SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CIGNA CORPORATION
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 06-1059331
__________________________ ___________________
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
One Liberty Place, 1650 Market Street, P.O. Box 7716,
Philadelphia, PA 19192-1550
_________________________________________________________
(Address of principal executive (Zip Code)
offices)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
to be so registered on which each class
is to be registered
- ------------------- -------------------
Rights to Purchase Preferred New York Stock Exchange
Stock, $1.00 par value Philadelphia Stock Exchange
per share Pacific Exchange
If this Form relates to the registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. [ ]
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of a concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction A.(c)(2),
please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
____________________________________________________________
(Title of Class)
<PAGE>
Item 1. Description of Securities to be Registered.
On July 23, 1997, the Board of Directors of CIGNA
Corporation, a Delaware corporation (the "Company"), declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock, par value $1.00 per share
(the "Common Shares"), of the Company. The dividend is payable
to the shareholders of record as of 5:00 P.M., Philadelphia time,
on August 4, 1997 (the "Effective Date"), and with respect to
Common Shares issued thereafter until the Distribution Date (as
hereinafter defined) and, in certain circumstances, with respect
to Common Shares issued after the Distribution Date. Except as
set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Preferred Stock,
Series D, of par value $1.00 per share (the "Preferred Shares"),
at a price of $780 per one one-hundredth of a 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 July 23, 1997 (the "Rights Agreement"), between the
Company and First Chicago Trust Company of New York (the "Rights
Agent").
A. Issue of Rights Certificates
The Rights are attached to all certificates
representing outstanding Common Shares, and no separate Right
Certificates (as hereinafter defined) have been distributed. The
Rights will separate from the Common Shares on the earliest to
occur of (i) the first date of public announcement that a Person
(defined in Section 1(m) of the Rights Agreement), alone or
together with its Affiliates and Associates (defined in Section
1(c) of the Rights Agreement), has acquired beneficial ownership
(as defined in Section 1(d) of the Rights Agreement) of 10% or
more of the outstanding Common Shares (except pursuant to a
Permitted Offer, as hereinafter defined); or (ii) the close of
business on the tenth (10th) business day (or such later date as
the Board of Directors of the Company may determine) following
the commencement of, or announcement of an intention to commence,
a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (as hereinafter
defined), including, in the case of both (i) and (ii), any such
date which is after the date of this Rights Agreement and prior
to the issuance of the Rights (the earliest of such dates being
called the "Distribution Date"). A Person, alone or together
with its Affiliates and Associates, whose acquisition of Common
Shares causes a Distribution Date pursuant to clause (i) above is
an "Acquiring Person." The first date of public announcement
that a Person, alone or together with its Affiliates and
Associates, has become an Acquiring Person is the "Shares
Acquisition Date."
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The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption, exchange, or expiration of the Rights), new Common
Share certificates issued after the Effective Date upon transfer
or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange, or expiration
of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Effective Date, even
without such notation or a copy of the Summary of Rights to
Purchase Preferred Shares being attached thereto, will also
constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As promptly as
practicable following the Effective Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of
business on the Distribution Date (and to each initial record
holder of certain Common Shares issued after the Distribution
Date), and such separate Right Certificates alone will evidence
the Rights.
B. Exercise of Rights; Final Expiration Date of
Rights
The Rights are not exercisable until the Distribution
Date and will expire at 5:00 P.M., Philadelphia time, on
August 4, 2007, unless earlier redeemed or exchanged by the
Company as described below.
C. Flip-In Provision
In the event that any Person becomes an Acquiring
Person (except pursuant to a "Permitted Offer" as hereinafter
defined), each holder of a Right will have (subject to the terms
of the Rights Agreement) the right to receive upon exercise the
number of Common Shares, or, in the discretion of the Board of
Directors of the Company, the number of one one-hundredths of a
Preferred Share (or, in certain circumstances, other securities
of the Company) having a value (immediately prior to such
"Triggering Event," as defined in Section 1(t) of the Rights
Agreement) equal to two times the Purchase Price (the "Flip-In
Right"). Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof will be null and void. A "Permitted Offer"
shall mean a tender or exchange offer for all outstanding Common
Shares 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 such directors may deem relevant.
"Disinterested Directors" are
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<PAGE>
directors of the Company who are not officers of the Company and
who are not Acquiring Persons or Affiliates or Associates
thereof, or representatives of any of them, or any person who was
directly or indirectly proposed or nominated as a director of the
Company by an Acquiring Person.
D. Flip-Over Provision
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any Affiliate or
Associate thereof, or any other person in which such Acquiring
Person, Affiliate or Associate has an interest, or any person
acting on behalf of or in concert with such Acquiring Person,
Affiliate or Associate, or, if in such transaction all holders of
Common Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of
the acquiring company having a value equal to two times the
Purchase Price. The holder of a Right will continue to have
the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
E. Adjustment of Purchase Price
The Purchase Price payable, and the number of one
one-hundredths of a Preferred Share or other securities issuable,
upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends or a dividend payable in preferred shares) or of
subscription rights or warrants (other than "equivalent preferred
shares," as defined in Section 11(b) of the Rights Agreement).
The Purchase Price is 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.
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<PAGE>
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
one-hundredths of a Preferred Share will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
F. Redemption of Rights
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $0.01 per Right (the "Redemption Price"),
which redemption shall be effective upon the action of the Board
of Directors of the Company. Additionally, the Company may redeem
the then outstanding Rights in whole, but not in part, at the Redemption
Price after the triggering of the Flip-In Right and before the
expiration of any period during which the Flip-In Right may be
exercised in connection with a merger or other business
combination transaction or series of transactions involving the
Company in which all holders of Common Shares are treated alike
but not involving (other than as a holder of Common Shares being
treated like all other such holders) any Person acting directly
or indirectly on behalf of, or in concert with, any Acquiring
Person, or its Affiliates or Associates. The Board of Directors
may only redeem Rights if a majority of the Disinterested Directors
authorize such redemption. Upon the effective date of the 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.
G. Exchange of Rights
At any time after a Person becomes an Acquiring Person
but before such Acquiring Person, together with all Affiliates
and Associates of such Person, becomes the "Beneficial Owner"
(defined in Section 1(d) of the Rights Agreement) of 50% or more
of the Common Shares then outstanding, the Company may, at its
option, exchange all or part of the then outstanding and
exercisable Rights (other than those owned by the Acquiring
Person, together with any Affiliates and Associates of such
Acquiring Person, which have become null and void) at an exchange
ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
involving either the Common Shares or the Preferred Shares
occurring after the date hereof (the "Exchange Ratio"). The
Board of Directors may only exchange Rights if a majority of
the Disinterested Directors authorize such exchange.
Immediately upon the action of the Board of Directors ordering
the exchange of any Rights 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
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<PAGE>
Common Shares equal to the number of such rights held by such
holder multiplied by the Exchange Ratio.
H. Rights Certificate Holder not deemed a Stockholder
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.
While the distribution of the rights will not be taxable to
shareholders of the Company, shareholders may, depending upon
the circumstances, recognize taxable income should the Rights
become exercisable or upon the occurrence of certain events
thereafter.
I. Exhibits
Attached hereto as Exhibit 1 and incorporated herein by
reference is a form of the Rights Agreement, dated as of July 23,
1997, between CIGNA Corporation and First Chicago Trust Company
of New York, as Rights Agent, specifying the terms of the Rights,
including the exhibits thereto, as follows: Exhibit A -
Certificate of Designations, Preferences and Rights of Junior
Participating Preferred Stock, Series D, of CIGNA 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 by reference to the Rights
Agreement and the exhibits thereto.
