<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
_____________________
Date of Report (July 1, 1994): July 19, 1994
Alexander & Alexander Services Inc.
(Exact name of registrant as specified in its charter)
Maryland 1-8282 52-0969822
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
organization)
1211 Avenue of the Americas 10036
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 840-8500
(Registrant's telephone number,
including area code:)
Not Applicable
(Former name or former address,
if changed since last report.
<PAGE>
Item 5. Other Items
At a Special Meeting of Stockholders of Alexander & Alexander
Services Inc. (the "Company") held on July 15, 1994, stockholders
holding a majority of the shares of the Company entitled to vote
approved the following proposals:
1. To approve the Stock Purchase and Sale Agreement,
dated as of June 6, 1994, between the Company and
American International Group, Inc. ("AIG"), as it may be
amended from time to time (the "Purchase
Agreement"), and the performance by the Company of
all transactions and acts on the part of the Company
contemplated pursuant to the Purchase Agreement,
including the issuance and sale to AIG of shares of
Series B Cumulative Convertible Preferred Stock, par
value $1.00 per share ("Series B Preferred Stock"), of
the Company and the issuance of shares of non-voting
Class D Common Stock, par value $1.00 per share
("Class D Stock"), of the Company upon the
conversion of shares of Series B Preferred Stock in
accordance with their terms, and the issuance of
shares of Common Stock in exchange for shares of
Class D Stock or, in certain circumstances, conversion
of Series B Preferred Stock;
2. To approve certain amendments to the Company's
charter to (i) increase the number of authorized shares
of stock of the Company, (ii) establish the terms of the
Class D Stock and (iii) effect other minor amendments.
On July 15, 1994, pursuant to the terms of the Purchase Agreement,
AIG purchased from the Company 4,000,000 shares of the Series B
Preferred Stock at a purchase price of $50 per share for a total
purchase price of $200,000,000 (the "AIG Investment"). A copy of a
press release noticing the foregoing events is attached hereto as
Exhibit 20.2.
In connection with the AIG Investment, the Board of Directors
amended the Rights Agreement, dated as of June 11, 1987, between
the Company and First Chicago Trust Company of New York, as
amended and restated as of March 22, 1990, as amended April 21,
1993 the "Rights Agreement". Pursuant to this amendment, effective
as of June 6, 1994, the acquisition of Series B Preferred Stock upon
closing of the Purchase Agreement, the acquisition of Class D Stock
upon conversion of Series B Preferred Stock, the acquisition of
Common Stock upon exchange for Class D Stock or the acquisition
by AIG or its affiliates or any transferee thereof of any securities of
the Company (if such acquisition is permitted by the Purchase
Agreement) will not (i) cause any person to become an Acquiring
Person, (ii) cause the Distribution Date or the Shares Acquisition
Date to occur, or (iii) give rise to a Section 11(a)(ii) Event (as such
capitalized terms are defined in the Rights Agreement). With respect
to the Rights Agreement, the Class D Stock will be treated as if such
shares were Class C Common Stock, $1.00 par value, of the
Company.
In addition, on July 15, 1994, the Board of Directors approved an
amendment to the Rights Agreement to provide for, among other
things, modifications of the definitions of Acquiring Person and
Distribution Date to raise from 10% to 15% the percentage of stock
ownership needed to cause a person to become an Acquiring
Person or to cause a Distribution Date to occur (as such capitalized
terms are defined in the Rights Agreement).
The foregoing description of the amendments to the Rights
Agreement is qualified in its entirety by reference to the full text of the
amendments, which are attached hereto as Exhibits 4.1 and 4.2 and
are incorporated herein by reference. A summary of the Rights
Agreement, as amended, is also attached hereto as Exhibit 20.1.
Effective July 15, 1994, the Company amended its long-term
credit agreement with various banks to restore its ability to borrow
up to $150 million. The agreement provides for unsecured
borrowings and contains various covenants including limits on
minimum net worth, maximum consolidated debt, minimum interest
coverage and minimum consolidated cash flow from operations.
The amendment increases the amount of the credit agreement
from $75 million to $150 million. The amendment also removes a
condition that the Company be in compliance with all financial
covenants for two consecutive quarters before borrowing and
provides a waiver of compliance with respect to the financial
covenants for the quarter ended June 30, 1994. After giving effect
to the amendment, the Company is no longer precluded from
borrowing under the agreement.
