FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PMA CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2217932
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(State of incorporation or organization) (IRS Employer Identification No.)
1735 Market Street, Suite 2800
Philadelphia, PA 19103-7590
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box [ ]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instructions A.(d), check the following box [X]
Securities Act registration statement file number to which this form
relates: N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Preferred Stock
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(Title of Class)
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Item 1. Description of Securities To Be Registered.
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On May 3, 2000, the Board of Directors of PMA Capital Corporation (the
"Company") adopted a shareholder rights plan in the form of a Rights Agreement,
dated May 3, 2000, between the Company and The Bank of New York, as Rights Agent
(the "Rights Agreement") and pursuant to the Rights Agreement declared a
dividend distribution of one preferred share purchase right (a "Right") for each
outstanding share of Class A Common Stock, par value $5.00 per share ("Class A
Stock"). The dividend will be payable May 22, 2000 to the shareholders of record
at the close of business on May 22, 2000 ("Record Date").
The Board has adopted the Rights Agreement to protect shareholders from
coercive or otherwise unfair takeover tactics. In general, the Rights Agreement
operates by imposing a significant economic penalty upon any person or group
that acquires 15% ("Threshold Percentage") or more of the Company's outstanding
Class A Stock without the approval of the Board. The Rights Agreement should not
interfere with any merger or other business combination approved by the Board.
Please note that the following description is only a summary and is not
complete. Those interested in the specific terms of the Rights Agreement should
read this summary together with the entire Rights Agreement, which is filed as
an exhibit to this Registration Statement on Form 8-A. A copy of the agreement
is available free of charge from the Company.
The Rights. The Board has authorized the issuance of a Right with
respect to each share of Class A Stock outstanding on the Record Date. The
Rights will initially trade with, and will be inseparable from, the Class A
Stock, and no separate Rights certificates will be issued. The Rights will be
evidenced only by certificates that represent shares of Class A Stock. New
Rights will accompany any new shares of Class A Stock issued after the Record
Date until the Distribution Date described below.
Exercise Price. Each Right will allow its holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock ("Preferred Share") for the price of $65 ("Exercise Price"), once the
Right becomes exercisable. This portion of a Preferred Share will give the
shareholder approximately the same dividend and liquidation rights as would one
share of Class A Stock. Prior to exercise, the Right does not give its holder
any dividend, voting, liquidation or other rights as a shareholder of the
Company.
Exercisability. The Rights will separate from the Class A Stock and
become exercisable as of the date which is the earlier of:
o 10 days after the date of a public announcement that a person or
group of affiliated or associated persons has become an
"Acquiring Person" (as further defined below) by obtaining
beneficial ownership of at least the Threshold Percentage of the
outstanding Class A Stock (except pursuant to a "Permitted Offer"
as described below), and
o 10 business days (or a later date determined by the Board before
a person or group becomes an Acquiring Person) after a person or
group begins, or publicly announces its intent to begin, a tender
or exchange offer, which, if consummated, would result in that
person or group becoming an Acquiring Person.
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The date when the Rights become exercisable is referred to as the
"Distribution Date." A person who, alone or together with its affiliates or
associates, obtains beneficial ownership of at least the Threshold Percentage is
an "Acquiring Person." However, in general, a person ("Exempted Person") who
owned 15% or more of the outstanding shares of Class A Stock on May 3, 2000 will
not be an Acquiring Person unless that person expresses an intent to control or
take over the Company, or purchases an additional 1% of the Class A Stock.
Until the Distribution Date, the Class A Stock certificates will also
evidence the Rights, and any transfer of shares of Class A Stock will constitute
a transfer of Rights. After the Distribution Date, the Rights will separate from
the Class A Stock and be evidenced by Rights certificates the Company will mail
to all eligible holders of Class A Stock. Any Rights held by an Acquiring Person
and certain transferees of an Acquiring Person will be void and may not be
exercised.
The Board may reduce the Threshold Percentage to not less than 10% of
the outstanding Class A Stock.
Consequences of a Person or Group Becoming Acquiring Person.
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o Flip In. If a person or group becomes an Acquiring Person, all
holders of Rights except the Acquiring Person may purchase that
number of shares of the Class A Stock having a market value equal
to twice the Exercise Price of the Right. This feature of the
plan is referred to as a "Flip In."
o Flip Over. If, at any time after a person or group becomes an
Acquiring Person, the Company is acquired in a merger or similar
business combination or 50% or more of the Company's assets or
earning power is sold, all holders of Rights except the Acquiring
Person may purchase that number of shares of the acquiring entity
having a market value equal to twice the Exercise Price of the
Right. This feature of the plan is referred to as a "Flip Over."
Permitted Offer. A tender or exchange offer for all outstanding Class A
Stock at a price and on terms determined, prior to the purchase of any shares
under the tender or exchange offer, by at least a majority of the Disinterested
Directors to be adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the Company and its
shareholders (other than the Acquiring Person) will be a Permitted Offer.
"Disinterested Directors" are directors of the Company who are not officers or
employees of the Company and who are not the Acquiring Person or an associate or
affiliate of the Acquiring Person, or have not been proposed or nominated as a
director of the Company by the Acquiring Person.
Preferred Share Provisions.
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Each one one-thousandth of a Preferred Share, if issued:
o will not be redeemable.
o will entitle holders to quarterly dividend payments of $.001, or
an amount equal to the dividend paid on one share of Class A
Stock, whichever is greater.
o will entitle holders upon liquidation to receive $1.00, or an
amount equal to the payment made on one share of Class A Stock,
whichever is greater.
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o will have the same voting power as one share of Class A Stock.
o will entitle holders to receive a payment equal to the payment
made on one share of Class A Stock in the event shares of Class A
Stock are exchanged in a merger or similar business combination.
The value of each one one-thousandth of a Preferred Share should approximate the
value of one share of Class A Stock.
Expiration. The Rights will expire on May 22, 2010.
Redemption. The Board may redeem the Rights for $.001 per Right at any
time before the close of business on the tenth day after any person or group
becomes an Acquiring Person. If the Board redeems any Rights, it must redeem all
of the Rights. Once the Rights are redeemed, the only right of the holders of
Rights will be to receive the redemption price of $.001 per Right. The
redemption price will be adjusted in the event of a stock split or stock
dividends of the Class A Stock.
Exchange. After a person or group becomes an Acquiring Person, but
before an Acquiring Person owns 50% or more of the outstanding Class A Stock,
the Board may extinguish the Rights by exchanging one share of Class A Stock or
any equivalent security for each Right, other than Rights held by the Acquiring
Person.
Anti-Dilution Provisions. The Board may adjust the Exercise Price of
the Rights, the number of Preferred Shares or other securities issuable upon
exercise of the Rights and the number of outstanding Rights to prevent dilution
that may occur from, among other things, a stock dividend, a stock split, or a
reclassification of the Preferred Shares or Class A Stock. No adjustments to the
Exercise Price will be made until cumulative adjustments require an adjustment
of at least 1%. The Company will not be obligated to issue fractional Preferred
Shares, and may instead pay cash in lieu of fractional shares.