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<PAGE>
Item 2. Exhibits.
1. Rights Agreement, dated as of July 23,
1997, between CIGNA Corporation and
First Chicago Trust Company of New York,
as Rights Agent, which includes, as
Exhibit A thereto, the Certificate of
Designations, Preferences and Rights of
Junior Participating Preferred Stock,
Series D, of CIGNA Corporation, as
Exhibit B thereto, the Form of Rights
Certificate and as Exhibit C thereto,
the Summary of Rights to Purchase
Preferred Shares.
2. Press Release, dated July 23, 1997,
announcing the adoption of the Rights
Agreement.
3. Form of Letter to Shareholders
announcing the adoption of the Rights
Agreement.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereto
duly authorized.
CIGNA CORPORATION
By: /s/ Carol J. Ward
_______________________
Name: Carol J. Ward
Title: Corporate Secretary
Dated: July 23, 1997
7
<PAGE>
EXHIBIT INDEX
Exhibit Description
1. Rights Agreement, dated as of July 23,
1997, between CIGNA Corporation and First
Chicago Trust Company of New York, as
Rights Agent, which includes, as Exhibit A
thereto, the Certificate of Designations,
Preferences and Rights of Junior
Participating Preferred Stock, Series D, of
CIGNA Corporation, as Exhibit B thereto,
the Form of Rights Certificate and as
Exhibit C thereto, the Summary of Rights to
Purchase Preferred Shares.
2. Press Release dated July 23, 1997
announcing the adoption of the Rights
Agreement.
3. Form of Letter to Shareholders announcing
the adoption of the Rights Agreement.
8
EXHIBIT 1
---------
CIGNA CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK, as
Rights Agent
Rights Agreement
Dated as of July 23, 1997
________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions............................. 1
Section 2. Appointment of Rights Agent..................... 5
Section 3. Issue of Rights Certificates.................... 5
Section 4. Form of Rights Certificate...................... 7
Section 5. Countersignature and Registration............... 8
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates.................. 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights................................. 10
Section 8. Cancellation and Destruction of Rights
Certificates................................... 12
Section 9. Reservation and Availability of Preferred Stock. 13
Section 10. Preferred Shares Record Date................... 14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.................... 14
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares..................................... 22
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power....................... 22
Section 14. Fractional Rights and Fractional Shares........ 25
Section 15. Rights of Action............................... 26
Section 16. Agreement of Rights Holders.................... 27
Section 17. Rights Certificate Holder Not Deemed a
Shareholder................................... 27
Section 18. Concerning the Rights Agent.................... 28
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.................................. 28
Section 20. Duties of Rights Agent......................... 29
<PAGE>
Section 21. Change of Rights Agent......................... 31
Section 22. Issuance of New Rights Certificates............ 32
Section 23. Redemption and Termination..................... 33
Section 24. Exchange....................................... 34
Section 25. Notice of Certain Events....................... 35
Section 26. Notices........................................ 36
Section 27. Supplements and Amendments..................... 37
Section 28. Determination and Actions by the Board of
Directors, etc................................ 38
Section 29. Successors..................................... 38
Section 30. Benefits of this Agreement..................... 38
Section 31. Severability................................... 39
Section 32. Governing Law.................................. 39
Section 33. Counterparts................................... 39
Section 34. Descriptive Headings........................... 39
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<PAGE>
Defined Term Cross Reference Sheet
Acquiring Person.................................... Section 1(a)
Act................................................. Section 1(b)
Adjustment Shares................................... Section 11(a)(ii)
Adjusted Number of Shares........................... Section 11(a)(iii)
Adjusted Purchase Price............................. Section 11(a)(iii)
Affiliate........................................... Section 1(c)
Agreement........................................... Preface
Associate........................................... Section 1 (c)
Beneficial Owner.................................... Section 1(d)
beneficially own.................................... Section 1(d)
Business Day........................................ Section 1(e)
capital stock equivalent............................ Section 11(a)(iii)
Close of business................................... Section 1(f)
Common Shares....................................... Section 1(g)
Company............................................. Preface
current per share market price...................... Section 11(d)(i)
Disinterested Director.............................. Section 1(h)
Distribution Date................................... Section 3(a)
Effective Date...................................... Preface
equivalent preferred shares......................... Section 11(b)
Exchange Act........................................ Section 1(c)
Exchange Ratio...................................... Section 24(a)
Final Expiration Date............................... Section 7(a)
Interested Shareholder.............................. Section 1(k)
Nasdaq.............................................. Section 11(d)(i)
Permitted Offer..................................... Section 1(l)
Person.............................................. Section 1(m)
Preferred Shares.................................... Section 1(n)
Principal Party..................................... Section 13(b)
Proration Factor.................................... Section 11(a)(iii)
Purchase Price...................................... Section 4(a)
Redemption Date..................................... Section 7(a)
Redemption Price.................................... Section 23(a)(i)
Right............................................... Preface
Rights Certificate.................................. Section 3(a)
Rights Agent........................................ Preface
Rights Agreement.................................... Section 3(c)
Section 11(a)(ii) Event............................. Section 11(a)(ii)
Section 13 Event.................................... Section 13
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Security............................................ Section 11(d)(i)
Shares Acquisition Date............................. Section 1(r)
Subsidiary.......................................... Section 1(s)
Summary of Rights................................... Section 3(b)
then outstanding.................................... Section 1(d)(iii)
Trading Day......................................... Section 11(d)(i)
Triggering Event.................................... Section 1(t)
voting securities................................... Section 13(a)
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<PAGE>
CIGNA CORPORATION
-----------------
RIGHTS AGREEMENT
----------------
This Agreement, dated as of July 23, 1997 (the
"Agreement"), between CIGNA Corporation, a Delaware corporation
(the "Company"), and First Chicago Trust Company of New York (the
"Rights Agent").
WITNESSETH:
WHEREAS, on July 23, 1997, the Board of Directors of
the Company authorized and declared a dividend of one preferred
share purchase right (a "Right") for each Common Share (as
hereinafter defined) of the Company outstanding at the close of
business on August 4, 1997 (the "Effective Date"), each Right
representing the right to purchase one one-hundredth of a share
of Junior Participating Preferred Stock, Series D, $1.00 par
value, of the Company, having the rights, powers and preferences
set forth in the form of Amended Certificate of Designations
attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth, and has further authorized and
directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Effective Date
and the Distribution Date (as such terms are hereinafter
defined), provided, however, that Rights may be issued with
respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date in accordance with the provisions
of Section 22 of this Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 10% or more of the then
outstanding Common Shares (other than as a result of a Permitted
Offer (as hereinafter defined)) or was such a Beneficial Owner at
any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of 10% or more of the then
outstanding Common Shares. Notwithstanding the foregoing, (A)
the term "Acquiring Person" shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company, or (iv)
any Person or entity organized, appointed or established by the
<PAGE>
Company for or pursuant to the terms of any such plan, and (B) no
Person shall become an "Acquiring Person" (i) as a result of the
acquisition of Common Shares by the Company which, by reducing
the number of Common Shares outstanding, increases the
proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person,
provided, that if (1) a Person would become an Acquiring Person
(but for the operation of this subclause (i)) as a result of the
acquisition of Common Shares by the Company, and (2) after such
share acquisition by the Company, such Person, or an Affiliate or
Associate of such Person, becomes the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed an
Acquiring Person or; (ii) if (1) within five Business Days after
such Person would otherwise have become an Acquiring Person (but
for the operation of this subclause (ii)), such Person notifies
the Board of Directors that such Person did so inadvertently, and
(2) within two Business Days after such notification (or such
greater period of time as may be determined by action of the
Board of Directors, but in no event greater than five Business
Days), such Person divests itself of a sufficient number of
Common Shares so that such Person is the Beneficial Owner of less
than 10% of the outstanding Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as
amended and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement
(the "Exchange Act").