Also on July 15, 1994, the Board of Directors elected three
new directors, increasing the size of the board from 8 to 11 directors.
The newly elected directors are: W. Peter Cooke, Chairman, World
Regulatory Advisory Practice, Price Waterhouse, London, England;
Joseph L. Dionne, Chairman and Chief Executive Officer, McGraw-
Hill, Inc., New York, New York; and James D. Robinson III, President,
J.D. Robinson Inc., New York, New York.
A copy of the press release noticing the election of the new
directors, the amendments to the Rights Agreement and the long-
term credit agreement, and other matters is attached hereto as
Exhibit 20.3.
On July 1, 1994, the Company's subsidiary, Alexander
Stenhouse & Partners Ltd. ("AS&P"), entered into an agreement with
Centre Reinsurance (Bermuda) Limited ("Centre Re") under which
AS&P will cede and Centre Re will assume AS&P's liability for certain
losses arising out of the activities of AS&P's former subsidiary,
Sphere Drake Insurance Group Plc, and Swann & Everett
Underwriting Agency and their subsidiaries and predecessors. The
Company's subsidiaries, Atlanta International Insurance Company,
American Special Risk Insurance Company and Trent Insurance
Company Limited (collectively, the "Atlanta companies"), also entered
into a related arrangement with Centre Re. The two above-
mentioned agreements are hereinafter referred to collectively as the
"Centre Re Agreements".
The Centre Re Agreements cover up to $200 million of losses
paid after January 1, 1994 in the aggregate under both agreements
in excess of an aggregate self-insured retention of $73 million. AS&P
paid $78 million and the Atlanta companies paid $2 million in
premiums for this coverage. AS&P may be liable for certain
additional premiums, but only to the extent, if any, the losses paid by
Centre Re exceed an amount equal to the sum of (i) premiums paid,
increased at an annual rate of 8.25% on the amount of premium net
of losses paid by Centre Re and (ii) $25 million, which will be borne
by Centre Re. If loss experience proves favorable, AS&P may
recover upon termination of the agreements amounts in a notional
experience account.
The subject business covered by AS&P's agreement includes
AS&P's liability for loss and allocated loss adjustment expense
sustained after January 1, 1994 with respect to (i) The Orion
Insurance Company Limited ("Orion") during underwriting years from
and including 1953 through 1967 in respect of a certain Marine Pool
Agreement (the "Orion Pool"), (ii) Sphere Drake Insurance Company
due to the unenforceability of a stop-loss agreement with Posgate
and Denby Syndicate 701 protecting certain quota share insurance
in favor of Posgate Syndicates 126/129 and predecessor syndicates,
subject to a maximum liability for such coverage of approximately
$64 million, (iii) AS&P due to the inability to collect from reinsurers for
its share of the Orion Pool, subject to a maximum liability for this
coverage of $16 million and (iv) Eagle Star Insurance Company
Limited for which AS&P may have liability in respect of actions or
omissions by Swann & Everett Underwriting Agency. The Atlanta
companies' agreement provides up to $10 million of coverage in
excess of certain existing reinsurance with an affiliate of Centre Re
in respect of insurance policies issued and reinsurance assumed by
such companies prior to January 1, 1989.
To partially fund the Centre Re Agreements, the Company
borrowed $50 million from Centre Re. The borrowing will be
repayable in five equal annual installments, commencing July 1,
1997, and bears interest at a rate per annum equal to the five-year
U.S. Treasury note rate as at July 1, 1994 plus 250 basis points.
AS&P also borrowed $30 million in deferred premium financing from
Centre Re on a short-term basis, which amount was paid to Centre
Re on July 15, 1994.
The Company contributed $48 million to AS&P to fund the
premium payment and contributed an additional $30 million from the
proceeds of the AIG Investment to permit AS&P to pay the deferred
premium.
As a result of the transaction, the Company will record a
second quarter charge of approximately $6 million to discontinued
operations. The charge represents the cost of the premium and
deductible that exceeds existing reserves for the covered exposures.