Amendments. The terms of the Rights Agreement may be amended by the
Board without the consent of the holders of the Rights. However, the Board may
not amend the Rights Agreement to lower the Threshold Percentage to below 10% of
the outstanding Class A Stock. In addition, the Board may not cause a person or
group to become an Acquiring Person by lowering the Threshold Percentage below
the percentage interest that such person or group already owns. After the
Distribution Date, the Board may not amend the Rights Agreement in a way that
adversely affects holders of the Rights.
Attached hereto as Exhibit 1 and incorporated herein by reference is
the Rights Agreement, specifying the terms of the Rights, including the exhibits
thereto as follows: Exhibit A - Statement with Respect to Shares -Domestic
Business Corporation; Exhibit B - Form of Rights Certificate; and Exhibit C -
Summary of Rights to Purchase Preferred Shares. The foregoing description of the
Rights is qualified in its entirety by reference to such exhibits.
Item 2. Exhibits.
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1. Rights Agreement, dated as of May 3, 2000, between the Company and
The Bank of New York, as Rights Agent, specifying the terms of the rights,
including the exhibits thereto as
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follows: Exhibit A - Statement with Respect to Shares -Domestic Business
Corporation; Exhibit B - Form of Rights Certificate; and Exhibit C - Summary of
Rights to Purchase Preferred Shares.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 5, 2000
PMA Capital Corporation
By: /s/ Charles A. Brawley, III
Name: Charles A. Brawley, III
Title: Vice President and Corporate Counsel
EXHIBIT LIST
Exhibit No. Exhibit Method of Filing
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1 Rights Agreement, dated as of May 3, 2000, Filed herewith
between the Company and The Bank of New York,
as Rights Agent, specifying the terms of the
rights, including the exhibits thereto as
follows: Exhibit A - Statement with Respect
to Shares -Domestic Business Corporation;
Exhibit B - Form of Rights Certificate; and
Exhibit C - Summary of Rights to Purchase
Preferred Shares.
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RIGHTS AGREEMENT
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Between
PMA Capital Corporation
and
The Bank of New York
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Dated as of
May 3, 2000
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<TABLE>
<CAPTION>
Index
Page
<S> <C> <C>
Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................5
Section 3. Issue of Rights Certificates..........................................................................5
Section 4. Form of Rights Certificates...........................................................................7
Section 5. Countersignature and Registration.....................................................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates..........................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................................8
Section 8. Cancellation and Destruction of Right Certificates...................................................11
Section 9. Availability of Preferred Stock......................................................................11
Section 10. Preferred Stock Record Date..........................................................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights...................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................................19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................19
Section 14. Fractional Rights and Fractional Shares..............................................................22
Section 15. Rights of Action.....................................................................................23
Section 16. Agreement of Right Holders...........................................................................23
Section 17. Right Certificate Holder Not Deemed a Stockholder....................................................24
Section 18. Concerning the Rights Agent..........................................................................24
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................25
Section 20. Duties of Rights Agent...............................................................................25
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Page
Section 21. Change of Rights Agent...............................................................................27
Section 22. Issuance of New Right Certificates...................................................................28
Section 23. Redemption...........................................................................................29
Section 24. Exchange.............................................................................................29
Section 25. Notice of Certain Events.............................................................................30
Section 26. Notices..............................................................................................31
Section 27. Supplements and Amendments...........................................................................32
Section 28. Successors...........................................................................................32
Section 29. Determinations and Actions by the Board, etc.........................................................32
Section 30. Benefits of this Agreement...........................................................................33
Section 31. Severability.........................................................................................33
Section 32. Governing Law........................................................................................33
Section 33. Counterparts.........................................................................................34
Section 34. Descriptive Headings.................................................................................34
EXHIBITS
Exhibit A - Statement with Respect to Shares -- Domestic Business Corporation
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
</TABLE>
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RIGHTS AGREEMENT
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Agreement, dated as of May 3, 2000, between PMA Capital
Corporation, a Pennsylvania corporation (the "Company"), and The Bank of New
York (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
share of Class A Stock (as hereinafter defined) of the Company outstanding at
the close of business on May 22, 2000 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a share of Preferred
Stock (as hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized the issuance of one Right with
respect to each share of Class A Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined).
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 15% or more of the Class A Stock
then outstanding, but shall not include the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any Exempted Person (as such term
is hereinafter defined), any employee benefit plan of the Company or any
Subsidiary of the Company, or any person or entity holding Class A Stock for or
pursuant to the terms of any such plan. Notwithstanding the foregoing, no Person
shall become an "Acquiring Person" as the result of an acquisition of Class A
Stock which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Class A Stock then outstanding; provided, however, that if a Person shall
become the Beneficial Owner of 15% or more of the Class A Stock then outstanding
by reason of share purchases by the Company and shall, after such share
purchases by the Company, become the Beneficial Owner of any additional Class A
Stock of the Company, then such Person shall be deemed to be an "Acquiring
Person". Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Class A Stock so that such Person
would no longer be an "Acquiring Person," as defined
<PAGE>
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has directly or
indirectly, (A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding, whether or not in
writing (other than customary agreements with and
between underwriters and selling group members with
respect to a bona fide public offering of
securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own,
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; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or
understanding to vote such security (1) arises solely
from a revocable proxy or consent 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
promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly
or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (other than customary agreements with
and between underwriters and selling group members
with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated
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by the proviso to Section l(c)(ii)(B)) or disposing
of any securities of the Company.
Notwithstanding anything in this definition
of Beneficial Owner to the contrary, the phrase "then
outstanding," when used with reference to a Person's
beneficial ownership of securities of the Company,
shall mean the number of such securities then issued
and outstanding together with the number of such
securities not then actually issued and outstanding
which such Person would be deemed to own beneficially
hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(e) "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.
(f) "Class A Stock" when used with reference to the Company
shall mean the shares of Class A Common Stock, par value $5.00 per share, of the
Company.
(g) "Common Stock" shall mean the capital share or stock (or
equity interest) with the greatest voting power of a Person other than the
Company or, if such other Person is a Subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person.
