SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 8-A/A
Amendment No. 1
AMENDING FORM 8-A, DATED JULY 23, 1997
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CIGNA CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 06-1059331
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
One Liberty Place Philadelphia, PA 19192-1550
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each such class
to be so registered is to be registered
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Rights to Purchase Preferred Stock, $1.00 New York Stock Exchange
par value per share Philadelphia Stock Exchange
Pacific Stock Exchange
If this Form relates to the registration of a class of
securities pursuant to Section 12(b) of the Exchange Act and is
effective pursuant to General Instruction A.(c), please check the
following box. /x/
If this Form relates to the registration of a class of
securities pursuant to Section 12(g) of the Exchange Act and is
effective pursuant to General Instruction A.(d), please check the
following box. / /
Securities Act registration statement file
number to which this form relates: _________________ (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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This Form 8-A/A-1 amends and supplements in its entirety the Form 8-A
(the "Form 8-A") filed by CIGNA Corporation, a Delaware corporation (the
"Company") on July 23, 1997 with respect to the Rights Plan, dated as of July
23, 1997 (the "Original Agreement") between the Company and First Chicago
Trust Company of New York (the "Rights Agent").
Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On July 23, 1997, the Board of Directors of the Company declared a
dividend of one preferred share purchase right (a "Right") for
each outstanding share of Common Stock (the "Common Shares") of
the Company. The dividend was paid 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 was paid and is payable until the Distribution Date
(as hereinafter defined) and, in certain circumstances, with
respect to Common Shares issued after the Distribution Date.
As a result of a 3-for-1 stock split with respect to the Common Shares
issued and outstanding as of May 4, 1998, the terms of the Rights
registered on the Form 8-A were amended on July 22, 1998, so that
each Right, when exercisable, represents the Right to purchase
one one-thousandth of a share of Junior Participating Preferred
Stock, Series D, par value $1.00 per share (the "Preferred
Shares") at a purchase price of $260 (the "Purchase Price"),
subject to adjustment, and except as set forth below. The
description and terms of the Rights are set forth in an Amended
and Restated Rights Agreement, dated as of July 22, 1998 (the
"Rights Agreement"), between the Company and 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 earlier 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 the Rights Agreement and prior
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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."
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-thousandths 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
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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
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-thousandths
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).
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<PAGE>
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.
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-thousandths
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 $0.0033 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 authorizes 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.
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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 authorizes 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 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 SHAREHOLDER
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 Amended and Restated Rights Agreement, dated as
of July 22, 1998, 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. Amended and Restated Rights Agreement, dated as of July 22, 1998,
between CIGNA Corporation and First Chicago Trust Company of New
York, as Rights Agent, which includes, as Exhibit A thereto, the
Amended 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.
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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
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Carol J. Ward
Corporate Secretary
Dated: July 22, 1998
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
1 Amended and Restated Rights Agreement,
dated as of July 22, 1998, between CIGNA
Corporation and First Chicago Trust
Company of New York, as Rights Agent,
which includes, as Exhibit A thereto,
the Amended 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.