<PAGE>
The Centre Re Agreements satisfied one of the conditions to
the obligations of AIG to make the AIG Investment. The Company
agreed with AIG that so long as AIG retains its investment in the
Company, the Company will not, without AIG's consent, cancel,
terminate, commute, substitute coverage or otherwise materially
modify the Centre Re Agreements.
A copy of the press release noticing the Centre Re
Agreements is attached hereto as Exhibit 20.4.
Item 7. Exhibits
4.1 Amendment No. 2 to Rights Agreement, effective as of
June 6, 1994, between Alexander & Alexander Services
Inc. and First Chicago Trust Company of New York, as
Rights Agent.
4.2 Amendment No. 3 to Rights Agreement, dated as of
July 15, 1994, between Alexander & Alexander Services
Inc. and First Chicago Trust Company of New York, as
Rights Agent.
20.1 Summary of Preferred Share Purchase Rights, dated as
of July 15, 1994.
20.2 Press Release, dated July 15, 1994.
20.3 Press Release, dated July 18, 1994.
20.4 Press Release, dated July 7, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
ALEXANDER & ALEXANDER
SERVICES INC.
Date: July 19, 1994 By: /s/ Ronald J. Roessler
Ronald J. Roessler
Senior Vice President and
General Counsel
ht:Z:FORM8K:JULY15<PAGE>
Exhibit Index
Exhibit No. Description Page
4.1 Amendment No. 2 to Rights Agreement,
effective as of June 6, 1994, between
Alexander & Alexander Services Inc. and
First Chicago Trust Company of New York,
as Rights Agent. 10
4.2 Amendment No. 3 to Rights Agreement,
dated as of July 15, 1994, between
Alexander & Alexander Services Inc. and
First Chicago Trust Company of New York,
as Rights Agent. 13
20.1 Summary of Preferred Share Purchase Rights,
dated as of July 15, 1994. 15
20.2 Press Release, dated July 15, 1994. 20
20.3 Press Release, dated July 18, 1994. 21
20.4 Press Release, dated July 7, 1994. 23
<PAGE>
Exhibit 4.1
Amendment Number 2 to Rights Agreement
The Rights Agreement dated as of June 11, 1987,
between Alexander & Alexander Services Inc. (the "Company") and
First Chicago Trust Company of New York, as amended and
restated as of March 22, 1990, as amended April 21, 1992 (the
"Rights Agreement"), is hereby amended, effective as of June 6,
1994, as follows. All capitalized terms used herein without definition
shall have the meanings assigned to such terms in the Rights
Agreement.
A. Notwithstanding anything to the contrary in the
Rights Agreement, none of the following events shall (a) cause any
person to become an Acquiring Person, (b) cause the Distribution
Date or the Shares Acquisition Date to occur, or (c) give rise to a
Section 11(a)(ii) Event:
1. The acquisition of 8% Series B Cumulative Convertible
Preferred Stock ("Series B Preferred Stock") pursuant to the terms of
a Stock Purchase and Sale Agreement dated June 6, 1994 between
the Company and American International Group, Inc. ("AIG") (the
"Purchase Agreement").
2. The acquisition of Class D Common Stock ("Class D
Stock") of the Company upon conversion of the Series B Preferred
Stock in accordance with the terms of the Series B Preferred Stock.
3. The acquisition of Common Stock in exchange for Class D
Stock in accordance with the terms of the Class D Stock.
4. The acquisition of Common Stock upon conversion of the
Series B Preferred Stock in accordance with the terms of the
Series B Preferred Stock.