(h) "Disinterested Director" means any member of the Board of
Directors of the Company who is not (a) an officer or employee of the Company,
(b) a Person proposing or attempting to effect a business combination or similar
transaction with the Company (including, without limitation, a merger, tender
offer or exchange offer, sale of substantially all of the Company's assets, or
liquidation of the Company's assets) or any Affiliate or Associate of such
Person or Person acting directly or indirectly on behalf of, or as a
representative of, or in concert with, any such Person, Affiliate or Associate,
(c) an Acquiring Person, an Affiliate or Associate of an Acquiring Person, or a
Person acting directly or indirectly on behalf of, or as a representative of, or
in concert with, an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, or (d) any Person who was directly or indirectly proposed or
nominated as a director of the Company by an Acquiring Person.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
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(j) "Exempted Person"
Any Person who on May 3, 2000, together with all Affiliates and
Associates of such Person, is the Beneficial Owner of Class A Stock, options
and/or warrants exercisable for shares of Class A Stock representing 15% or more
of the shares of Class A Stock outstanding on May 3, 2000, and has reported or
is required to report such beneficial ownership on Schedule 13G under the
Exchange Act (or any comparable or successor report) will be an "Exempted
Person." However, any such person will no longer be deemed to be an Exempted
Person and will be deemed to be an Acquiring Person if such Person, (i) ceases
to be eligible to report such beneficial ownership on Schedule 13G under the
Exchange Act (or any comparable or successor report) and is required instead to
report such beneficial ownership on Schedule 13D under the Exchange Act (or any
comparable or successor report) and such report states an intention to, or
reserves the right to, control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of such Schedule
(other than the disposition of Class A Stock), or (ii) together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner, at any
time after May 3, 2000 of additional securities representing an additional 1% or
more shares of Class A Stock, except if such additional securities are acquired
(x) pursuant to the exercise of options or warrants to purchase Class A Stock
outstanding and beneficially owned by such Person as of the date such Person
became the Beneficial Owner of 15% or more of the then outstanding shares of
Class A Stock or as a result of an adjustment to the number of shares of Class A
Stock for which such options or warrants are exercisable pursuant to the terms
thereof, (y) as a result of a stock split, stock dividend or the like or (z) as
a result of the purchase by the Company of its Class A Stock. A purchaser,
assignee or transferee of the shares of Class A Stock (or options or warrants
exercisable for Class A Stock) from an Exempted Person will not thereby become
an Exempted Person.
(k) "Exchange Date" shall have the meaning set forth in
Section 7 hereof.
(l) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(m) "Interested Shareholder" shall mean any Acquiring Person
or Affiliate or Associate of an Acquiring Person or any other Person in which
any such Acquiring Person, Affiliate or Associate has an interest which
represents in excess of 5% of the total combined economic or voting power of
such Person, or any other Person acting directly or indirectly on behalf of, or
in concert with, any such Acquiring Person, Affiliate or Associate.
(n) "Permitted Offer" shall mean a tender or exchange offer
for all outstanding shares of Class A Stock at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the Disinterested Directors to be adequate (taking into account
all factors that such directors deem relevant) and otherwise in the best
interests of the Company and its shareholders (other than the Person or any
Affiliate or Associate thereof on whose behalf the offer is being made) taking
into account all factors that
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such directors may deem relevant including without limitation those set forth in
Section 1715 (or any comparable or successor provision) of the Pennsylvania
Business Corporation Law of 1988 ("BCL").
(o) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
(p) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company having the rights,
powers and preferences set forth in the Statement with Respect to Shares -
Domestic Business Corporation attached hereto as Exhibit A.
(q) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(r) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such.
(s) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
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 Class A Stock) 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 upon ten (10) days prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issue of Rights Certificates. (a) Until the earlier
of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any person or entity holding Class A Stock for or
pursuant to the terms of any such plan) of, or of the first public announcement
of the intention of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any Person holding Class A Stock for or pursuant to the terms of any
such plan) to commence, a tender or exchange offer the consummation of which
would result in any Person becoming the Beneficial Owner of Class A Stock
aggregating 15% or more of the
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then outstanding Class A Stock (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights; the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof) by
the certificates for Class A Stock registered in the names of the holders
thereof (which certificates shall also be deemed to be Rights Certificates) and
not by separate Rights Certificates, and (y) the right to receive Rights
Certificates will be transferable only in connection with the transfer of Class
A Stock. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Class A
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (a "Rights Certificate"), evidencing
one Right for each share of Class A Stock so held. As of the Distribution Date,
the Rights will be evidenced solely by such Rights 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 of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Class A Stock as of
the close of business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Class A Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Class A Stock 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 Class A Stock
represented thereby.
(c) Certificates for Class A Stock which become outstanding
(including, without limitation, reacquired Class A Stock referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date, or 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
PMA Capital Corporation and The Bank of New York, as Rights
Agent, dated as of May 3, 2000 (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 PMA Capital 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. PMA Capital 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, as set forth in the
Rights Agreement,
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Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) may
become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Class A Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Class A Stock represented thereby. In
the event that the Company purchases or acquires any Class A Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Class A Stock shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Class A Stock which are
no longer outstanding.
Section 4. Form of Rights Certificates. The Rights
Certificates (and the forms of election to purchase Preferred Stock and of
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 share
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Rights Certificates
shall entitle the holders thereof to purchase such number of one one-thousandths
of a share of Preferred Stock as shall be set forth therein at the price per one
one-thousandth of a share of Preferred Stock set forth therein (the "Purchase
Price"), but the number of such one one-thousandths of a share of Preferred
Stock and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board or the President and by the Secretary or an Assistant Secretary of the
Company under the corporate seal of the Company; provided that the signature of
such officers upon the Rights Certificates may be in the form of a facsimile
signature and may be imprinted or otherwise reproduced on the Rights
Certificates, the Company hereby adopting as binding upon it such facsimile
signatures, notwithstanding the fact that at the time of the issuance of such
Rights Certificates such officer shall have ceased to hold such office, and
provided that the seal of the Company may be in the form of a facsimile and may
be imprinted or otherwise reproduced on the Rights Certificates. The Rights
Certificate shall be manually countersigned by the Rights Agent and shall not be
valid for any purpose unless countersigned.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place or places for surrendering of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective
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holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date, the Exchange Date or the Final Expiration
Date, any Rights Certificate or Rights Certificates (other than Rights
Certificates representing Rights that have became void pursuant to Section 7 (e)
hereof or that have been exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of one one-thousandths of a share of Preferred Stock as the Rights Certificate
or Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Rights Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
such holder shall have completed and signed the certificate contained in the
form of assignment set forth on the reverse side of each such Rights
Certificate. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, 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 Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase on the reverse side thereof duly executed and the
certificate contained therein duly completed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one- thousandth of a
share of Preferred Stock as to which the Rights are exercised, at or prior to
the earliest of (i) the
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close of business on May 22, 2010 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof (the "Exchange Date") or (iv) the consummation of
a transaction contemplated by Section 13(d) hereof.
