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Exhibit 34
[AMERICAN BANKERS INSURANCE GROUP LETTERHEAD]
February 27, 1998
To Our $3.125 Series B Cumulative Convertible Preferred Stock Holders:
On February 19, 1998, the Board of Directors of American Bankers Insurance
Group, Inc. (the "Company") adopted a new shareholders' rights agreement. The
Company's existing shareholders' rights agreement will expire on March 10,
1998. The new shareholders' rights agreement is substantially identical to the
existing shareholders' rights agreement, except the exercise price has been set
at $75 and the expiration date is March 10, 2003.
One right (a "Right") for each outstanding share of the Company's common
stock, par value $1.00 per share ("Common Stock") will be distributed to
shareholders of record at the close of business on March 10, 1998. The Rights
initially will be part of and will trade with the Common Stock. A Right will
also be part of each share of Common Stock issued upon conversion of the $3.125
Series B Cumulative Convertible Preferred Stock.
We have enclosed a summary description of the Rights Agreement, dated as
of February 19, 1998, between American Bankers Insurance Group, Inc. and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
We thank you for your continued support.
Sincerely,
/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
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SUMMARY OF
RIGHTS AGREEMENT, DATED AS OF FEBRUARY 19, 1998,
BETWEEN
AMERICAN BANKERS INSURANCE GROUP, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS RIGHTS AGENT
On February 19, 1998, the Company declared a dividend distribution of one
Right (a "Right") for each outstanding share of the Company's Common Stock to
shareholders of record at the close of business on March 10, 1998 (the "Record
Date"). Except as described below, each Right, when exercisable, entitles the
registered holder thereof to purchase from the Company 1/100th of a share (a
"Unit") of Series C Participating Preferred Stock, no par value (the "Preferred
Stock"), at a Purchase Price of $75.00 per Unit, subject to adjustment. The
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent.
Initially, each Right will be a part of and trade with each share of
Common Stock outstanding. The Rights will separate from the Common Stock and a
Distribution Date will occur on the day (or such later date as may be
determined by action of the Board of Directors, upon approval by a majority of
the Continuing Directors (as such term is defined below)) which is the earlier
of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock, or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of such outstanding shares of Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates (and no separate Rights certificate will be issued)
and will be transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after the Record Date will contain a
notation incorporating the Rights Agreement by reference, and (iii) the
surrender for transfer of any certificates for Common Stock outstanding will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
Notwithstanding the foregoing, no Distribution Date will occur until such
date as may be determined by action of the Board of Directors, upon approval by
a majority of the Continuing Directors, as a result of the Cendant Offer (as
such term is defined in the Rights Agreement). In addition, the Rights
Agreement provides that the date of execution, delivery or consummation of the
transactions contemplated by the Agreement and Plan of Merger dated as of
December 21, 1997, as amended and restated as of January 7, 1998, and as
amended by Amendment No. 1 thereto dated as of January 28, 1998, among the
Company, American International Group, Inc. ("AIG") and AIGF, Inc., a
wholly-owned subsidiary of AIG ("AIGF") (the "Merger Agreement"), the Stock
Option Agreement dated as of December 21, 1997, between the Company and AIG
(the "Stock Option Agreement") and the Voting Agreement dated as of December
21, 1997, among AIG and certain stockholders of the Company (the "Voting
Agreement") shall not be deemed to be a Distribution Date for any purpose of
the Rights Agreement solely by reason of such execution, delivery or
consummation; provided, however, that any other acquisition of Beneficial
Ownership (as such term is defined in the Rights Agreement) of Common Stock by
AIG, AIGF or any of their Affiliates (as such term is defined in the Rights
Agreement) otherwise than pursuant to the Merger Agreement, the Stock Option
Agreement or the Voting Agreement shall give rise to a Distribution Date. The
Rights Agreement also provides that neither AIG, AIGF nor any of their
Affiliates be deemed to be an Acquiring Person for any purpose of the Rights
Agreement solely by reason of the execution, delivery or consummation of the
transactions contemplated by the Merger Agreement, the Stock Option Agreement
or the Voting Agreement; provided, however, that AIG, AIGF or any of their
Affiliates shall be deemed to be an Acquiring Person if any of them acquire
Beneficial Ownership of any shares of Common Stock other than pursuant to the
Merger Agreement, the Stock Option Agreement or the Voting Agreement.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as set forth in the Rights
Agreement and except as
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otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution date will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on March 10, 2003, unless earlier redeemed or exchanged
by the Company as described below.