(d) 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 (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights (other than the 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,
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<PAGE>
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 (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing) (other than customary
agreements with and between underwriters and selling group
members with respect to a bona fide public offering of
securities) relating to the acquisition, holding, voting (except
to the extent contemplated by the proviso to Section l(d)(ii)(B))
or disposing of any securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership 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.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, federal holiday or a day on which banking
institutions in the State of New York are authorized or obligated
by law or executive order to close.
(f) "Close of business" on any given date shall mean
5:00 P.M., Philadelphia time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
Philadelphia time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock, par value $1.00
per share, of the Company or, in the event of a subdivision,
combination or consolidation with respect to such shares of
Common Stock, the shares of Common Stock resulting from such
subdivision, combination or consolidation. "Common Shares" when
used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
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(h) "Disinterested Director" means any director 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.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(k) "Interested Shareholder" shall mean any Acquiring
Person or any 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.
(l) "Permitted Offer" shall mean a tender or exchange
offer for all outstanding Common Shares 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 such directors may
deem relevant.
(m) "Person" shall mean any individual, firm,
partnership, corporation, limited liability company, trust,
association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(n) "Preferred Shares" shall mean the Junior
Participating Preferred Stock, Series D, $1.00 par value, of the
Company, having the rights, powers and preferences set forth in
the form of Certificate of Designation attached hereto as
Exhibit A.
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(o) "Redemption Date" shall have the meaning set forth
in Section 7 hereof.
(p) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(q) "Section 13 Event" shall mean any event described
in clause (x), (y) or (z) of Section 13(a) 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; provided, that
if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(s) "Subsidiary" of any Person shall mean any
corporation or other Person of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(t) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of
the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Rights Certificates. (a) Until
the earlier of (i) the Shares Acquisition Date or (ii) the close
of business on the tenth day (or such later date as may be
determined by action of the Company's Board of Directors) 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 organized, appointed or established by the Company or
of any Subsidiary of the Company 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 or entity organized,
appointed or established by the Company or
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<PAGE>
of any Subsidiary of the Company for or pursuant to the terms of
any such plan) to commence (which intention to commence remains
in effect for five Business Days after such announcement), a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the
case of both (i) and (ii), 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
Common Shares 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 the underlying Common
Shares (including a transfer to the Company); provided, however,
that if a tender offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a
result of such tender offer. 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 by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (a "Rights Certificate"), evidencing
one Right for each Common Share so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Effective
Date, 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 Common Shares as of the close of
business on the Effective Date, at the address of such holder
shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Effective
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 attached
thereto. Until the Distribution Date (or the earlier of the
Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the
Effective Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares. As a result of the
execution of this Agreement on July 23, 1997, each Common Share
outstanding as of the Close of Business on August 4, 1997 shall,
subject to the terms and conditions of this Agreement, also
represent one Right and shall, subject to the terms and
conditions of this Agreement, represent the right to purchase one
one-hundredth of a share of Preferred Stock.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence
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<PAGE>
of this paragraph (c)) after the Effective Date but prior to the
earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall be deemed also to be certificates for
Rights and shall bear the following legend:
This certificate also evidences and
entitles the holder hereof to certain
Rights as set forth in a Rights
Agreement between CIGNA Corporation and
First Chicago Trust Company of New York,
dated as of July 23, 1997 (the "Rights
Agreement"), the terms of which are
hereby incorporated herein by reference
and a copy of which is on file at the
principal offices of CIGNA 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. CIGNA
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 set forth in the
Rights Agreement, Rights issued to, or
held by, any Person who is, was or
becomes an Acquiring Person or an
Affiliate or Associate thereof (as
defined in the Rights Agreement) and
certain related persons, whether
currently held by or on behalf of such
Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares 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 Common Shares
represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Effective Date but prior to
the Distribution Date, any Rights associated with such Common
Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.
Section 4. Form of Rights Certificate. (a) The
Rights Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of
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<PAGE>
any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Effective Date,
and on their face shall entitle the holders thereof to purchase
such number of one one-hundredths of a Preferred Share as shall
be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights which are null
and void pursuant to Section 7(e) of this Agreement and any
Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights
Certificate are or were beneficially
owned by a Person who was or became an
Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as
such terms are defined in the Rights
Agreement) or certain related persons.
Accordingly, this Rights Certificate and
the Rights represented hereby are null
and void.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any
such Rights Certificate.
Section 5. Countersignature and Registration. The
Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates
shall be countersigned by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of
the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights
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<PAGE>
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated as the
appropriate place for surrender of such Rights Certificate for
transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each
of the Rights Certificates and the certificate number 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
4(b), Section 7(e) and Section 14 hereof, at any time after the
close of business on the Distribution Date, and at or prior to
the close of business on the earlier of the Redemption Date or
the Final Expiration Date, any Rights Certificate or Rights
Certificates 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-
hundredths of a Preferred Share (or, following a Triggering
Event, other securities, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or 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 the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as
so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or
exchange of Rights Certificates.
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
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<PAGE>
Agent and cancellation of the Rights Certificate if mutilated,
the Company will execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and 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 appropriate form of
election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price
for the total number of one one-hundredths of a Preferred Share
(or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of
(i) the close of business on August 4, 2007 (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 the Rights are exchanged as provided in Section
24 hereof, or (iv) the consummation of a transaction contemplated
by Section 13(d) hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall
initially be $780, shall be subject to adjustment from time to
time as provided in the next sentence and in Sections 11 and
13(a) hereof and shall be payable 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 Common Shares
payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares,
then in any such case, each Common Share 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 Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of Common Shares
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 appropriate form of election to
purchase and the certificate duly executed,
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<PAGE>
accompanied by payment of the Purchase Price for the Preferred
Shares (or other securities, as the case may be) 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 6 hereof by certified check, cashier's check or money
order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares (or
make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company, in its
sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary
agent to comply with such requests, (ii) when appropriate,
requisition from the Company the amount of cash, if any, 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 thereof, deliver
such cash to or upon the order of the registered holder of such
Rights Certificate. In the event that the Company is obligated
to issue other securities (including Common Shares) 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.
In addition, in the case of an exercise of the Rights
by a holder pursuant to Section 11(a)(ii), the Rights Agent shall
return such Rights Certificate to the registered holder thereof
after imprinting, stamping or otherwise indicating thereon that
the rights represented by such Rights Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights
Agreement and if less than all the Rights represented by such
Rights Certificate were so exercised, the Rights Agent shall
indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided
by Section 11(a)(ii).
(d) In case the registered holder of any Rights
Certificate shall exercise (except pursuant to Section 11(a)(ii))
less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to
the registered holder of such Rights Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof, or the Rights Agent shall place an appropriate notation
on the Rights Certificate with respect to those Rights exercised.
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<PAGE>
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an 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) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or
other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the appropriate
form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii)
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise (other than a partial exercise), transfer,
split up, combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights Agent
for cancellation or in canceled form, or, if surrendered to the
Rights Agent, shall be canceled by it, and no Rights Certificates
shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this 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.