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock purchasable pursuant to the exercise of a Right shall
initially be $65, and shall be subject to adjustment from time to time as
provided in Section 11 or 13 hereof and shall be payable in lawful money of the
United States of America in accordance with paragraph (c) below. Anything in
this Agreement to the contrary notwithstanding, in the event that, at any time
after the date of this Agreement and prior to the Distribution Date, the Company
shall (i) declare or pay any dividend on the Class A Stock payable in Class A
Stock or (ii) effect a subdivision, combination or consolidation of the Class A
Stock (by reclassification or otherwise than by payment of dividends in Class A
Stock) into a greater or lesser number of Class A Stock, then in any such case,
each share of Class A Stock outstanding following such subdivision, combination
or consolidation shall continue to have a Right associated therewith and the
Purchase Price following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price immediately prior to
such event by a fraction the numerator of which shall be the total number of
shares of Class A Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Class
A Stock outstanding immediately following the occurrence of such event. The
adjustment provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase set forth on the
reverse side thereof duly executed and the certificate contained therein duly
completed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be paid
by the holder of such Rights Certificate in accordance with Section 9 hereof by
certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Stock certificates for the number of shares of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of one
one-thousandths of a share of Preferred Stock as are to be purchased (in which
case certificates for the Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby irrevocably authorizes the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Rights Certificate. In the event
that the Company is
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obligated to issue other securities (including Class A Stock) of the Company
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of an event under Section
11(a)(ii) or Section 13 hereof, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any Affiliate or Associate thereof) 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 the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
insure that the provisions of this Section 7(e) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to take
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless the registered holder
shall have completed and signed the certificate set forth on the reverse side of
the Rights Certificate surrendered for such exercise and 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 is furnished to the Company.
(g) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Stock
or any Preferred Stock held in its treasury, the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights in accordance with this Section 7.
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Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Preferred Stock. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Stock delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Stock (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights Certificate
or of any Preferred Stock upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Rights Certificate to a person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Stock in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Stock (or other securities
as the case may be) upon the exercise of any Rights until any such tax shall
have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock 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 Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to
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exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number of shares of Preferred Stock
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares of Preferred Stock
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event
any Person, together with all Affiliates and Associates of such person, becomes
an Acquiring Person, each holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one one-thousandths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Agreement and in lieu of Preferred Stock, such number of shares of Class A
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is then exercisable and dividing that product
by (y) 50% of the then current per share market price of the Company's Class A
Stock (determined pursuant to Section 11(d) hereof) on the date of the
occurrence of such event (such number of shares being referred to as "Adjustment
Shares"); provided, however, that if the transaction that would otherwise give
rise to the foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11 (a)(ii). In the event that
any Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
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(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved) Class A Stock to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board has
determined to make the Rights exercisable into fractions of a share of Preferred
Stock), notwithstanding any other provision of this Agreement, to the extent
necessary and permitted by applicable law, each Right shall thereafter represent
the right to receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, (x) a number of (or fractions
of) shares of Class A Stock (up to the maximum number of shares of Class A Stock
which may permissibly be issued) and (y) one one-thousandth of a share of
Preferred Stock or a number of (or fractions of) other equity securities of the
Company (or, in the discretion of the Board of Directors, debt) which the Board
of Directors of the Company has determined to have the same aggregate current
market value (determined pursuant to Sections 11(d)(i) and (ii) hereof, to the
extent applicable) as one share of Class A Stock (such number of, or fractions
of, shares of Preferred Stock (or other equity securities or debt of the
Company) being referred to as a "capital stock equivalent"), equal in the
aggregate to the number of Adjustment Shares; provided, however, if sufficient
shares of Class A Stock and/or capital stock equivalents are unavailable, then
the Company shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional shares of Class A Stock or
capital stock equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of shareholders; and provided, further, that if the
Company is unable to cause sufficient shares of Class A Stock and/or capital
stock equivalents to be available for issuance upon exercise in full of the
Rights, then each right shall thereafter represent the right to receive the
"Adjusted Number of Shares" (as hereinafter defined); upon exercise at the
"Adjusted Purchase Price" (as hereinafter defined). As used herein, the term
"Adjusted Number of Shares" shall be equal to that number of (or fractions of)
shares of Class A Stock (and/or capital stock equivalents) equal to the product
of (x) the number of Adjustment Shares and (y) a fraction, the numerator of
which is the number of shares of Class A Stock (and/or capital stock
equivalents) available for issuance upon exercise of the Rights and the
denominator of which is the aggregate number of Adjustment Shares otherwise
issuable upon exercise in full of all Rights (assuming there were a sufficient
number of shares of Class A Stock available) (such fraction being referred to as
the "Proration Factor"). The "Adjusted Purchase Price" shall mean the product of
the Purchase Price and the Proration Factor. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to receive
Common Stock and capital stock equivalents upon exercise of the Rights among
holders of Rights.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges and preferences as the Preferred Stock ("equivalent preferred
share")) or securities convertible into Preferred Stock or equivalent preferred
share at a price per share of Preferred Stock or equivalent preferred share (or
having a conversion price per share, if a security convertible into Preferred
Stock or equivalent preferred share) less than the then current per share market
price of the Preferred Stock (as defined in Section 11(d)) on such record date,
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the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred share so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
equivalent preferred share to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right. 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 Rights Agent. Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Stock (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 quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Stock on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent) of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one share of Preferred Stock
and the denominator of which shall be such current per share market price of the
Preferred Stock; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. 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.
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(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security 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 per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is 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 Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by The Nasdaq Stock Market or
such other system then in use, or, if on any such date the Security is 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 Security
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Class A Stock, the fair value of such shares on
such date as determined in good faith by the Board shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred Stock
is not publicly traded, the "current per share market price" of the Preferred
Stock shall be conclusively deemed to be the current per share market price of
the Class A Stock as determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any share split, share dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. If neither the
Class A Stock nor the Preferred Stock is publicly held or so listed or traded,
"current per share 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 binding on the Rights Agent.
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(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 the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-millionth of a share of Preferred
Stock or one ten-thousandth of any other share or security 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 or (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) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Stock, 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 Stock contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a share of Preferred Stock (calculated to the nearest one
one- millionth of a share of Preferred Stock) obtained by (i) multiplying (x)
the number of one one- thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-thousandths of a share of Preferred
Stock 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-thousandths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such
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<PAGE>
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one 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
Rights Certificate have been issued, shall be at least 10 days later than the
date of the public announcement. If Rights Certificate have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificate on such record date Rights Certificate evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificate held by such holders prior to the date of
adjustment, add upon surrender thereof, if required by the Company, new Rights
Certificate evidencing all the Rights to which such holders shall be entitled
after such adjustment. Rights Certificate so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Rights Certificate on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificate theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-thousandths of a share of Preferred Stock which were expressed in the
initial Rights Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value, if
any, of the Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares or securities upon the occurrence of the event requiring such
adjustment.
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(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any Preferred Stock at less than the current
market price, issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exchangeable for Preferred Stock, dividends
on Preferred Stock payable in Preferred Stock or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Class A Stock payable in Class A Stock or (ii) effect a
subdivision, combination or consolidation of the Class A Stock (by
reclassification or otherwise than by payment of dividends in Class A Stock)
into a greater or lesser number of shares of Class A Stock, then in any such
case (A) the number of one one-thousandths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Class A Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Class A Stock outstanding immediately after such event, and (B) each
share of Class A Stock outstanding immediately after such event shall have
issued with respect to it that number of Rights which each share of Class A
Stock outstanding immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(o) 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(p) 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(p) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
does not violate Section 11(p) hereof), if (x) at the time of or immediately
after such consolidation, merger, sale or transfer there are any charter or
bylaw provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken, which would
materially diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13 hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior
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thereto the Company and such other Person shall have executed and delivered to
the Rights Agent a supplemental agreement evidencing compliance with this
Section 11(o).
