1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
Alexander & Alexander Services Inc.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
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(Title of Class of Securities)
14476105
-----------------------------------
(CUSIP Number)
Wayland M. Mead, Acting General Counsel
American International Group, Inc.
70 Pine Street, New York, New York 10270 (212) 770-5121
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 15, 1994
-----------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 014476105 PAGE 2 OF PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American International Group, Inc.
IRS No. 13-2592361
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated in the State of Delaware
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7 SOLE VOTING POWER
NUMBER OF
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
4,815,859
OWNED BY
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
4,815,859
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,815,859
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.50% (represents 9.9% of the outstanding voting stock of
Alexander & Alexander Services Inc.)
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14 TYPE OF REPORTING PERSON*
HC, CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
3
SCHEDULE 13D
CUSIP NO. 014476105 PAGE 3 OF PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Home Assurance Company
IRS No. 13-5124990
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated in the State of New York
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7 SOLE VOTING POWER
NUMBER OF
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
3,371,101
OWNED BY
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
3,371,101
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,371,101
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.35%
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14 TYPE OF REPORTING PERSON*
IC, CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
4
SCHEDULE 13D
CUSIP NO. 014476105 PAGE 4 OF PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Commerce & Industry Insurance Company
IRS No. 31-1938623
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated in the State of New York
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7 SOLE VOTING POWER
NUMBER OF
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
722,379
OWNED BY
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
722,379
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
722,379
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.58%
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14 TYPE OF REPORTING PERSON*
IC, CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
5
SCHEDULE 13D
CUSIP NO. 014476105 PAGE 5 OF PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Insurance Company of the State of Pennsylvania
IRS No. 31-5540698
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Incorporated in the State of Pennsylvania
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7 SOLE VOTING POWER
NUMBER OF
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
722,379
OWNED BY
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
722,379
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
722,379
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.58%
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14 TYPE OF REPORTING PERSON*
IC, CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
6
ITEM 1. Security and Issuer.
This statement relates to the common stock, par value
$1.00 per share (the "Common Stock"), of Alexander & Alexander
Services Inc., a Delaware corporation (the "Company"). The
principal executive offices of the Company are located at 1211
Avenue of the Americas, New York, New York 10036.
ITEM 2. Identity and Background.
(a) through (c) and (f). This statement is filed by
American International Group, Inc., a corporation organized
under the laws of the State of Delaware ("AIG") on behalf of
itself and its wholly-owned subsidiaries American Home
Assurance Company, a New York corporation ("AHAC"), Commerce
and Industry Insurance Company, a New York corporation ("CIIC")
and The Insurance Company of the State of Pennsylvania, a
Pennsylvania corporation ("ICP"). AHAC, CIIC and ICP are
hereinafter referred to collectively as the "Purchasers". AIG
is a holding company which, through its subsidiaries, is
primarily engaged in a broad range of insurance and insurance-
related activities in the United States and abroad. AIG,
through its subsidiaries, also conducts financial services
activities and agency fee operations. Each of AHAC, CIIC and
ICP is a multiple line insurance company which writes
substantially all lines of property and casualty insurance in
each state of the United States and abroad. The principal
executive offices of AIG and the Purchasers are located at 70
Pine Street, New York, New York 10270.
Starr International Company, Inc., a private holding
company incorporated in Panama ("SICO"), The Starr Foundation
("The Starr Foundation"), a New York not-for-profit
corporation, and C.V. Starr & Co., Inc., a Delaware corporation
("Starr"), have the right to vote approximately 15.9%, 3.7% and
2.4%, respectively, of the outstanding common stock of AIG.
The principal executive offices of SICO are located at 29
Richmond Road, Pembroke, Bermuda. The principal executive
offices of The Starr Foundation and Starr are located at 70
Pine Street, New York, New York 10270. The directors and
officers ("Covered Persons") of AIG, the Purchasers, SICO, The
Starr Foundation and Starr, their business addresses and
principal occupations are set forth in Exhibit A attached
hereto, which is incorporated herein by reference in its
entirety. The business address indicated for each Covered
Person is also the address of the principal employer for such
Covered Person. Each of the Covered Persons is a citizen of
the United States,
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except for Messrs. Manton, Milton and Tse who are British subjects,
Mr. Colayco who is a Philippine subject, Mr. Cohen who is a Canadian
subject and Mr. Johnson who is a Bermudian subject.