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<PAGE>
Section 9. Reservation and Availability of Preferred
Shares. The Company covenants and agrees that at all times prior
to the occurrence of a Section 11(a)(ii) Event it will cause to
be reserved and kept available out of its authorized and unissued
Preferred Shares, or any authorized and issued Preferred Shares
held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event,
shall, to the extent reasonably practicable, so reserve and keep
available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in full
of the Rights pursuant to this Agreement.
So long as the Preferred Shares (and, after the
occurrence of a Section 11(a)(ii) Event, Common Shares or any
other securities) issuable upon the exercise of the Rights may be
listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights
become exercisable, all shares (or other securities) reserved for
such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred
Shares (or Common Shares and/or other securities, as the case may
be) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and non-assessable shares or
securities.
The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance
or delivery of the Rights Certificates or of any Preferred Shares
(or Common Shares and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Rights Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise, or to issue or
deliver any certificates for Preferred Shares or depositary
receipts for Preferred Shares (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.
The Company shall use its best efforts to (i) file, as
soon as practicable following the Shares Acquisition Date (or, if
required by law, at such earlier time following the Distribution
Date as so required), a registration statement under the Act,
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<PAGE>
with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by
Section 11(a)(ii). The Company will also take such action as may
be appropriate under the blue sky laws of the various states.
Section 10. Preferred Shares Record Date. Each person
in whose name any certificate for Preferred Shares (or Common
Shares and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the Preferred Shares (or
Common Shares and/or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if
the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as
the case may be) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer
books of the Company are open.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares or (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of 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 Shares 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,
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<PAGE>
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.
If an event occurs which would require an adjustment under both
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall
be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event that any Person, alone or together
with its Affiliates and Associates, shall become an Acquiring
Person, then proper provision shall be made so that each holder
of a Right (except as provided below and in Section 7(e) hereof)
shall, for a period of 60 days after the later of the occurrence
of any such event or the effective date of an appropriate
registration statement under the Act pursuant to Section 9
hereof, have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price, in accordance with the
terms of this Agreement, such number of Common Shares (or, in the
discretion of the Board of Directors, one one-hundredths of a
Preferred Share) as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event, and (y) dividing that product by 50% of
the then current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) hereof) on the date
of such first occurrence (such number of shares being referred to
as the "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);
(iii) In the event that there shall not be
sufficient treasury shares or authorized but unissued (and
unreserved) Common Shares 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 Preferred Share),
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) Common
Shares (up to the maximum number of Common Shares which may
permissibly be issued) and (y) one one-hundredth of a Preferred
Share 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 Common Share (such number of, or fractions of,
Preferred Shares (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
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<PAGE>
sufficient Common Shares 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 Common Shares 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 Common Shares 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 upon
exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "Adjusted Number
of Shares" shall be equal to that number of (or fractions of)
Common Shares (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 Common Shares
(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 Common Shares 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
Shares 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 (other than the Rights), options or
warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Shares (or shares having
the same rights and privileges as the Preferred Shares
("equivalent preferred shares")) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per
Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares (or having a
conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record date,
the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or
purchase (or into which the
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<PAGE>
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 the 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 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 Shares owned by or held
for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall
be made successively whenever such a record date is fixed; and in
the event that such rights, 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
Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) 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 (as determined pursuant to Section 11(d) hereof) of the
Preferred Shares on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent 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 Preferred Share and the denominator of which
shall be such current per share market price of the Preferred
Shares; 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.
(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 thirty (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
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<PAGE>
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 thirty (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 National Association of
Securities Dealers, Inc. Automated Quotations System ("Nasdaq")
or such other exchange or market 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 such market maker is making a market in the
Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Company
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the 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. Subject to
Section 11(d)(ii) hereof, if any Security is not publicly held or
so listed or traded, the "current per share market price" of such
Security shall mean the fair market value per share as determined
in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares (or
one one-hundredth of a Preferred Share) shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common
Shares as determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one
hundred. If neither the Common Shares nor the Preferred
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<PAGE>
Shares are 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.
(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-hundredth of a
Preferred Share, 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 mandates such adjustment or
(ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable
upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Share
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) hereof, upon each
adjustment of the Purchase Price as a result of the calculations
made in Sections 11(b) and 11(c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one ten-thousandth of a
Preferred Share) obtained by (i) multiplying (x) the number of
Preferred Shares covered by a Right immediately prior to this
adjustment of the Purchase Price 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.
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<PAGE>
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-hundredths of
a Preferred Share purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths
of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest 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 Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so
to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preferred Shares issuable upon
the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price
per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value,
if any, of the number of one one-hundredths of a Preferred Share,
Common Shares or other securities 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 such number of fully paid
and non-assessable one one-hundredths of a Preferred Share,
Common Shares or other securities at such adjusted Purchase
Price.
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<PAGE>
(1) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of one one-hundredths of a Preferred Share, Common Shares or
other securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a
Preferred Share, Common Shares or other securities of the
Company, if any, issuable upon 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 upon the occurrence of the event
requiring such adjustment.
(m) Anything to the contrary in this Section 11
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 (i) any consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred
Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares,
(iv) stock dividends, or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Shares shall not be taxable
to such shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in
a transaction which does not violate Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which does not violate Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets 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(o)
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 thereto the
Company and such other Person shall have executed and
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<PAGE>
delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 11(n).
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action 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.
(p) 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 Common Shares
and the Preferred Shares a copy of such certificate and (c) mail
a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. (a) In the event that, 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 Common Shares 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 Common Shares 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
Persons or, if in such transaction all holders of
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<PAGE>
Common Shares 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(o)
hereof), then, and in each such case (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 Shares, such number of freely tradable Common Shares
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-hundredths
of a Preferred Share 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 Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such Section
13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its Common Shares) 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 Shares 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 Common
Shares of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation
(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 Shares of such Person are not at such
time and have 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 Shares of which are and have
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<PAGE>
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 Shares of two or
more of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value; 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 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 its authorized Common
Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and 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 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 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.
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<PAGE>
(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 Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person
or Persons); (ii) the price per Common Share offered in such
transaction is not less than the price per Common Share paid to
all holders of Common Shares 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
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 Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For 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 of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights 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 Preferred Shares (other than fractions which are one
one-hundredths or integral multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other
than fractions which are integral multiples of one one-hundredth
of a Preferred Share). Fractions of Preferred
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<PAGE>
Shares in integral multiples of one one-hundredths of a Preferred
Share 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
Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not one one-hundredths or
integral multiples of one one-hundredth of a Preferred Share, the
Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one Preferred Share. For purposes of this Section
14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of one of the
transactions or events specified in Section 11 giving rise to the
right to receive Common Shares, capital stock equivalents (other
than Preferred Shares) or other securities upon the exercise of a
Right, the Company shall not be required to issue fractions of
shares or units of such Common Shares, capital stock equivalents
or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares,
capital stock equivalents or other securities. In lieu of
fractional shares or units of such Common Shares, capital stock
equivalents or other securities, the Company may pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share or unit of
such Common Shares, 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-hundredth of a Preferred Share.
(d) The holder of a Right by the acceptance of the
Right expressly waives the right to receive any fractional Rights
or any fractional share 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, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
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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 shall 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 Rights Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, 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 Common Shares certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificate or the associated Common Shares certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or 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, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be
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deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as
such any of the rights of a 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 other
distributions or to exercise any preemptive 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 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 therefrom, directly or indirectly.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Rights Certificate or certificate
for Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
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
stock transfer or all or substantially all of the corporate trust
business of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent
under the
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provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates 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 Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of an Acquiring Person and the determination of the
current per share market price of any Security) 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 Chief Executive
Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant 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.