(p) 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 the purpose of which
is to, or if at the time such action is taken it is reasonably foreseeable that
the effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(q) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Class A
Stock or the Preferred Stock a copy of such certificate and (c) if such
adjustment occurs at any time after the Distribution Date, mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment contained therein.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, on or following the Shares
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any Interested Shareholder, or if in such merger
or consolidation all holders of Class A Stock are not treated alike, any other
Person, (y) the Company shall consolidate with, or merge with, any Interested
Shareholder or, if in such merger or consolidation all holders of Class A Stock
are not treated alike, any other Person, and the Company shall be the continuing
or surviving corporation of such consolidation or merger (other than, in a case
of any transaction described in (x) or (y), a merger or consolidation which
would result in all of the securities generally entitled to vote in the election
of directors ("voting securities") of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Interested Shareholder
or, if in such transaction all holders of Class A Stock are not treated alike,
any other Person, (other than the Company or any Subsidiary of the Company in
one or more transactions each of which does not violate Section 11(p) hereof),
then, and in each such case
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<PAGE>
(except as provided in Section 13(d) hereof), proper provision shall be made so
that (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Stock, such number of freely tradable shares
of Common Stock of the Principal Party (as hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall equal the result obtained by (A) multiplying the then current Purchase
Price by the number of one one- thousandths of a share of Preferred Stock for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) hereof and dividing that product
by (B) 50% of the then current per share market price of the Common Stock of
such Principal Party (determined pursuant to Section 11(d) hereof) on the date
of consummation of such transaction; (ii) such Principal Party shall thereafter
be liable for, and shall assume, by virtue of this Section 13, 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 transaction
described in this Section 13; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Stock in connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Stock
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Class A Stock of the Company are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the
other party to such merger or consolidation (including, if applicable, the
Company if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any of the foregoing
cases, (1) if the Common Stock of such Person is not at such time and has not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stock of two or more of which is and has been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value; and (3) in case such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of ownership
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<PAGE>
having an interest in such joint venture as if such party were a "Subsidiary" of
both or all of such joint venturers and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
shares of its authorized Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the
Securities Act of 1933 (the "Securities Act") with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, and
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 Securities Act)
until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all material respects with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clauses (x) and (y) of Section 13(a) if: (i) such transaction is consummated
with a Person or Persons who acquired Class A Stock pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per share of Common Stock offered in such transaction is not less than the
price per share of Class A Stock paid to all holders of Class A Stock whose
shares were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon
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<PAGE>
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificate which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificate
with regard to which such fractional Rights would otherwise be issuable, an
amount equal to the same fraction of the current market value of a whole Right.
For the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with 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 The Nasdaq Stock Market 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 and shall be
binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of one Right) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are such integral multiples). Fractions of shares of Preferred
Stock in such integral multiples may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not such integral multiples, the
Company shall pay to the registered holders of Rights Certificate at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For the
purposes of this Section 14(b), the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
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<PAGE>
(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive Class A
Stock, capital stock equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Company shall not be required to
issue fractions of shares or units of such Class A Stock, capital stock
equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Class A Stock, capital stock
equivalents or other securities. In lieu of fractional shares or units of such
Class A Stock, capital stock equivalents or other securities, the Company may
pay to the registered holders of Rights Certificate at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such Class A Stock, capital stock
equivalents or other securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent shall
have the value of one one-thousandth of a share of Preferred Stock.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof and the rights of action, if any, given to the Rights
Agent under Section 20 hereof, are vested in the respective registered holders
of the Rights Certificate (and, prior to the Distribution Date, the registered
holders of the Class A Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Class A Stock), without
the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Class A Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
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.
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 Class A Stock;
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<PAGE>
(b) after the Distribution Date, the Rights Certificate are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Rights Certificate (or, prior to the Distribution Date,
the associated Class A Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated Class A
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.
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental
authority or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority prohibiting or otherwise restraining the performance of any of its
obligations under the Agreement.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent. 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
gross 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
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<PAGE>
therefrom. The indemnity provided herein shall survive the expiration of the
Rights and the termination of' this Agreement.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Rights Certificate or certificate for the Preferred Stock or Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, 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. 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. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificate shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificate so countersigned; and in case at that time any of the Rights
Certificate shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificate either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Rights Certificate shall have the full force provided in the Rights Certificate
and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificate shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificate so countersigned; and in
case at that time any of the Rights Certificate shall not have been
countersigned, the Rights Agent may countersign such Rights Certificate either
in its prior name or in its changed name; and in all such cases such Rights
Certificate shall have the full force provided in the Rights Certificate and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificate, by their acceptance thereof, shall be bound:
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(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the
President, any Executive, Senior, Group or other Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or
willful misconduct provided, however, that the Rights Agent shall not
be liable for indirect, special, punitive or consequential damages.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact of recitals contained in this Agreement
or in the Rights Certificate (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(e) hereof) or any adjustment in the
terms of the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificate after actual written notice that such change or adjustment
is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any Preferred Stock to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any Preferred Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.
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(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, any
Executive, Senior, Group or other Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in
the form of assignment or the form of election to purchase set forth on
the reverse thereof, 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 with the
Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Class A Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificate 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 Class A Stock or
Preferred Stock by registered or
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<PAGE>
certified mail, and to the holders of the Rights Certificate 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 of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of the State of New York
(or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York), in
good standing, having an office in the State of New York, which is authorized
under such laws to exercise corporate trust or share transfer powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million, or (b) an affiliate of a corporation described
in clause (a) of this sentence. 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 Class A Stock or Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificate. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificate.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificate
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificate made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Class
A Stock following the Distribution Date and prior to the earliest of the
Redemption Date, the Exchange Date, the Final Expiration Date and the
consummation of a transaction contemplated by Section 13(d) hereof, the Company
(a) shall with respect to Class A Stock 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, notes or debentures issued by
the Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Rights Certificate representing
the appropriate number of Rights in connection with such issuance or
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sale; provided, however, that no Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to the close of business on the
tenth day following the date any Person becomes an Acquiring Person, redeem all
but not less than all the then outstanding Rights at a redemption price of $.001
per Right, appropriately adjusted to reflect any share split, share dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). 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,
shares of Class A Stock (based on the current per share market price as defined
in Section 11 (d) (i)) or in any other form of consideration deemed appropriate
by the Board of Directors of the Company.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights 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
Class A Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Class A Stock prior to the
Distribution Date.
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)) for Class A Stock at an exchange ratio of one share of Class A
Stock per Right, appropriately adjusted to reflect any adjustment in the number
of Rights pursuant to Section 11(a)(i) (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Class
A Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Class A Stock then outstanding.
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<PAGE>
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares of Class A Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Class A Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7 (e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or equivalent preferred share, as
such term is defined in Section 11(b) hereof) for Class A Stock exchangeable for
Rights, at the initial rate of one one-thousandth of a share of Preferred Stock
(or equivalent preferred share) for each share of Class A Stock, as
appropriately adjusted to reflect any share split, share dividend or similar
transaction with respect to the Class A Stock after the date hereof.