CIGNA CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Rights Agent
Amended and Restated Rights Agreement
Dated as of July 22, 1998
________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions................................2
Section 2. Appointment of Rights Agent........................6
Section 3. Issue of Rights Certificates.......................6
Section 4. Form of Rights Certificate.........................8
Section 5. Countersignature and Registration..................9
Section 6. Transfer, Split-Up, Combination and Exchange
of Rights Certificate Mutilated, Destroyed,
Lost or Stolen Rights Certificates...............10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights........................10
Section 8. Cancellation and Destruction of Rights
Certificates.....................................13
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...............15
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares.................................23
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.......................23
Section 14. Fractional Rights and Fractional Shares............26
Section 15. Rights of Action...................................27
Section 16. Agreement of Rights Holders........................28
Section 17. Rights Certificate Holder Not Deemed a
Shareholder......................................28
Section 18. Concerning the Rights Agent........................29
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.............................29
Section 20. Duties of Rights Agent.............................30
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Section 21. Change of Rights Agent.............................32
Section 22. Issuance of New Rights Certificates................33
Section 23. Redemption and Termination.........................33
Section 24. Exchange...........................................35
Section 25. Notice of Certain Events...........................36
Section 26. Notices............................................37
Section 27. Supplements and Amendments.........................38
Section 28. Determination and Actions by the Board
of Directors, etc................................38
Section 29. Successors.........................................39
Section 30. Benefits of this Agreement.........................39
Section 31. Severability.......................................39
Section 32. Governing Law......................................39
Section 33. Counterparts.......................................39
Section 34. Descriptive Headings...............................40
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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)
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Section 11(a)(ii) Event Section 11(a)(ii)
Section 13 Event Section 13
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
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of July 22, 1998
(the "AGREEMENT"), between CIGNA Corporation, a Delaware
corporation (the "COMPANY"), and First Chicago Trust Company of
New York (the "RIGHTS AGENT"), amends and restates the Rights
Agreement, dated as of July 23, 1997 (the "ORIGINAL AGREEMENT"),
between the Company and 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 Amended Certificate of Designations, filed with the Secretary
of the State of Delaware on August 4, 1997 and further authorized
and directed the issuance of one Right with respect to each
Common Share issued 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;
WHEREAS, as a result of a 3-for-1 stock split with respect to the
Common Shares issued and outstanding as of May 4, 1998, and
pursuant to Section 7(b) of the Original Agreement, each
outstanding Common Share continues to have associated with it one
Right to purchase one one-hundredth of a Preferred Share (as
hereafter defined);
WHEREAS, to ensure that the Company has sufficient Preferred
Shares to permit the full exercise of the Rights upon a
Triggering Event (as hereafter defined), the Board has deemed it
appropriate to modify the fraction of a Preferred Share issuable
upon exercise of a Right from one one-hundredth to one one-
thousandth;
WHEREAS, pursuant to Section 7(b) of the Original Agreement,
the Board of Directors desires to adjust the Purchase Price (as
hereafter defined) from $780 to $260 to reflect the 3-for-1 stock
split;
<PAGE>
WHEREAS, the Board of Directors also desires to adjust the
Redemption Price (as hereafter defined) from $.01 to $.0033 to
reflect the 3-for-1 stock split;
WHEREAS, pursuant to Section 27 of the Original Agreement, prior
to the Distribution Date, the Company and the Rights Agent shall,
if the Company so directs upon the approval of a majority of the
Disinterested Directors (as hereafter defined), supplement or
amend any provision of the Original Agreement without the
approval of any holders of Rights Certificates; and
WHEREAS, a majority of the Disinterested Directors has authorized
this Agreement and determined that the amendments contained in
this Agreement are in the best interests of the Company and its
shareholders;
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 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
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(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 "BENIFICIALLY 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, 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
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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 $0.25 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.
(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.
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(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 an
Amended Certificate of Designations attached hereto as Exhibit A.
(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
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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 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
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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) Following the Effective Date, the Company sent a copy of a
Summary of Rights to Purchase Preferred Shares, 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. Upon execution
and delivery of this Agreement, or as soon as practicable
thereafter, the Company shall file with the Securities and
Exchange Commission the full text of this Agreement and a revised
summary thereof, which revised summary shall be in substantially
the form of Exhibit C hereto (the "Summary of Rights"). 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 the Original Agreement on July 23, 1997, each Common
Share outstanding as of the Close of Business on August 4, 1997
also represents, subject to the terms and conditions of this
Agreement, one Right, and subject to the terms and conditions of
this Agreement, represents the right to purchase one
one-thousandth 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 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 an Amended and
Restated Rights Agreement between CIGNA
Corporation and First Chicago Trust
Company of New York, dated as of July
22, 1998 (the "RIGHTS AGREEMENT"), as
amended from time to time, the terms
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<PAGE>
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 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-
thousandths of a Preferred Share as shall be set forth therein at
the price per one one-thousandth 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.
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<PAGE>
(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 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.
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<PAGE>
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-
thousandths 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 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
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<PAGE>
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-thousandths 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-thousandth of a
Preferred Share pursuant to the exercise of a Right shall be $260, 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, 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
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<PAGE>
a depositary, requisition from the depositary agent depositary
receipts representing such number of one one-thousandths 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.
(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
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<PAGE>
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.
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.
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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,
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
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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, 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
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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-thousandths 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-thousandths 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-thousandth 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 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
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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-thousandth 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 thousand. If neither
the Common Shares nor the Preferred 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-thousandth of a
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<PAGE>
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-thousandths 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-thousandths 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.