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<PAGE>
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates (except its
countersignature on such Rights Certificates) 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
required under the provisions of Section 11 or 13 hereof or
responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt
of the certificate described in Section 12 hereof); nor shall it
by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred
Shares, Common Shares or other securities to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any
Preferred Shares, Common Shares or other securities will, when
issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder and certificates delivered pursuant to any
provision hereof from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and is authorized to apply to
such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered
by it in good faith or lack of action in accordance with
instructions of any such officer.
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<PAGE>
(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, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from
any such act, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights hereunder if there
shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Shares or Preferred Shares by registered or certified mail, and
to the holders of the Rights Certificates by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 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
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<PAGE>
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 any other state of the United States, so long as such
corporation complies with the applicable rules and requirements
of the New York Stock Exchange, as such rules and requirements
may be amended or modified from time to time, is authorized to
exercise stock transfer or corporate trust 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 $50,000,000 (or such
lower number as approved by the Board), 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 Common Shares or Preferred Shares
and mail a notice thereof in writing to the registered holders of
the Rights Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement.
In addition, in connection with the issuance or sale of
Common Shares following the Distribution Date and prior to the
earliest of the Redemption Date, the Final Expiration Date and
the consummation of a transaction contemplated by Section 13(d)
hereof, the Company (a) shall with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, 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 Certificates representing the appropriate
number of Rights in connection with such issuance or sale;
provided, however, that no
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Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
Section 23. Redemption and Termination.
(a) (i) Subject to Section 23(a)(iii), the Board of Directors
of the Company may, at its option, redeem all, but not less than
all, the then outstanding Rights at a redemption price of $.01
per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), at any time
prior to the earlier of (x) a Section 11(a)(ii) Event, or (y) the
Final Expiration Date. The Company may, at its option, pay the
Redemption Price either in Common Shares (based on the "current
per share market price," as defined in Section 11(d)(i) hereof,
of the Common Shares at the time of redemption) or cash; provided
that if the Company elects to pay the Redemption Price in Common
Shares, the Company shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each
holder of Rights shall be rounded down to the next whole share.
(ii) In addition, subject to Section 23(a)(iii), the
Board of Directors of the Company may, at its option, at any time
following a Shares Acquisition Date but prior to any Section 13
Event, redeem all, but not less than all, of the then outstanding
Rights at the Redemption Price in connection with any merger,
consolidation, sale or other transfer (in one transaction or in a
series of related transactions) of assets or earning power
aggregating 50% or more of the earning power of the Company and
its Subsidiaries (taken as a whole) in which all holders of
Common Shares are treated alike and not involving (other than as
a holder of Common Shares being treated like all other such
holders) an Interested Shareholder.
(iii) The Board of Directors of the Company may
only redeem Rights pursuant to Section 23(a)(i) or 23(a)(ii)
hereof if a majority of the Disinterested Directors authorizes
such redemption.
(b) In the case of a redemption permitted under
Section 23(a)(i), immediately upon the date for redemption set
forth (or determined in the manner specified in) in a resolution
of the Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. In the case
of a redemption permitted only under Section 23(a)(ii), evidence
of which shall have been filed with the Rights Agent, the right
to exercise the Rights will terminate and represent only the
right to receive the Redemption Price upon the later of ten
Business Days following the giving of such notice or the
expiration of any period during which the rights under Section
11(a)(ii) may be
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exercised. 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 ten days after such date for redemption
set forth in a resolution 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 Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. 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
and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
(c) The Company may, at its option, discharge all of
its obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights in
accordance with this Agreement and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books
of the transfer agent of the Common Shares, and upon such action,
all outstanding Rights and Rights Certificates shall be null and
void without any further action by the Company.
Section 24. Exchange. (a) Subject to Section 24(e),
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 Sections 7(e) and 11(a)(ii) hereof) for Common
Shares of the Company at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction involving either the Common
Shares or the Preferred Shares occurring after the date hereof
(such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such
Subsidiary, any entity holding Common Shares for or pursuant to
the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to Section 24(a) hereof and
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without any further action and without any notice, the right to
exercise such rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such rights held
by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
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
Common Shares 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 Sections 7(e) and 11(a)(ii) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Shares (or
equivalent preferred shares, as such term is defined in Section
11(b) hereof) for some or all of the Common Shares exchangeable
for Rights, at the initial rate of one one-hundredth of a
Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the
voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as
one Common Share.
(d) The Board shall not authorize any exchange
transaction referred to in Section 24(a) hereof unless at the
time such exchange is authorized there shall be sufficient Common
Shares or Preferred Shares issued but not outstanding, or
authorized but unissued, to permit the exchange of Rights as
contemplated in accordance with this Section 24.
(e) The Board of Directors may only exchange Rights
pursuant to Section 24(a) hereof if a majority of the
Disinterested Directors authorizes such exchange.
Section 25. Notice of Certain Events. (a) In case
the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to
make any other distribution to the holders of Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to
the holders of its Preferred Shares rights or warrants to
subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred
Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any
consolidation or merger
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<PAGE>
into or with any other Person (other than a Subsidiary of the
Company in a transaction which does not violate Section 11(o)
hereof), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other
transfer) in one 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 or Persons (other than the
Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall
give to each holder of a Rights Certificate, in accordance with
Section 26 hereof, a notice of such proposed action to the extent
feasible and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of
such stock 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 Preferred Shares, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other
action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by
the holders of the Preferred Shares, whichever shall be the
earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) 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 and (ii) all
references in the preceding Section 25(a) to Preferred Shares
shall be deemed thereafter to refer also, if appropriate, to
Common Shares and/or, if appropriate, other securities of the
Company.
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:
CIGNA Corporation
One Liberty Place
1650 Market Street
P.O. Box 7716
Philadelphia, Pennsylvania 19192-1550
Attention: Corporate Secretary
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<PAGE>
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:
First Chicago Trust Company of New York
Tenders & Exchanges
525 Washington Boulevard
Suite 4660
Jersey City, NJ 07303
Attention: Tenders & Exchanges Administration
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares 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. (a) Prior to
the Distribution Date, subject to Section 27(b) hereof, the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common
Shares. From and after the Distribution Date, subject to
Section 27(b) hereof, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that such supplement or
amendment does not adversely affect the rights or obligations of
the Rights Agent under Section 18 or Section 20 of this
- 37 -
<PAGE>
Agreement. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests
of the holders of Common Shares.
(b) The Company shall not supplement or amend any
provision of this Agreement unless a majority of the
Disinterested Directors authorizes such supplement or amendment.
Section 28. Determination and Actions by the Board of
Directors, etc. Subject to Sections 1(m), 23(a)(iii), 24(e) and
27(b) hereof, the Board of Directors of the Company shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the
Board, or 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,
without limitation, a determination to redeem or not redeem the
Rights or to amend the Agreement and whether any proposed
amendment adversely affects the interests of the holders of
Rights Certificates). For all purposes of this Agreement, any
calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common
Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of
this Agreement. All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or
made by the Board in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the
Rights Certificates and all other parties, and (y) not subject
the Board to any liability to the holders of the Rights
Certificates.
Section 29. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common
Shares).
- 38 -
<PAGE>
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. This Agreement, each Right
and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Delaware and
for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
- 39 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date
and year first above written.