(d) In the event that there shall not be sufficient Class A
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Class A Stock or Preferred Stock for issuance upon exchange of the
Rights.
(e) The Company shall not be required to issue fractions of
shares of Class A Stock or to distribute certificates which evidence fractional
shares of Class A Stock. In lieu of such fractional shares of Class A Stock, the
Company shall pay to the registered holders of the Rights Certificate with
regard to which such fractional shares of Class A Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Class A Stock. For the purposes of this paragraph (e),
the current market value of a whole share of Class A Stock shall be the closing
price of a share of Class A Stock (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the
Exchange Date.
Section 25. Notice of Certain Events. (a) In case the Company
shall, at any time after the Distribution Date, propose (i) to pay any dividend
payable in shares of any class to the holders of its Preferred Stock or to make
any other distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
- 30 -
<PAGE>
Stock rights or warrants to subscribe for or to purchase any additional
Preferred Stock or shares of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of outstanding Preferred
Stock), (iv) to effect any consolidation or merger 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 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Class A
Stock payable in Class A Stock or to effect a subdivision, combination or
consolidation of the Class A Stock (by reclassification or otherwise than by
payment of dividends in Class A Stock), then, in each such case, the Company
shall give to each holder of a Rights Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such share dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Class A Stock and/or Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of the Preferred Stock for purposes of
such action, and in the case of any such other action, at least 10 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Class A Stock and/or Preferred Stock, whichever
shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
PMA Capital Corporation
1735 Market Street
Philadelphia, PA 19103
Attention: General Counsel and Secretary
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
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
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<PAGE>
The Bank of New York
101 Barclay Street
New York, NY 10286
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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 in its
sole and absolute discretion from time to time supplement or amend this
Agreement without the approval of any holders of Rights Certificate in order to
cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, or to
amend or supplement any provisions with respect to the Rights which the Company
may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that the Rights Agent shall execute any such supplement or amendment
only if (i) it shall have been provided a certificate signed by an appropriate
officer of the Company stating that the supplement or amendment is consistent
with this Section 27, and (ii) in the case of any such supplement or amendment
to Section 18 or 20 of this Agreement that restricts the rights or expands the
duties of the Rights Agent, the Rights Agent shall have given its express
written consent; and provided, further, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
Without limiting the foregoing, the Company may at any time prior to such time
as any Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections l(a) and 3(a) hereof to not less than 10% (the
"Reduced Threshold"); provided, however, that no Person who beneficially owns a
number of shares of Class A Stock equal to or greater than the Reduced Threshold
shall become an Acquiring Person unless such Person shall, after the public
announcement of the Reduced Threshold, increase its beneficial ownership of the
then outstanding Class A Stock (other than as a result of an acquisition of
Class A Stock by the Company) to an amount equal to or greater than the greater
of (x) the Reduced Threshold or (y) the sum of (i) the lowest beneficial
ownership of such Person as a percentage of the outstanding Class A Stock as of
any date on or after the date of the public announcement of such Reduced
Threshold plus (ii) .001%. Notwithstanding anything contained herein to the
contrary, this Agreement may not be amended or supplemented at a time when the
Rights are not redeemable.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
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<PAGE>
Section 29. Determinations and Actions by the Board, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1) (i) (or any comparable or successor rule)
of the General Rules and Regulations under the Exchange Act. The Board shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend or supplement the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board to any liability
to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificate (and, prior to
the Distribution Date, the Class A Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificate (and, prior to the Distribution Date, the Class A Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law, Jurisdiction, Waiver of Jury Trial.
This Agreement and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the Commonwealth of Pennsylvania and for
all purposes shall be governed by and construed in accordance with the laws of
such Commonwealth applicable to contracts to be made and performed entirely
within such Commonwealth; provided, however, that the rights, obligations and
duties of the Rights Agent hereunder shall be governed by and construed in
accordance with the laws of the State of New York. The parties agree that all
actions and proceedings in which the Rights Agent is a party or is joined as a
party arising out of this Agreement or any of the transactions contemplated
hereby, shall be brought in the United States District Court for the Southern
District of New York or in a New York State Court in the County of New York and
that in connection with any such action or proceeding, submit to the
jurisdiction of, and venue in, such Court. Each of the parties hereto also
irrevocably waives all
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<PAGE>
right to trial by jury in any action, proceeding or counterclaim arising out of
this Agreement or the transactions contemplated hereby.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
PMA CAPITAL CORPORATION
By: /s/ Francis W. McDonnell
Name: Francis W. McDonnell
Title: Senior Vice President Chief
Financial Officer and Treasurer
THE BANK OF NEW YORK
By: /s/ Diana M. Ajjan
Name: Diana M. Ajjan
Title: Vice President
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<PAGE>
EXHIBIT A
ATTACHED TO
STATEMENT WITH RESPECT TO SHARES-DOMESTIC BUSINESS CORPORATION
--------------------------------------------------------------
RESOLUTIONS OF THE BOARD OF DIRECTORS OF
PMA CAPITAL CORPORATION
ESTABLISHING GENERAL TERMS OF PREFERRED STOCK AND DESIGNATING
FIRST SERIES THEREOF ENTITLED
"SERIES A JUNIOR PARTICIPATING PREFERRED STOCK"
A. General Terms of Preferred Stock
--------------------------------
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors of PMA Capital Corporation (herein called the "Corporation") by
Article 5 of the Amended and Restated Articles of Incorporation of the
Corporation, ("Articles of Incorporation") the Board of Directors hereby fixes
and determines the number of shares and the voting rights, designations,
preferences, limitations and special rights applicable to all shares of all
series of the class of stock hereby designated as the "Preferred Stock" as
follows:
Section 1. General. The class of Preferred Stock shall consist of
2,000,000 shares, par value $.01 per share. The shares of Preferred Stock may be
divided into and issued in series from time to time. All shares of any
particular series Preferred Stock shall be identical to all other shares of that
series. Except as otherwise subordinated in a resolution or resolutions of the
Board of Directors creating a series of the Preferred Stock (any such resolution
referred to hereinafter as an "Adopting Resolution"), all shares of Preferred
Stock of all series shall rank ratably as to dividends and assets according to
the respective rates and amounts provided in this resolution and in any Adopting
Resolution.
B. Specific Terms of Series A Junior Participating Preferred Stock
---------------------------------------------------------------
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors of the Corporation by Article 5 of the Articles of Incorporation,
the Board of Directors hereby fixes and determines the number of shares and the
voting rights, designations, preferences, limitations and special rights of
shares of a series of Preferred Stock, by establishing and designating such
series as follows:
Section 1. Designation. There shall be a series of Preferred Stock
which shall consist of 40,000 shares and designated as the "Series A Junior
Participating Preferred Stock" (such series being herein called the "Series A
Preferred Stock"). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus 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 Corporation
convertible into Series A Preferred Stock.