(d) through (e). During the last five years, none of
AIG, the Purchasers, SICO, The Starr Foundation, Starr or any
of the Covered Persons has (i) been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to federal or state
securities laws or finding any violations with respect to such
laws.
ITEM 3. Source and Amount of Funds or Other Consideration.
Pursuant to a Stock Purchase and Sale Agreement dated
as of June 6, 1994 between AIG and the Company (the "Stock
Purchase and Sale Agreement"), the Purchasers acquired directly
from the Company 4,000,000 shares (the "Preferred Shares") of
8% Series B Cumulative Convertible Preferred Stock, par value
$1.00 per share, for an aggregate consideration of
$200,000,000. AHAC purchased 2,800,000 Preferred Shares for an
aggregate consideration of $140,000,000 and each of CIIC and
ICP purchased 600,000 Preferred Shares for an aggregate
consideration of $30,000,000. Each of the Purchasers used its
available working capital to purchase the Preferred Shares.
In December, 1992 AHAC purchased 150,000 shares of
Common Stock (the "Portfolio Shares") for investment purposes
for an aggregate consideration of $4,020,075 and AHAC
beneficially owned such shares as of the date hereof. AHAC
used its available working capital to purchase the Portfolio
Shares.
ITEM 4. Purpose of Transaction.
Each of the Purchasers purchased the Preferred Shares
for investment purposes.
The terms and conditions of the Purchasers'
investment in the Preferred Shares are summarized in the
Company's Proxy Statement dated June 27, 1994 (the "Proxy
Statement"), a copy of which is attached hereto as Exhibit B.
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The Preferred Shares are convertible into the number
of shares of the Company's non-voting Class D Common Stock, par
value $1.00 per share (the "Class D Common Stock"), obtained by
dividing $50 by a conversion price of $17 per share, subject to
adjustment. As of the date of this Schedule 13D, the Preferred
Shares are convertible into 11,764,705 shares of the Company's
Class D Common Stock. Shares of Class D Common Stock are
exchangeable, on a share for share basis, for the Company's
Common Stock, provided, however, that, no person shall be
entitled to acquire Common Stock upon such exchange if after
giving effect thereto such person shall have, or shall have the
then contractual right to acquire, through coversion, exercise
of warrants, or otherwise, 9.9% of the combined voting power of
the Common Stock, the Company's Class A Common Stock, par value
$.00001 per share, and the Company's Class C Common Stock, par
value $1.00 per share, then outstanding; however, in connection
with the execution of the Stock Purchase and Sale Agreement,
AIG announced in its press release relating thereto that it
does not intend to do so.
The terms and conditions of the Preferred Shares are
set forth in full in the Company's Articles Supplementary
relating to the Preferred Shares (the "Articles Supplementary"),
a copy of which is attached hereto as Exhibit C and which is
incorporated herein by reference. The terms of the Class D
Common Stock are set forth in the Articles of Amendment of the
Charter of the Company dated July 15, 1994 (the "Charter
Amendment"), a copy of which is attached hereto as Exhibit D
and which is incorporated herein by reference.
The Stock Purchase and Sale Agreement provides that
for a period of time not to exceed eight years after July 15,
1994 (the "Standstill Period"), neither AIG nor any of its
affiliates will, subject to certain exceptions, (i) acquire,
offer to acquire or agree to acquire by purchase or by joining
a "group" (hereinafter, a "13D Group"), within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"), any voting securities of the
Company or securities convertible into voting securities
(collectively, "Restricted Securities"), (ii) participate in or
encourage the formation of a 13D Group which owns or seeks to
own Restricted Securities, (iii) make or participate in any
"solicitation" of "proxies," within the meaning of Regulation
14A under the Exchange Act, or become a "participant" in any
"election contest," within the meaning of Rule 14a-11 of the
Exchange Act, or initiate, propose or solicit the approval of a
stockholder proposal with respect to the Company, (iv) call or
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seek to have called a meeting of the Company's stockholders,
(v) seek to control the management, Board of Directors,
policies or affairs of the Company, (vi) solicit, propose or
negotiate with respect to any form of business combination,
restructuring, recapitalization or similar transaction
involving the Company or any affiliate of the Company,
(vii) solicit, make, propose, negotiate or announce any tender
offer or exchange offer for any Restricted Securities, or
(viii) disclose an intent with respect to the Company or any
Restricted Securities that would require the Company to waive
or amend any restrictions relating to standstill provisions
contemplated by the Stock Purchase and Sale Agreement.