CIGNA CORPORATION
By: /s/ Wilson H. Taylor
__________________________
Name: Wilson H. Taylor
Title: Chairman of the Board and Chief
Executive Officer
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By: /s/ James R. Kuzmich
___________________________
Name: James R. Kuzmich
Title: Assistant Vice President
- 40 -
<PAGE>
Exhibit A
---------
FORM OF AMENDED CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES D
of
CIGNA CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, Wilson H. Taylor, Chairman of the Board and Chief
Executive Officer, and Carol J. Ward, Corporate Secretary, of
CIGNA Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:
1. No shares of the Corporation's Junior Participating
Preferred Stock, Series D, have been issued.
2. That pursuant to the authority conferred upon the Board
of Directors by the Restated Certificate of Incorporation of the
Corporation, the Board of Directors on July 23, 1997, adopted the
following resolution amending the Certificate of Designations,
Preferences and Rights originally filed with the Secretary of
State of the State of Delaware on July 30, 1987, as corrected on
August 12, 1987, that created a series of preferred stock
designated as Junior Participating Preferred Stock, Series D:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation by Article FOURTH of the Restated
Certificate of Incorporation, the Certificate of Designations,
Preferences and Rights originally filed with the Secretary of
State of the State of Delaware on July 30, 1987, as corrected on
August 12, 1987, that created a series of preferred stock
designated as "Junior Participating Preferred Stock, Series D" of
the Corporation be, and it hereby is, amended, and that the
designation and amount thereof and the powers, preferences and
relative, participating, optional and other special rights of the
shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:
A1
<PAGE>
Section 1. Designation and Amount. There shall be a
series of the Preferred Stock of the Corporation which shall be
designated as the "Junior Participating Preferred Stock, Series
D," $1.00 par value, and the number of shares constituting such
series shall be 6,000,000. 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
Junior Participating Preferred Stock, Series D, to a number less
than that of the shares then outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by
the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of
the holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of Junior Participating
Preferred Stock, Series D, with respect to dividends, the holders
of shares of Junior Participating Preferred Stock, Series D, in
preference to the holders of shares of Common Stock, par value
$1.00 per share (the "Common Stock"), of the Corporation and 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 that 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 on which 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 Junior Participating Preferred Stock, Series D, in an
amount per share (rounded to the nearest cent) equal to the
greater of (a) $10.00, or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of
Common Stock 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 Junior Participating Preferred Stock, Series D. In the
event the Corporation shall at any time after August 4, 1997 (the
"Effective Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the amount to
which holders of shares of Junior Participating Preferred Stock,
Series D, 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
A2
<PAGE>
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 Junior Participating Preferred Stock, Series
D, as provided in paragraph (A) above 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 $10.00 per share on the
Junior Participating Preferred Stock, Series D, shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Participating Preferred Stock,
Series D, from the Quarterly Dividend Payment Date next preceding
the date of issue of such shares of Junior Participating
Preferred Stock, Series D, 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 Junior Participating Preferred Stock, Series D,
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 Junior
Participating Preferred Stock, Series D, 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 Junior Participating Preferred Stock, Series
D, entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Junior Participating Preferred Stock, Series D shall have the
following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Junior Participating
Preferred Stock, Series D, shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any
time after the Effective Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of
A3
<PAGE>
shares, then in each such case the number of votes per share to
which holders of shares of Junior Participating Preferred Stock,
Series D, 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.
(B) Except as otherwise provided herein or by law, the
holders of shares of Junior Participating Preferred Stock, Series
D, and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders
of the Corporation.
(C) (i) If at any time dividends on any Junior
Participating Preferred Stock, Series D, shall be in arrears in
an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all
previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Junior Participating Preferred
Stock, Series D, then outstanding shall have been declared and
paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Junior
Participating Preferred Stock, Series D) with dividends in
arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have
the right to elect two (2) directors.
(ii) During any default period, such voting
right of the holders of Junior Participating Preferred Stock,
Series D, may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that neither such voting right nor the
right of the holders of any other series of Preferred Stock, if
any, to increase, in certain cases, the authorized number of
directors shall be exercised unless the holders of ten percent
(10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the
holders of Common Stock shall not affect the exercise by the
holders of Preferred Stock of such voting right. At any meeting
at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they
shall have the right, voting as a class, to elect directors to
fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) directors, or if such right is exercised
at an annual meeting, to elect two (2) directors. If the number
which may be so elected at any special meeting does not amount to
the required number, the holders of the Preferred Stock shall
have the right to make such increase in the number of directors
as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Stock shall
have
A4
<PAGE>
exercised their right to elect directors in any default period
and during the continuance of such period, the number of
directors shall not be increased or decreased except by vote of
the holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or pari
passu with the Junior Participating Preferred Stock, Series D.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not
less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Preferred
Stock, which meeting shall thereupon be called by the Chairman,
President, a Vice-President or the Corporate Secretary of the
Corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to
this paragraph (C)(iii) shall be given to each holder of record
of Preferred Stock by mailing a copy of such notice to him at his
last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 10 days
and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such
order or request, such meeting may be called on similar notice by
any stockholder or stockholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) directors voting as a
class, after the exercise of which right (x) the directors so
elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining directors theretofore elected by the
holders of the class of stock which elected the director whose
office shall have become vacant. References in this paragraph
(C) to directors elected by the holders of a particular class of
stock shall include directors elected by such directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a
default period, (x) the right of the holders of Preferred Stock,
as a class to elect directors shall cease, (y) the term of any
directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the
A5
<PAGE>
number of directors shall be such number as may be provided for
in, or pursuant to, the Restated Certificate of Incorporation or
Bylaws irrespective of any increase made pursuant to the
provisions of paragraph (C) (ii) of this Section 3 (such number
being subject, however to change thereafter in any manner
provided by law or in the Restated Certificate of Incorporation
or Bylaws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining directors, even
though less than a quorum.
(D) Except as set forth herein, holders of Junior
Participating Preferred Stock, Series D, shall have no special
voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock
as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Participating Preferred
Stock, Series D, as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior
Participating Preferred Stock, Series D, outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Junior Participating Preferred Stock, Series D;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up), with the Junior Participating Preferred Stock,
Series D, except dividends paid ratably on the Junior
Participating Preferred Stock, Series D, and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts of which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Junior Participating Preferred Stock,
Series D, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior
Participating Preferred Stock, Series D; or
A6
<PAGE>
(iv) purchase or otherwise acquire for
consideration any shares of Junior Participating Preferred
Stock, Series D, or any shares of stock ranking on a parity
with the Junior Participating Preferred Stock, Series D,
except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series of 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 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Junior
Participating Preferred Stock, Series D, purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized
but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A)
Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Junior Participating Preferred Stock, Series D, unless, prior
thereto, the holders of shares of Junior Participating Preferred
Stock, Series D, shall have received $100 per share plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment
(the "Series D Liquidation Preference"). Following the payment
of the full amount of the Series D Liquidation Preference, no
additional distributions shall be made to the holders of shares
of Junior Participating Preferred Stock, Series D, unless, prior
thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Series D Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series D
Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Junior Participating Preferred
A7
<PAGE>
Stock, Series D, and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining
assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event there are not sufficient assets available
to permit payment in full of the Series D Liquidation Preference
and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Junior
Participating Preferred Stock, Series D, then such remaining
assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.
In the event there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining
assets shall be distributed ratably to the holders of Common
Stock.
(C) In the event the Corporation shall at any time after
the execution of the Rights Agreement (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by
a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case
the shares of Junior Participating Preferred Stock, Series D,
shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Effective Date
(i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Junior Participating Preferred Stock, Series D, 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 are
outstanding immediately prior to such event.