<PAGE>
Section 2. Definitions.
------------
(A) The term "Common Stock" as used in this resolution shall be deemed
to mean the Class A Common Stock of the Corporation and stock of the Corporation
of any class, whether now or hereafter authorized, which has the right to
participate in the distribution of either earnings or assets of the Corporation
without limit as to the amount or percentage.
(B) The term "Dividend Parity Stock" as used in this resolution with
respect to Series A Preferred Stock shall be deemed to mean all other stock of
the Corporation ranking equally therewith as to the payment of dividends. The
term "Liquidation Parity Stock" as used in this resolution with respect to
Series A Preferred Stock shall be deemed to mean all other stock of the
Corporation ranking equally therewith as to distribution of assets upon
liquidation.
(C) The term "Junior Stock" as used in this resolution with respect to
Series A Preferred Stock shall be deemed to mean the Common Stock and all other
stock of the Corporation ranking junior to the Series A Preferred Stock as to
the payment of dividends and the distribution of assets upon liquidation.
(D) The term "Senior Stock" as used in this resolution with respect to
Series A Preferred Stock shall be deemed to mean all other stock of the
Corporation ranking senior to the Series A Preferred Stock as to the payment of
dividends or the distribution of assets upon liquidation.
Section 3. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any
class of Senior Stock, the holders of shares of Series A Preferred
Stock, in preference to the holders of Common Stock and of any other
Junior Stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the 10th day of January, April,
July and October in each year (or, in each case if not a date the
Corporation is open for business, the next date on which the
Corporation is so open) (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, one thousand
times the aggregate per share amount of all cash dividends, and one
thousand times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock or effect a subdivision or combination or consolidation
of the outstanding shares of
2
<PAGE>
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 90 days prior to the
date fixed for the payment thereof.
Section 4. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to one thousand votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
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<PAGE>
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event; provided, however, that in no event
shall any share of Series A Preferred Stock have more than one thousand
votes per share.
(B) Except as otherwise provided herein, in any other Adopting
Resolution, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 5. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 3 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(1) declare or pay dividends or make any other
distributions, on any shares of Junior Stock;
(2) declare or pay dividends, or make any other
distributions, on any shares of Dividend Parity Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such Dividend 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;
(3) redeem or purchase or otherwise acquire for
consideration shares of any Junior Stock, provided that the
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such Junior Stock in exchange for shares
of any other class of Junior Stock; or
(4) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of Dividend Parity Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and
4
<PAGE>
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 5, purchase or otherwise acquire such
shares at such time and in such manner.
Section 6. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Adopting Resolution creating another
series of Preferred Stock or as otherwise required by law.
Section 7. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation, dissolution or winding up (collectively a
"Liquidation") of the Corporation, no distribution shall be made (1) to the
holders of shares of Junior Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received $1000 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision of adjustment hereinafter set forth, equal to
one thousand times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (2) to the holders of shares of Dividend Parity
Stock, except distributions made ratably on the Series A Preferred Stock and all
such Dividend Parity Stock in proportion to the total amounts to which the
holders of all such shares are entitled upon Liquidation. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the provision in clause (1) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) None of the following shall be considered a Liquidation within the
meaning of this section:
(1) a consolidation or merger of the Corporation with or into any
other corporation;
(2) a merger of any other corporation into the Corporation;
5
<PAGE>
(3) a reorganization of the Corporation;
(4) the purchase or redemption of all or part of the outstanding
shares of any class or classes of the Corporation;
(5) a sale or transfer of all or any part of the assets of the
Corporation;
(6) a share exchange to which the Corporation is a party; or
(7) a division of the Corporation
Section 8. Consolidation, Merger etc. In case the Corporation shall
enter into any consolidation, merger, division, share exchange, business
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash or any other
property, or a combination thereof, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to one thousand times the aggregate amount of stock, securities, cash or
any other property, or a combination thereof (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 9. No Redemption. The shares of Series A Preferred Stock shall
not be redeemable.
Section 10. Rank. The Series A Preferred Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
junior to all other classes of Preferred Stock (and series thereof) of the
Corporation, whether now or hereafter authorized.
Section 11. Amendment. The Articles of Incorporation shall not be
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
PH3-638400-8
6
<PAGE>
EXHIBIT B
---------
Form of Rights Certificate
Certificate No. R- Rights
---------
NOT EXERCISABLE AFTER MAY 22, 2010 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS
DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7 (e) OF THE RIGHTS
AGREEMENT.] 1
Rights Certificate
PMA CAPITAL 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 3, 2000 (the "Rights Agreement"), between
PMA Capital Corporation, a Pennsylvania corporation (the "Company"), and The
Bank of New York (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York City time, on May 22, 2010 at the principal
office or offices of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid, nonassessable share of Series
A Junior Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock") of the Company, at a purchase price of $65 per one one-thousandth of a
share of Preferred Stock (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and the
- ----------------------
1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE>
certificate on the reverse hereof, duly executed. The number of Rights evidenced
by this Rights Certificate (and the number of one one-thousandths of a share of
Preferred Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
May 3, 2000, based on the Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a share of Preferred Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above- mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent, may be exchanged for another Rights Certificate or Rights Certificates of
like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.001 per Right or (ii) may be exchanged in whole or in
part for Preferred Stock or shares of the Company's Class A Common Stock, par
value of $5 per share.
No fractional shares of Preferred Stock or other securities
will be issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of the number of one one-thousandths
of a share of Preferred Stock issuable upon the exercise of one Right, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder, as such, of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
the Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
B-2
<PAGE>
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ________, 20__.
ATTEST: PMA CAPITAL CORPORATION
____________________________ By ______________
Secretary Title:
Countersigned:
THE BANK OF NEW YORK
By: ___________________________
Authorized Signature
B-3
<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto _______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 20 .
-------------------- ---
______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) to the best knowledge of the undersigned, the Rights evidenced by
this Rights Certificate [ ] are [ ] are not being exercised by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement);
(2) to the best knowledge of the undersigned, the undersigned [ ] did [
] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: , 20
----------- -- ----------------------------
Signature
B-4
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To PMA CAPITAL CORPORATION
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Rights Certificate to purchase the Preferred Stock or
Class A Common Stock issuable upon the exercise of such Rights and requests that
certificates for such Preferred Stock or Class A Common Stock be issued in the
name of:
Please insert social security _________________________________________________
or other identifying number ____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance 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: , 20
-------------------- --
________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
B-5
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) to the best knowledge of the undersigned, the Rights
evidenced by this Rights Certificate [ ] are [ ] are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement);
(2) to the best knowledge of the undersigned, the undersigned
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: , 20
-------------------- -- ------------------------
Signature
NOTICE
------
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Introduction. On May 3, 2000, the Board of Directors of PMA Capital
Corporation (the "Company") adopted a shareholder rights plan in the form of a
Rights Agreement, dated May 3, 2000, between the Company and The Bank of New
York, as Rights Agent (the "Rights Agreement") and pursuant to the Rights
Agreement declared a dividend distribution of one preferred share purchase right
(a "Right") for each outstanding share of Class A Common Stock, par value $5.00
per share ("Class A Stock"). The dividend will be payable May 22, 2000 to the
shareholders of record at the close of business on May 22, 2000 ("Record Date").