If (i) the Company is the surviving corporation in a merger with an
Acquiring Person and the Company's Common Stock remains outstanding and
unchanged, (ii) an Acquiring Person is or becomes the beneficial owner of 15% or
more of the then outstanding shares of the Company's Common Stock, (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement, or (iv) there is any recapitalization, reclassification
or similar transaction involving the Company, which has the effect of increasing
by more than 1% an Acquiring Person's proportionate share of the beneficial
ownership of the outstanding shares of any class of equity securities or
securities exercisable for or convertible into equity securities of the Company
or its subsidiaries, then each holder of a Right will thereafter have the right
to receive, upon exercise of the Right, Common Stock or, in certain
circumstances, cash, property or other securities of the Company having a value
equal to two times the Purchase Price of the Right; PROVIDED, HOWEVER, that the
Rights to purchase Common Stock (or cash, property or other securities of the
Company) are not exercisable following the occurrence of any of the events set
forth above until such time as the Rights are no longer redeemable by the
Company as set forth below or until certain other events occur as set forth in
the Rights Agreement. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
If at any time on or after the Distribution Date (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation (or is the surviving corporation but
the Company's Common Stock is changed or exchanged), or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, then each holder
of a Right (except Rights which previously have been voided as set forth in the
preceding paragraph) shall thereafter have the right to receive, upon exercise
of the Right, Common Stock of the acquiring entity having a value equal to two
times the Purchase Price of the Right. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events." If
any acquiring entity does not have Registered Common Stock (as such term is
defined in the Rights Agreement) each Right will entitle its holder to purchase,
for the Purchase Price, at such holder's option, (i) the number of shares of
such entity (or, at such holder's option, of the surviving corporation in such
acquisition, which could be the Company) which, at the time of the transaction,
would have a book value of two times the Purchase Price of the Right or (ii) if
such entity has an affiliate that has Registered Common Stock, the number of
shares of such affiliate which, at the time of the transaction, would have a
market value of two times the Purchase Price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain rights or
warrants to subscribe for Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or (iii) upon the distribution
to holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
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At any time after the acquisition by a Person or group of affiliated or
associated Persons of beneficial ownership of 15% or more of the outstanding
Common Stock and prior to the acquisition by such Person or group of 50% of the
outstanding Common Stock, the Board of Directors of the Company may exchange
the Rights (other than the Rights owned by such Person or group that have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock (or of a share of a class of series or the Company's preferred stock
having equivalent rights, preferences and privileges) per Right (subject to
adjustment).
At any time until 10 days following the Distribution Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right,
payable in cash or stock. The redemption period may be extended by the Company
at any time prior to the expiration of such period. After the redemption period
has expired, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company and there are no other persons who are Acquiring
Persons. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price. The decision to
redeem or to extend the redemption period shall require the vote of a majority
of the Disinterested Directors, with the concurrence of a majority of the
Continuing Directors voting separately.
The term "Continuing Director" means any member of the Board of Directors
of the Company who was a member of the Board immediately prior to the time that
any person became an Acquiring Person, and any member of the Board subsequent
to the time that any Person shall become an Acquiring Person if such person is
recommended or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, or any representative of such Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Distribution Date. On and after the
Distribution Date, the provisions of the Rights Agreement may be amended by a
majority of the Disinterested Directors, with the concurrence of a majority of
the Continuing Directors voting separately, in order to cure any ambiguity, to
make changes in any manner which the Disinterested Directors and Continuing
Directors may deem necessary or desirable and which does not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement;
PROVIDED, HOWEVER, that no amendment to adjust the time period governing
redemption shall be made at any time that the Rights are not redeemable.
The Rights Agreement provides that the Company may not consolidate or
merge with, or sell 50% or more of the Company's assets or earning power to,
any person that has securities or is bound by agreements which would
substantially diminish the benefits of the Rights.
The foregoing description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement.
A copy of the Rights Agreement (and the exhibits thereto) has been filed
by the Company with the Securities and Exchange Commission on Amendment No. 3 to
Schedule 14D-9, dated February 20, 1998.