5. The acquisition by AIG or its Affiliates of any securities of
the Company and the acquisition of any such securities by any
transferee thereof, to the extent that such acquisition occurs at or
after the time that (i) the Company shall consent or agree to the
acquisition of, or the commencement of a tender offer for, or the
Board of Directors of the Company shall recommend or, within 10
business days after the commencement of the tender offer, not
recommend that shareholders reject, a tender offer for, "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act) by
any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended ("the
Exchange Act")), of securities of the Company entitled to vote
generally in the election of directors, or securities convertible into or
exchangeable for such securities (collectively, "Designated
Securities"), representing, when added to the Designated Securities
already owned by such person or group, thirty-five percent (35%) or
more of such Designated Securities; (ii) the Company shall amend,
modify or supplement, or waive the benefit of, this Agreement, as
amended to date, so as to permit any acquisition of beneficial
ownership of thirty-five percent (35%) or more of the Designated
Securities without causing such person or group to become an
Acquiring Person or without causing the Distribution Date or the
Shares Acquisition Date to occur or without giving rise to a Sec-
tion 11(a)(ii) Event; (iii) the Company shall take any action under
Section 3-603(c) of the Maryland General Corporation Law to exempt
any transaction between the Company and any of its subsidiaries, on
the one hand, and any such person or group, or any affiliates of any
person or group, on the other hand, who (A) acquire, own or hold
beneficial ownership of Designated Securities representing thirty-five
percent (35%) or more of such Designated Securities from the
provisions of Title 3, Subtitle 6 of the Maryland General Corporation
Law or (B) acquire, own or hold beneficial ownership of Designated
Securities representing ten percent (10%) or more of such
Designated Securities unless such other person or group, or any
affiliate of such person or group, enters into a standstill agreement
with the Company limiting the acquisition of Designated Securities by
such other person or group, or any affiliates of such person or
group, to less than 35% of the Designated Securities and such
standstill agreement remains in full force and effect; (iv) the Company
shall issue, sell or transfer, in one or a series of related transactions,
Designated Securities to any person or group if after giving effect
thereto said person or group shall have, or shall have the then
contractual right to acquire through conversion, exercise of warrants
or otherwise, more than thirty-five percent (35%) of the combined
voting power to vote generally in the election of directors of the
Company; or (v) the Company shall agree to merge or consolidate
with or into any person, firm, corporation or other legal entity or shall
agree to sell all or substantially all its assets to any person, firm,
corporation or other legal entity other than (i) a merger or consolida-
tion of one subsidiary of the Company into another or the Company,
or (ii) a merger or consolidation in which the securities of the
Company outstanding before the merger or consolidation are not
affected and in which the Company issues equity securities having
an aggregate market value of less than 20% of the total market value
of the Company's equity securities outstanding prior to such merger
or consolidation.
B. Shares of Class D Stock will be treated under the
Rights Agreement as if they were Class C Shares. Without limiting
the generality of the foregoing, Rights shall be issued in respect of
all shares of Class D Stock that are issuable upon conversion of the
Series B Preferred Stock, prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date, as contemplated
by Section 3 of the Rights Agreement, provided that, at the option of
any holder of Class D Stock, any securities issued upon exercise of
such Rights shall be voting only to the extent that the Class D Stock
is voting.
This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. In all
respects not inconsistent with the terms and provisions of this
amendment, the Rights Agreement is hereby ratified, adopted,
approved and confirmed.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed and their respective corporate seals
to be hereunto affixed and attested.
ATTEST: ALEXANDER & ALEXANDER
SERVICES INC.
/s/ Andrea L. Schuman By: /s/ R. Alan Kershaw
Andrea L. Schuman R. Alan Kershaw
Attorney Vice President and Treasurer
ATTEST: FIRST CHICAGO TRUST
COMPANY OF NEW YORK
/s/ Michael J. Kane By: /s/ Joanne Gorostiola
Michael J. Kane Joanne Gorostiola
Customer Service Officer Assistant Vice-President
<PAGE>
Exhibit 4.2
AMENDMENT NO. 3 TO RIGHTS AGREEMENT
AMENDMENT, dated as of July 15, 1994, to the Rights
Agreement, dated as of June 11, 1987, as amended and restated as
of March 22, 1990, as amended April 21, 1992, as amended July 15,
1994 (the "Rights Agreement"), between Alexander & Alexander
Services Inc., a Maryland corporation (the "Company") and First
Chicago Trust Company of New York, a New York corporation (the
"Rights Agent").
Pursuant to Section 27 of the Rights Agreement, the Company
and the Rights Agent may from time to time supplement or amend
the Rights Agreement in accordance with the provisions of Section
27 thereof. All acts and things necessary to make this Amendment
a valid agreement, enforceable according to its terms, have been
done and performed, and the execution and delivery of this
Amendment by the Company and the Rights Agent have been in all
respects duly authorized by the Company and the Rights Agent.
In consideration of the foregoing and the mutual agreements set
forth herein, the parties hereto agree as follows:
1. The definition of "Acquiring Person" in Section 1(b)
of the Rights Agreement is hereby amended by replacing the amount
"10%" in each place where it appears with the amount "15%".