The Board has adopted the Rights Agreement to protect shareholders from
coercive or otherwise unfair takeover tactics. In general, the Rights Agreement
operates by imposing a significant economic penalty upon any person or group
that acquires 15% ("Threshold Percentage") or more of the Company's outstanding
Class A Stock without the approval of the Board. The Rights Agreement should not
interfere with any merger or other business combination approved by the Board.
Please note that the following description is only a summary and is not
complete. Those interested in the specific terms of the Rights Agreement should
read this summary together with the entire Rights Agreement, which has been
filed with the Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A dated May 3, 2000. A copy of the agreement is
available free of charge from the Company.
The Rights. The Board has authorized the issuance of a Right with
respect to each share of Class A Stock outstanding on the Record Date. The
Rights will initially trade with, and will be inseparable from, the Class A
Stock, and no separate Rights certificates will be issued. The Rights will be
evidenced only by certificates that represent shares of Class A Stock. New
Rights will accompany any new shares of Class A Stock issued after the Record
Date until the Distribution Date described below.
Exercise Price. Each Right will allow its holder to purchase from the
Company one one-thousandth of a share of Series A Junior Participating Preferred
Stock ("Preferred Share") for the price of $65 ("Exercise Price"), once the
Right becomes exercisable. This portion of a Preferred Share will give the
shareholder approximately the same dividend and liquidation rights as would one
share of Class A Stock. Prior to exercise, the Right does not give its holder
any dividend, voting, liquidation or other rights as a shareholder of the
Company.
Exercisability. The Rights will separate from the Class A Stock and
become exercisable as of the date which is the earlier of:
o 10 days after the date of a public announcement that a person or
group of affiliated or associated persons has become an
"Acquiring Person" (as further defined below) by obtaining
beneficial ownership of at least the Threshold Percentage of the
outstanding Class A Stock (except pursuant to a "Permitted Offer"
as described below), and
o 10 business days (or a later date determined by the Board before
a person or group becomes an Acquiring Person) after a person or
group begins, or publicly announces its intent to begin, a tender
or exchange offer, which, if consummated, would result in that
person or group becoming an Acquiring Person.
<PAGE>
The date when the Rights become exercisable is referred to as the
"Distribution Date." A person who, alone or together with its affiliates or
associates, obtains beneficial ownership of at least the Threshold Percentage is
an "Acquiring Person." However, in general, a person ("Exempted Person") who
owned 15% or more of the outstanding shares of Class A Stock on May 3, 2000 will
not be an Acquiring Person unless that person expresses an intent to control or
take over the Company, or purchases an additional 1% of the Class A Stock.
Until the Distribution Date, the Class A Stock certificates will also
evidence the Rights, and any transfer of shares of Class A Stock will constitute
a transfer of Rights. After the Distribution Date, the Rights will separate from
the Class A Stock and be evidenced by Rights certificates the Company will mail
to all eligible holders of Class A Stock. Any Rights held by an Acquiring Person
and certain transferees of an Acquiring Person will be void and may not be
exercised.
The Board may reduce the Threshold Percentage to not less than 10% of
the outstanding Class A Stock.
Consequences of a Person or Group Becoming Acquiring Person.
o Flip In. If a person or group becomes an Acquiring Person, all
holders of Rights except the Acquiring Person may purchase that
number of shares of the Class A Stock having a market value equal
to twice the Exercise Price of the Right. This feature of the
plan is referred to as a "Flip In."
o Flip Over. If, at any time after a person or group becomes an
Acquiring Person, the Company is acquired in a merger or similar
business combination or 50% or more of the Company's assets or
earning power is sold, all holders of Rights except the Acquiring
Person may purchase that number of shares of the acquiring entity
having a market value equal to twice the Exercise Price of the
Right. This feature of the plan is referred to as a "Flip Over."
Permitted Offer. A tender or exchange offer for all outstanding Class A
Stock at a price and on terms determined, prior to the purchase of any shares
under the tender or exchange offer, by at least a majority of the Disinterested
Directors to be adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the Company and its
shareholders (other than the Acquiring Person) will be a Permitted Offer.
"Disinterested Directors" are directors of the Company who are not officers or
employees of the Company and who are not the Acquiring Person or an associate or
affiliate of the Acquiring Person, or have not been proposed or nominated as a
director of the Company by the Acquiring Person.
Preferred Share Provisions.
Each one one-thousandth of a Preferred Share, if issued:
o will not be redeemable.
o will entitle holders to quarterly dividend payments of $.001, or
an amount equal to the dividend paid on one share of Class A
Stock, whichever is greater.
o will entitle holders upon liquidation to receive $1.00, or an
amount equal to the payment made on one share of Class A Stock,
whichever is greater.
<PAGE>
o will have the same voting power as one share of Class A Stock.
o will entitle holders to receive a payment equal to the payment
made on one share of Class A Stock in the event shares of Class A
Stock are exchanged in a merger or similar business combination.
The value of each one one-thousandth of a Preferred Share should approximate the
value of one share of Class A Stock.
Expiration. The Rights will expire on May 22, 2010.
Redemption. The Board may redeem the Rights for $.001 per Right at any
time before the close of business on the tenth day after any person or group
becomes an Acquiring Person. If the Board redeems any Rights, it must redeem all
of the Rights. Once the Rights are redeemed, the only right of the holders of
Rights will be to receive the redemption price of $.001 per Right. The
redemption price will be adjusted in the event of a stock split or stock
dividends of the Class A Stock.
Exchange. After a person or group becomes an Acquiring Person, but
before an Acquiring Person owns 50% or more of the outstanding Class A Stock,
the Board may extinguish the Rights by exchanging one share of Class A Stock or
any equivalent security for each Right, other than Rights held by the Acquiring
Person.
Anti-Dilution Provisions. The Board may adjust the Exercise Price of
the Rights, the number of Preferred Shares or other securities issuable upon
exercise of the Rights and the number of outstanding Rights to prevent dilution
that may occur from, among other things, a stock dividend, a stock split, or a
reclassification of the Preferred Shares or Class A Stock. No adjustments to the
Exercise Price will be made until cumulative adjustments require an adjustment
of at least 1%. The Company will not be obligated to issue fractional Preferred
Shares, and may instead pay cash in lieu of fractional shares.
Amendments. The terms of the Rights Agreement may be amended by the
Board without the consent of the holders of the Rights. However, the Board may
not amend the Rights Agreement to lower the Threshold Percentage to below 10% of
the outstanding Class A Stock. In addition, the Board may not cause a person or
group to become an Acquiring Person by lowering the Threshold Percentage below
the percentage interest that such person or group already owns. After the
Distribution Date, the Board may not amend the Rights Agreement in a way that
adversely affects holders of the Rights.