(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-thousandths 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-thousandths 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
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<PAGE>
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-thousandths 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-thousandths of a Preferred Share, Common
Shares or other securities at such adjusted Purchase Price.
(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-
thousandths 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-thousandths 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.
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<PAGE>
(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 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
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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 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-thousandths
of a Preferred Share for which a Right is then exercisable
(without taking
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<PAGE>
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 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.
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<PAGE>
(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.
(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.
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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-thousandths
or integral multiples of one one-thousandth 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-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-thousandths 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-thousandths or integral multiples of one one-
thousandth 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
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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-thousandth 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,
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.
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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 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
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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 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.
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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.
(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
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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.
(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
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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
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.
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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 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 $.0033 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
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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
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
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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 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
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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-thousandth 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
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,
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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
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
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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
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
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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).
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
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<PAGE>
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.
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<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/ Joanne Gorostiola
---------------------
Name: Joanne Gorostiola
Title: Assistant Vice President
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<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 22, 1998, adopted the
following resolution amending the Certificate of Designations,
Preferences and Rights filed with the Secretary of State of the
State of Delaware on August 4, 1997 that sets forth the terms of
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 filed with the Secretary of State of the
State of Delaware on August 4, 1997, that sets forth the terms of
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:
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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 $0.25 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)
$100.00, or (b) 1000 times the aggregate per share amount of all
cash dividends, and 1000 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.
(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 $100.00 per share on the Junior Participating
Preferred
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<PAGE>
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) Each share of Junior Participating Preferred Stock, Series D,
shall entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation.
(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
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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 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
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<PAGE>
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 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
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<PAGE>
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
(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
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<PAGE>
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 $1000 per share plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (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) 1000 (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 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.
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 equal to 1000 times
the aggregate amount of stock, securities, cash and/or any
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other property (payable in kind), as the case may be, into which
or for which each share of Common Stock is changed or exchanged.
Section 8. REDEMPTION. The shares of Junior Participating Preferred
Stock, Series D, shall not be redeemable.
Section 9. RANKING. The Junior Participating 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-thousandths or integral multiples of one one-thousandths 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.
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<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
as of this 22nd day of July, 1998.
_______________________
Name: Wilson H. Taylor
Title: Chairman of the Board and
Chief Executive Officer
Attest:
_____________________________
Name: Carol J. Ward
Title: Corporate Secretary
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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 $0.0033 PER RIGHT ON THE
TERMS SET FORTH IN THE AMENDED AND
RESTATED 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
AMENDED AND RESTATED 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 AMENDED
AND RESTATED RIGHTS AGREEMENT.]*
Rights Certificate
- ------------------------------------------------------------------
* The portion of the legend in brackets shall be inserted
only if applicable and shall replace the preceding sentences.
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<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 Amended and Restated
Rights Agreement dated as of July 22, 1998 (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-thousandth of a fully-paid, nonassessable share of
Junior Participating Preferred Stock, Series D (the "Preferred
Stock") of the Company, at a purchase price of $260 per one one-
thousandth 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 July 22, 1998, 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 $.0033 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-thousandth 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
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<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.
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<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:
_______________________________
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.
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<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.
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<PAGE>
Exhibit C
CIGNA CORPORATION
REVISED 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 of the Company. The
dividend was paid to the shareholders of record as of 5:00 P.M.,
Philadelphia time, on August 4, 1997 (the "Effective Date"), and
either was paid or is payable 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.
As a result of a 3-for-1 stock split with respect to
the Common Shares issued and outstanding as of May 4, 1998, the
terms of the Rights were amended on July 22, 1998, so that each
Right, when exercisable, represents the Right to purchase one one-
thousandth of a share of Junior Participating Preferred Stock,
Series D, par value $1.00 per share (the "Preferred Shares") at a
purchase price of $260 (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in an Amended and Restated Rights Agreement, dated as of
July 22, 1998 (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 earlier 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 the 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
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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."
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-thousandths 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
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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
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-thousandths 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).
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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.
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-thousandths 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 $.0033 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
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majority of the Disinterested Directors authorizes 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 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 an amendment
to the Company's Registration Statement on Form 8-A. A copy of
the Rights Agreement is available upon request free of charge
from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement.
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