A8
<PAGE>
Section 8. Redemption. The shares of Junior
Participating Preferred Stock, Series D, shall not be redeemable.
Section 9. Ranking. The Junior Particpating Preferred
Stock, Series D, shall rank junior to all other series of the
Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in
any manner which would materially alter or change the powers,
preferences or special rights of the Junior Participating
Preferred Stock, Series D, so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds (66
2/3%) of the outstanding shares of Junior Participating Preferred
Stock, Series D, voting separately as a class.
Section 11. Fractional Shares. Junior Participating
Preferred Stock, Series D, may be issued in fractions of a share,
which are one one-hundredths or integral multiples of one
one-hundredths of a share, which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Junior
Participating Preferred Stock, Series D.
A9
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury this __ day of August, 1997.
________________________________
Name: Wilson H. Taylor
Title: Chairman of the Board and
Chief Executive Officer
Attest:
_____________________________
Name: Carol J. Ward
Title: Corporate Secretary
A10
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER AUGUST 4, 2007, OR
EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $0.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
THE RIGHTS ARE SUBJECT TO EXCHANGE, AT
THE OPTION OF THE COMPANY, AT ONE COMMON
SHARE PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ASSOCIATE OR AFFILIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME
VOID TO THE EXTENT PROVIDED IN AND UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION
7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
___________________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentences.
B1
<PAGE>
CIGNA 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 July 23, 1997 (the "Rights Agreement")
between CIGNA Corporation, a Delaware corporation (the
"Company"), and First Chicago Trust Company 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. (Philadelphia, PA time) on
August 4, 2007 at the office of the Rights Agent in New York, New
York, one one-hundredth of a fully-paid, nonassessable share of
Junior Participating Preferred Stock, Series D (the "Preferred
Stock") of the Company, at a purchase price of $780 per one one-
hundredth of a share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the appropriate
Form of Election to Purchase duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and
Purchase Price as of August 4, 1997, based on the Preferred Stock
as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of shares of
Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of
certain events.
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
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Rights Certificates. Copies of the Rights Agreement are on file
at the principal office of the Company and are also available
upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the
Rights Agent, may be exercised 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 (other than pursuant to Section 11(a)(ii) of
the Rights Agreement) 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.
If this Rights Certificate shall be exercised in whole or in part
pursuant to Section 11(a)(ii) of the Rights Agreement, the holder
shall be entitled to receive this Rights Certificate duly marked
to indicate that such exercise has occurred as set forth in the
Rights Agreement.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.01 per Right,
and the redemption price may be satisfied by issuing Common
Shares (pursuant to Section 23(a)(i) of the Rights Agreement).
In addition, the Rights evidenced by this Certificate may be
exchanged by the Company at its option at an exchange ratio of
one Common Share per Right.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Rights or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the
Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the
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<PAGE>
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 of the
Rights Agreement), or to receive dividends or other
distributions, or otherwise, until the Right or Rights evidenced
by such Rights Certificate shall have been exercised.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated: _____________________
ATTEST: CIGNA CORPORATION
__________________________ __________________________
Name: Carol J. Ward Name:
Title: Corporate Secretary Title:
Countersigned:
___________________________
Authorized Signature
B5
<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: _______________
_________________________________
Signature
Signature Guaranteed:
_________________________
Signatures must be guaranteed by a member firm of a registered
national stock 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.
B6
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________
________________________________
Signature
Signature Guaranteed:
_____________________________
Signatures must be guaranteed by a member firm of a registered
national stock 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.
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or
enlargement or any change whatsoever.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: CIGNA CORPORATION
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock or Common Stock issuable
upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the
exercise in the Rights) and requests that certificates for such
shares be issued in the name of and deliverable to:
_____________________________________________________________
(Please insert social security or other identifying number)
_____________________________________________________________
_____________________________________________________________
______________________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
_____________________________________________________________
(Please insert social security or other identifying number)
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
(Please print name and address)
Dated: ____________________
________________________
Signature
Signature Guaranteed:
__________________________
B8
<PAGE>
Signatures must be guaranteed by a member firm of a registered
national stock 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.
B9
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) 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 any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement);
(2) the Rights evidenced by this Rights Certificate are [ ]
are not [ ] being sold, assigned or transferred by or on behalf
of a Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person;
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: _______________
________________________
Signature
Signature Guaranteed:
____________________________________
Signatures must be guaranteed by a member firm of a registered
national stock 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.
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B10
<PAGE>
Exhibit C
---------
CIGNA CORPORATION
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On July 23, 1997, the Board of Directors of CIGNA
Corporation, a Delaware corporation (the "Company"), declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock, par value $1.00 per share
(the "Common Shares"), of the Company. The dividend is payable
to the shareholders of record as of 5:00 P.M., Philadelphia time,
on August 4, 1997 (the "Effective Date"), and with respect to
Common Shares issued thereafter until the Distribution Date (as
hereinafter defined) and, in certain circumstances, with respect
to Common Shares issued after the Distribution Date. Except as
set forth below, each Right, when it becomes exercisable,
entitles the registered holder to purchase from the Company one
one-hundredth of a share of Junior Participating Preferred Stock,
Series D, par value $1.00 per share (the "Preferred Shares"), at
a price of $780 per one one-hundredth of a 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 July 23, 1997 (the "Rights Agreement"), between the Company
and First Chicago Trust Company of New York (the "Rights Agent").
A. Issue of Right Certificates
The Rights are attached to all certificates representing
outstanding Common Shares, and no separate Right Certificates (as
hereinafter defined) have been distributed. The Rights will
separate from the Common Shares on the earliest to occur of
(i) the first date of public announcement that a Person (defined
in Section 1(m) of the Rights Agreement), alone or together with
its Affiliates and Associates (defined in Section 1(c) of the
Rights Agreement), has acquired beneficial ownership (as defined
in Section 1(d) of the Rights Agreement) of 10% or more of the
outstanding Common Shares (except pursuant to a Permitted Offer,
as hereinafter defined); or (ii) the close of business on the
tenth (10th) business day (or such later date as the Board of
Directors of the Company may determine) following the
commencement of, or announcement of an intention to commence, a
tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (as hereinafter
defined), including, in the case of both (i) and (ii), any such
date which is after the date of this Rights Agreement and prior
to the issuance of the Rights (the earliest of such dates being
called the "Distribution Date"). A Person, alone or together
with its Affiliates and Associates, whose acquisition of Common
Shares causes a Distribution Date pursuant to clause (i) above is
an "Acquiring Person." The first date of public announcement
that a Person, alone or
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together with its Affiliates and Associates, has become an
Acquiring Person is the "Shares Acquisition Date."
The Rights Agreement provides that until the
Distribution Date the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption, exchange, or expiration of the Rights), new Common
Share certificates issued after the Effective Date upon transfer
or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange, or expiration
of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Effective Date, even
without such notation or a copy of the Summary of Rights to
Purchase Preferred Shares being attached thereto, will also
constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As promptly as
practicable following the Effective Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of
business on the Distribution Date (and to each initial record
holder of certain Common Shares issued after the Distribution
Date), and such separate Right Certificates alone will evidence
the Rights.
B. Exercise of Rights; Final Expiration Date of
Rights
The Rights are not exercisable until the Distribution
Date and will expire at 5:00 P.M., Philadelphia time, on
August 4, 2007, unless earlier redeemed or exchanged by the
Company as described below.