2. Section 3(a) of the Rights Agreement is hereby
amended by replacing the amount "10%" where it appears with the
amount "15%".
3. This Amendment shall be governed by and construed
in accordance with the laws of the State of Maryland and for all
purposes shall be governed by
and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State.
4. This Amendment may be executed in any number
of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
Terms not defined herein shall, unless the context otherwise requires,
have the meanings assigned to such terms in the Rights Agreement.
5. In all respects not inconsistent with the terms and
provisions of this Amendment, the Rights Agreement is hereby
ratified, adopted, approved and confirmed. In executing and
delivering this Amendment, the Rights Agent shall be entitled to all
the privileges and immunities afforded to the Rights Agent under the
terms and conditions of the Rights Agreement.
6. If any term, provision, covenant or restriction of this
Amendment 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 Amendment, and
of the Rights Agreement, shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested, all as of the date and
year first above written.
Attest: ALEXANDER & ALEXANDER
SERVICES INC.
By: /s/ Andrea L. Schuman By: /s/ R. Alan Kershaw
Andrea L. Schuman R. Alan Kershaw
Attorney Vice President and Treasurer
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ Michael J. Kane By: /s/ Joanne Gorostiola
Michael J. Kane Joanne Gorostiola
Customer Service Officer Assistant Vice-President<PAGE>
Exhibit 20.1
ALEXANDER & ALEXANDER SERVICES INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On June 11, 1987, the Board of Directors of Alexander &
Alexander Services Inc. (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share
of Common Stock, $1.00 par value (the "Common Shares"), and
Class C Common Stock, $1.00 par value (the "Class C Shares"), of
the Company. The Company also issued to Montreal Trust Com-
pany of Canada, as successor to The Canada Trust Company, as
trustee (the "Trustee") under a Trust Agreement dated as of June 11,
1987, a number of Rights equal to the number of Class 1 Special
Shares, without par value (the "Class 1 Shares"), of Reed Stenhouse
Companies Limited, a Canadian subsidiary of the Company,
outstanding on July 6, 1987. Under the Company's charter, (i) the
Class C Shares together with the related Dividend Shares, 2.0p par
value (the "Dividend Shares"), of Alexander & Alexander UK, plc,
formerly Alexander & Alexander Europe plc, a United Kingdom
subsidiary of the Company, and (ii) the Class 1 Shares together with
the shares of Class A Common Stock, par value $.00001 per share
(the "Class A Shares"), of the Company which are beneficially owned
by the holders of the Class 1 Shares, are each equivalent to the
Common Shares. With respect to the Rights, the Class D Common
Stock, $1.00 par value (the "Class D Shares"), of the Company will
be treated as if such shares were Class C Shares, and any reference
hereinafter to the Class C Shares shall mean to include the Class D
Shares. The Common Shares, Class C Shares and Class A Shares
are collectively referred to herein as the "Voting Shares." The
dividend was paid on July 6, 1987, (the "Record Date") to the
shareholders of record on that date. As of March 22, 1990, the
Board of Directors amended and restated the terms of the Rights,
and as of April 21, 1992, June 6, 1994 and July 15, 1994 the Board
of Directors further amended the terms of the Rights. The following
is a summary of the terms of the Rights, as amended.
Each Right entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, $1.00 par value (the "Junior Preferred
Shares"), of the Company, at a price of $85 per one one-hundredth
of a Junior Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, dated as of June 11, 1987, amended and
restated as of March 22, 1990, and further amended as of April 21,
1992, June 6, 1994 and July 15, 1994 (the Rights Agreement, as so
amended, the "Rights Agreement"), between the Company and First
Chicago Trust Company of New York, formerly Morgan Shareholder
Services Trust Company, as rights agent (the "Rights Agent").
Until the earlier to occur of (i) ten (10) days following the
date (the "Shares Acquisition Date") of a public announcement by the
Company that (except as provided below) a person or group of
affiliated or associated persons (a "Person") has acquired, or
obtained the right to acquire, "beneficial ownership" (as defined in the
Rights Agreement) of 15% or more of the outstanding Voting Shares
(such Person, an "Acquiring Person") or (ii) ten (10) business days
(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) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the
consummation of which would result in any Person becoming an
Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any
of the Common Share and Class C Share certificates outstanding as
of the Record Date, by such Common Share or Class C Share
certificates, with a copy of this Summary of Rights attached thereto
or, with respect to the Class 1 Shares, by the Master Certificate.
