fix a record date to distribute to all holders of the
Preferred Shares evidences of indebtedness or assets (other than a regular
periodic cash dividend or dividends payable in Preferred Shares) or subscription
rights or warrants (other than those referred to above). The number of Rights
and number of Preferred Shares issuable upon the exercise of each Right are also
subject to adjustment in the event of a stock split, combination or stock
dividend on the Common Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% of
such Purchase Price. No fractional Preferred Shares will be issued and in lieu
thereof, an adjustment will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
Redemption and Exchange of Rights
At any time prior to the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 20% or more of the
outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per Right (the "Redemption
Price"), payable in cash, Common Shares or any other form of consideration
deemed appropriate by the Board of Directors. The redemption of the Rights may
be effective at such time, on such basis and with such conditions as the Board
of Directors in its sole discretion may establish. Immediately upon redemption
of the Rights, the Rights will terminate and the only privilege of the Rights
holders will be to receive the $.001 redemption price. The date on which Rights
are redeemed is referred to herein as the "Redemption Date".
At any time after the acquisition by any person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may cause the Company to
exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio of one Common Share
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 together with all affiliates and associates of such
person, becomes the beneficial owner of 50% or more of the Common Shares then
outstanding.
Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Right shall be to
receive the number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. In connection with this exchange
provision, the Company shall not be required to issue fractions of Common Shares
or certificates evidencing fractional Common Shares and, in lieu thereof, an
adjustment will be made based on the market price of the Preferred Shares on the
last trading day prior to the date of exercise.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, other than rights resulting from such
holder's ownership of Common Shares, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Amendments to Terms of the Rights
The Rights and the Rights Agreement may be amended in any respect
whatsoever (including, without limitation, any extension of the period in
which the Rights may be redeemed) at any time prior to such time any person
becomes an Acquiring Person, without the approval of the holders of the Rights.
After such time, amendments may only be made to (i) cure any ambiguity, (ii) to
correct or supplement any provision contained in the Rights Agreement which may
be defective or inconsistent with any other provision in the Rights Agreement,
or (iii) make any amendments or supplements which the Company and the Rights
Agent may deem necessary or desirable which do not adversely affect the
interests of the holders of the Rights (other than the Acquiring Person or an
affiliate or associate thereof).
A copy of the Rights Agreement will be filed shortly with the Securities
and Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of
the Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby incorporated
by reference.