C. Flip-In Provision
In the event that any Person becomes an Acquiring
Person (except pursuant to a "Permitted Offer" as hereinafter
defined), each holder of a Right will have (subject to the terms
of the Rights Agreement) the right to receive upon exercise the
number of Common Shares, or, in the discretion of the Board of
Directors of the Company, the number of one one-hundredths of a
Preferred Share (or, in certain circumstances, other securities
of the Company) having a value (immediately prior to such
"Triggering Event," as defined in Section 1(t) of the Rights
Agreement) equal to two times the Purchase Price (the "Flip-In
Right"). Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof will be null and void. A "Permitted Offer"
shall mean a tender or exchange offer for all outstanding Common
Shares 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
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<PAGE>
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 such directors may deem relevant. "Disinterested Directors"
are directors of the Company who are not officers or employees of
the Company and who are not Acquiring Persons or Affiliates or
Associates thereof, or representatives of any of them, or any
person who was directly or indirectly proposed or nominated as a
director of the Company by an Acquiring Person.
D. Flip-Over Provision
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the holders of
all of the outstanding Common Shares immediately prior to the
consummation of the transaction are not the holders of all of the
surviving corporation's voting power, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in
either case with or to an Acquiring Person or any Affiliate or
Associate thereof, or any other person in which such Acquiring
Person, Affiliate or Associate has an interest, or any person
acting on behalf of or in concert with such Acquiring Person,
Affiliate or Associate, or, if in such transaction all holders of
Common Shares are not treated alike, any other person, then each
holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of
the acquiring company having a value equal to two times the
Purchase Price. The holder of a Right will continue to have
the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.
E. Adjustment of Purchase Price
The Purchase Price payable, and the number of one
one-hundredths of a Preferred Share or other securities issuable,
upon exercise of the Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred
Shares of certain rights or warrants to subscribe for or purchase
Preferred Shares at a price, or securities convertible into
Preferred Shares with a conversion price, less than the then
current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends or a dividend payable in preferred shares) or of
subscription rights or warrants (other than "equivalent preferred
shares," as defined in Section 11(b) of the Rights Agreement).
The Purchase Price is 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
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<PAGE>
Shares, or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the
Distribution Date.
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
one-hundredths of a Preferred Share will be issued, and in lieu
thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to
the date of exercise.
F. Redemption of Rights
At any time prior to the earlier to occur of (i) a
person becoming an Acquiring Person or (ii) the expiration of the
Rights, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"),
which redemption shall be effective upon the action of the Board
of Directors of the Company. Additionally, the Company may redeem
the then outstanding Rights in whole, but not in part, at the Redemption
Price after the triggering of the Flip-In Right and before the
expiration of any period during which the Flip-In Right may be
exercised in connection with a merger or other business
combination transaction or series of transactions involving the
Company in which all holders of Common Shares are treated alike
but not involving (other than as a holder of Common Shares being
treated like all other such holders) any Person acting directly
or indirectly on behalf of, or in concert with, any Acquiring
Person, or its Affiliates or Associates. The Board of Directors
may only redeem Rights if a majority of the Disinterested
Directors authorize such redemption. Upon the effective date
of the 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.
G. Exchange of Rights
At any time after a Person becomes an Acquiring Person
but before such Acquiring Person, together with all Affiliates
and Associates of such Person, becomes the "Beneficial Owner"
(defined in Section 1(d) of the Rights Agreement) of 50% or more
of the Common Shares then outstanding, the Company may, at its
option, exchange all or part of the then outstanding and
exercisable Rights (other than those owned by the Acquiring
Person, together with any Affiliates and Associates of such
Acquiring Person, which have become null and void) at an exchange
ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
involving either the Common Shares or the Preferred Shares
occurring after the date hereof (the "Exchange Ratio"). The
Board of Directors may only exchange Rights if a majority of
the Disinterested Directors authorize such exchange.
Immediately upon the action of the Board of Directors ordering
the exchange of any Rights and without any
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<PAGE>
further action and without any notice, the right to exercise such
rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares
equal to the number of such rights held by such holder multiplied
by the Exchange Ratio.
H. Rights Certificate Holder not deemed a Stockholder
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. While the distribution of the Rights will not be
taxable to shareholders of the Company, shareholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
I. Copy Available
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Rights Agent,
First Chicago Trust Company of New York. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
C5
EXHIBIT 2
---------
Immediate
Michael J. Monroe, Media Relations - 215.761.6133
CIGNA Corporation Adopts New Shareholder Rights Agreement
Declares Distribution of Preferred Share Purchase Rights
Philadelphia, PA, July 23, 1997 -- The Board of Directors of
CIGNA Corporation (NYSE: CI), today adopted a new shareholder
rights agreement and declared a distribution of one preferred
share purchase right on each outstanding share of common stock to
shareholders of record as of August 4, 1997. These rights also
will attach to newly issued shares after that date. The new
agreement replaces CIGNA's original agreement, which was adopted
in 1987 and will expire on August 4.
CIGNA CEO Wilson H. Taylor said, "The rights are designed to
ensure that all of CIGNA's shareholders receive maximum value in
the event of a change of control or takeover of the company by
addressing actions by hostile acquirors. In a Board-approved
acquisition of the company, the Board retains the power to redeem
the rights."
Mr. Taylor noted a 1995 analysis completed by the investment
banking firm J.P. Morgan indicates that shareholders have
received higher premiums than originally offered for firms with
shareholder rights plans in place.
Under the plan, the rights would be exercisable only if a
person or group acquired 10 percent or more of CIGNA's
outstanding common shares in a transaction that is not approved
by the Company's Board. In such an event, all holders of common
shares, other than the buyer, could exercise their rights and
purchase common shares at a discount. If the Company is acquired
in a merger after such an acquisition, all rights holders, except
the buyer, also will be entitled to purchase stock in the buyer
at a discount.
Details of the rights agreement are outlined in a letter
that is being mailed to all shareholders. The dividend
distribution of rights will be made on August 4, 1997, payable to
shareholders of record as of 5:00 p.m., eastern daylight time, on
August 4, 1997. The rights will expire after 10 years.
CIGNA Corporation, with 1996 assets of $99 billion and
revenues of $19 billion, is a leading provider of health care,
insurance and related financial services throughout the United
States and internationally.
* * *
EXHIBIT 3
---------
[CIGNA Letterhead]
August 4, 1997
I'm writing to you to describe a new shareholder rights
plan, adopted by the CIGNA Board of Directors this past July 23,
which replaces an original plan that expires today, August 4. As
of this date, rights will be distributed to record shareholders,
and will continue to be distributed with respect to all shares
issued going forward. The rights will be represented by, and
transferred with, your common stock certificates
.
We have enclosed a summary description of the shareholder
rights plan.
The Board of Directors has adopted the rights plan to ensure
that CIGNA shareholders receive fair value in the event of a
change in control or a takeover, and that you realize the long-
term value of your investment in the Company. The plan achieves
this by providing the Board with needed flexibility in responding
to unilateral, abusive actions by hostile acquirors that are
calculated to deprive the Board and our shareholders of the
ability to obtain maximum value in the Company. The adoption of
the new plan upon expiration of the original one ensures that the
Board will continue to be able to protect your interests against
these abusive practices and maximize the value of your shares, if
a takeover offer were to emerge.
Your Board and management remain enthusiastic about the
potential for the Company and we continue to be committed to
serving your best interests as shareholders.
On behalf of the Board of Directors,
____________________________________
Chairman of the Board and
Chief Executive Officer
Enclosures