Notwithstanding the foregoing, in the event that any Person who
would otherwise be an "Acquiring Person" has become such
inadvertently (including, without limitation, because (i) such Person
was unaware that it beneficially owned 15% or more of the Voting
Shares or (ii) such Person was aware of the extent of such beneficial
ownership but such Person acquired beneficial ownership of such
Voting Shares without the intention to change or influence the control
of the Company and without actual knowledge of the consequences
of such beneficial ownership under the Rights Agreement), as
determined in good faith by the Board of Directors, and such Person,
as promptly as practicable, divests itself of a sufficient number of
Voting Shares to bring its ownership below the 15% threshold, such
Person will not be deemed to be an Acquiring Person. Further,
notwithstanding anything to the contrary in the Rights Agreement, the
occurrence of certain specified transactions contemplated by the
Stock Purchase and Sale Agreement, dated as of June 6, 1994,
between the Company and American International Group, Inc. will
not cause (i) any Person to become an Acquiring Person, (ii) cause
the Distribution Date or the Shares Acquisition Date to occur; or (iii)
give rise to a Section 11(a)(ii) Event (as defined in the Rights
Agreement).
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the underlying
shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share, Class C Share and
Class 1 Share certificates issued after the Record Date, upon transfer
or new issuance of such shares, will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for such shares outstanding as of the
Record Date, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the underlying shares represented by
such certificate. As soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common
Shares, Class C Shares and the Trustee as of the close of business
on the Distribution Date and such separate Right Certificates alone
will evidence the Rights. Prior to the Distribution Date Common
Shares issuable upon redemption of the Class 1 Shares and upon
conversion of the Class C Shares will also represent one Right.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on July 6, 1997 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed by the Company, in each case, as described
below.
The Purchase Price payable, and the number of Junior
Preferred Shares or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Junior Preferred
Shares, (ii) upon the grant to holders of the Junior Preferred Shares
of certain rights or warrants to subscribe for or purchase Junior
Preferred Shares at a price, or securities convertible into Junior
Preferred Shares with a conversion price, less than the then-current
market price of the Junior Preferred Shares or (iii) upon the grant to
holders of the Junior Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Junior
Preferred Shares) or of subscription rights or warrants (other than
those referred to above). The Rights are not dilutive and will not
affect reported earnings per share.
The number of outstanding Rights and the number of one
one-hundredths of a Junior Preferred Share issuable upon exercise
of each Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations
or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
On June 11, 1987, the Board of Directors initially
authorized and reserved 500,000 of Junior Preferred Shares for
issuance upon exercise of the Rights. On November 18, 1993 and
July 15, 1994, the Board of Directors authorized and reserved an
additional 100,000 shares and 400,000 shares, respectively, of the
Junior Preferred Shares. Junior Preferred Shares purchasable upon
exercise of the Rights will not be redeemable. Each Junior Preferred
Share will be entitled to a minimum preferential quarterly dividend
payment of $10.00 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Junior Preferred Shares
will be entitled to a minimum preferential liquidation payment of $100
per share but will be entitled to an aggregate payment of 100 times
the payment made per Common Share. Each Junior Preferred
Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction
in which Common Shares are exchanged, each Junior Preferred
Share will be entitled to receive 100 times the amount received per
Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Junior Preferred Shares'
dividend, liquidation and voting rights, the value of the one
one-hundredth interest in a Junior Preferred Share purchasable upon
exercise of each right should approximate the value of one Common
Share.
In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets, earning power, or cash flow are sold, proper
provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of
common stock of the acquiring company (or the Company, as the
case may be) which at the time of such transaction will have a
market value (determined as provided in the Rights Agreement) of
two times the exercise price of the Right.
In the event that any Person becomes an Acquiring
Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive
upon exercise that number of one-hundredths of a Junior Preferred
Share (or, under certain circumstances, other equity securities, debt
securities, cash, a reduction in the Purchase Price, and/or other
property, or a combination of the foregoing) having a value
(determined as provided in the Rights Agreement) of two times the
exercise price of the Right.
At any time after any Person becomes an Acquiring
Person and prior to the acquisition by such Person of 5O% or more
of the outstanding Voting Shares, the Board of Directors of the
Company may exchange the Rights (other than Rights beneficially
owned by such Person which have become void), in whole or in part,
at an exchange ratio of one one-hundredth of a Junior Preferred
Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Junior Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Junior Preferred Share,
which may, at the election of the Company, be evidenced by
depositary receipts) and in lieu thereof, an adjustment in cash will be
made based on the market price of the Junior Preferred Shares on
the last trading day prior to the date of exercise.
At any time prior to any Person becoming an Acquiring
Person, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
The terms of the Rights may be amended by the Board
of Directors of the Company in any respect without the consent of
the holders of the Rights prior to there being an Acquiring Person.
Thereafter, the Board of Directors of the Company may amend the
terms of the Rights without the consent of the holders of the Rights,
including an amendment to extend the Final Expiration Date, except
that no such amendment may adversely affect the interests of the
holders of the Rights.
The Rights have certain anti-takeover effects. The Rights
may cause substantial dilution to a person that attempts to acquire
the Company on terms not approved by the Board of Directors of
the Company. The Rights should not interfere with any merger or
other business combination approved by the Board of Directors prior
to the Shares Acquisition Date, since until such time the Rights may
be redeemed by the Company at a redemption price of $.01 per
Right.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement, as amended and
restated as of March 22, 1990, has been filed with the Securities and
Exchange Commission (the "SEC") as an Exhibit to an Amendment
on Form 8 to an Application for Registration on Form 8-A, dated
March 28, 1990. A copy of the amendment dated as of April 21,
1992 has been filed with the SEC as an Exhibit to an Amendment on
Form 8 to an Application for Registration on Form 8-A, dated April
23, 1992. The Amendments dated as of June 6, 1994 and July 15,
1994, has been filed with the SEC as Exhibits to Form 8A/A, dated
July 15, 1994. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated
herein by reference.
July 15, 1994
<PAGE>
Exhibit 20.2
A&A CLOSES $200 MILLION AIG TRANSACTION
NEW YORK, July 15, 1994 -- Alexander & Alexander Services Inc.
(A&A) today completed a previously announced transaction in
which American International Group, Inc. (AIG) purchased 4 million
shares of newly issued Series B convertible preferred stock for
$200 million.
A&A will use the cash infusion for general corporate
purposes, primarily to invest in its core businesses and to fund a
reinsurance arrangement that was completed July 1 for certain
discontinued underwriting operations.
Earlier today, at a special meeting of stockholders, the AIG
transaction and related charter amendments were approved by a
majority of stockholders entitled to vote.
The new, non-voting convertible preferred stock pays an
annual 8 percent dividend. The dividend will be paid in kind
through December 15, 1996, and in kind at A&As option for an
additional three years.
The stock is convertible into A&A's common stock at $17
per share. Upon conversion of the preferred shares into common
stock, AIG would own approximately 21 percent of A&A's
common stock. The preferred stock and the common stock into
which it is convertible are non-voting.
AIG can exchange non-voting common stock for up to 9.9
percent of A&As voting stock. AIG will not be represented on the
A&A board, and a standstill agreement is in effect for eight years.
Alexander & Alexander Services Inc. [NYSE: AAL] is a
global organization of professional advisers providing risk
management, insurance brokerage and human resource
management consulting services from offices in more than 80
countries.
<PAGE>
Exhibit 20.3
A&A AMENDS EXISTING CREDIT FACILITY
AND RAISES RIGHTS THRESHOLD TO 15 PERCENT;
W.P. COOKE, J.L. DIONNE AND J.D. ROBINSON III JOIN BOARD
NEW YORK, July 18, 1994 -- Frank G. Zarb, Chairman and CEO of
Alexander & Alexander Services Inc. (A&A), today said that the
company has completed negotiations amending its long-term
credit agreement .
The bank agreement, reached with the support of all
members of the bank group, increases the amount of available
credit from $75 million to $150 million, effective immediately.
Mr. Zarb also announced that the Board of Directors
amended the companys rights plan, raising from 10 to 15 percent
the threshold of stock ownership needed to trigger certain actions
under the rights plan.
As amended, the rights plan increases the amount of stock
that can be held by stockholders individually or as a group.
In addition, the board elected three new members:
- W. Peter Cooke, Chairman, World Regulatory Advisory
Practice, Price Waterhouse, London.
- Joseph L. Dionne, Chairman and CEO, McGraw-Hill, Inc.,
New York.
- James D. Robinson III, President, J.D. Robinson Inc.,
New York.
Prior to joining Price Waterhouse in 1989, Mr. Cooke
served as head of Banking Supervision, the Bank of England,
and as Associate Director of the bank. From 1977-88, he was
also Chairman of the Group of Ten Committee of Banking
Supervisors at the Bank for International Settlements in Basel,
Switzerland.
Mr. Dionne was named McGraw-Hills chief executive
officer in 1983 and the company's chairman in 1988. He
joined McGraw-Hill in 1967 after having held positions in
teaching, educational administration and consulting on various
experimental education projects.
Prior to forming J.D. Robinson Inc. in 1993, Mr.
Robinson was Chairman, CEO and Director of American Express
Company. He joined American Express in 1970. He previously
held senior positions with White Weld & Co. and
Morgan Guaranty Trust Company.
Commenting on the election of the new directors, Mr.
Zarb said, I am delighted that our shareholders will be
represented by three new directors who bring such a breadth of
experience and accomplishment to our board.
A&A also announced that it has begun the development
of a business plan that gives new emphasis to improving client
service and improving overall efficiency. As part of this plan,
the company has begun an internal review aimed at identifying
potential areas of cost reduction.
The actions follow the Friday, July 15, announcement
that A&A had completed a transaction in which American
International Group, Inc. purchased 4 million shares of newly
issued Series B convertible preferred stock for $200 million.
The capital infusion primarily will be invested into A&A's
core businesses and will help finance a previously announced
reinsurance package that was obtained earlier this month for
certain indemnities and exposures related to the Sphere Drake
Insurance Group that A&A sold in 1987.
Alexander & Alexander Services Inc. [NYSE: AAL] is a
global organization of professional advisers providing risk
management, insurance brokerage and human resource
management consulting services from offices in more than 80
countries.<PAGE>
EXHIBIT 20.4
A&A ACQUIRES REINSURANCE PROTECTION
FOR SPHERE DRAKE-RELATED EXPOSURES
NEW YORK, July 7 -- Alexander & Alexander Services
Inc.(A&A) said that reinsurance coverage has been obtained to
protect A&A and its subsidiaries from certain indemnities and
exposures relating primarily to the Sphere Drake Insurance
Group prior to its sale by A&A in 1987.
This reinsurance protection satisfies a condition of the
previously announced $200 million investment in A&A by
American International Group, Inc. (AIG). The proposed
investment is subject to stockholder approval at a special July
15 meeting.
Frank G. Zarb, A&A's Chairman and Chief Executive
Officer, said, "The reinsurance protection further insulates our
income statement against these particular exposures. We are
reviewing the company's remaining contingencies to determine
what additional actions may be taken. This will enable us to
focus fully on the performance of our core businesses."
As a result of the transaction, A&A will record a second
quarter charge of approximately $6 million to discontinued
operations. The charge represents the cost of the premium and
deductible that exceeds existing A&A reserves for the covered
exposures.
Additional details will be available when appropriate
documentation is filed with the U.S. Securities and Exchange
Commission.
Alexander & Alexander Services Inc. is a global
organization of professional advisers providing risk
management, insurance brokerage and human resource
management consulting services from offices in more than 80
countries.<PAGE>
Alexander & Alexander Services Inc.
1211 Avenue of the Americas
New York, NY 10036
Telephone 212 444-4500
FAX 212 444-4696
VIA EDGAR
July 19, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Current Report on Form 8-K
Gentlemen:
Enclosed for filing please find one conformed copy of the Current Report on
Form 8-K for Alexander & Alexander Services Inc. (the "Company").
This filing notices certain recent events under "Item 5 - Other Events".
Sincerely,
/s/ Donna Somma
Donna Somma
Assistant Vice President
& Securities Counsel
DS/ht
Enc.
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