There shall be an early termination of the Standstill
Period upon the occurrence of certain events, including
(i) certain bankruptcy or insolvency events relating to the
Company or any of its subsidiaries, which in the case of a
subsidiary of the Company has had or would have a material
adverse effect on the business of the Company, (ii) the
material breach by the Company of any of its obligations under
the Registration Rights Agreement described below, (iii) the
acquisition of, the commencement of a tender offer for, or the
public announcement of an intention to acquire beneficial
ownership of 35% or more of the total voting power of
Restricted Securities by a person or 13D Group with the consent
(whether tacit or explicit) of the Company, (iv) the
designation of any date as the termination of the Standstill
Period by the Company's Board of Directors or (v) default in
the payment of principal or interest after the expiration of
any grace periods with respect to indebtedness of the Company
and its subsidiaries for money borrowed in the aggregate amount
of $15,000,000.
Pursuant to a Registration Rights Agreement (the
"Registration Rights Agreement"), dated July 15, 1994, among
the Purchasers and the Company on up to three occasions on or
after July 15, 1995, the Purchasers will have the right to
require the Company to use its best efforts to register under
the Securities Act, at the Company's expense, all or any
portion of the Preferred Shares or the Common Stock into which
the Preferred Shares, directly or indirectly, is convertible
("Registrable Securities") for sale in an underwritten public
offering. The Company will not be entitled to sell its
securities in any such registration for its own account without
the consent of the Purchasers.
In addition, if the Company at any time before
July 15, 1997 seeks to register under the Securities Act for
10
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sale to the public any of its securities, the Company must
include, at the Purchasers' request, the Purchasers'
Registrable Securities in the registration statement, subject
to the underwriter cutbacks and except, at any time prior to
July 15, 1995, with respect to a registered secondary offering
pursuant to registration rights granted by the Company prior to
the signing of the Stock Purchase and Sale Agreement.
The description of the terms and provisions of the
Stock Purchase and Sale Agreement and the Registration Rights
Agreement contained herein is a summary only and is qualified
in its entirety by the terms of the Stock Purchase and Sale
Agreement and Registration Rights Agreement which are filed as
Exhibits E and F hereto, respectively, and which are
incorporated herein by reference.
Subject to the foregoing, neither AIG, nor any of the
the Purchasers has any plans or proposals which relate to or
would result in:
(a) the acquisition of any additional securities of
the Company, or the disposition of any securities of the
Company;
(b) any extraordinary corporate transaction, such as
a merger, reorganization or liquidation of the Company or
its subsidiaries;
(c) a sale or transfer of a material amount of
assets of the Company or its subsidiaries;
(d) any material change in the present Board of
Directors or management of the Company, including any
plans or proposals to change the number or term of
directors or to fill any vacancies on the board;
(e) any material change in the present
capitalization or dividend policy of the Company;
(f) any material change in the Company's business or
corporate structure;
(g) any change in the Company's charter or by-laws
or other actions which may impede the acquisition of
control of the Company by any person;
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(h) a class of securities of the Company to be
delisted from a national securities exchange or to cease
to be quoted in an inter-dealer quotation system of a
registered national securities association;
(i) a class of equity securities of the Company
becoming eligible for termination and registration
pursuant to Section 12(g)(4) of the Exchange Act; or
(j) any action similar to the foregoing.
ITEM 5. Interest in Securities of the Issuer.
The information required by this Item is set forth in
Items 7 through 11 and 13 of the cover pages of this Schedule
13D and is based on the number of securities outstanding as of
June 21, 1994 as contained in the Proxy Statement.
The number of shares beneficially owned by AIG and
the Purchasers, as described in Items 7 through 11 and 13 of
the cover pages of this Schedule 13D, reflects the Purchasers'
purchase of the Preferred Shares pursuant to the Stock Purchase
and Sale Agreement, as well as the beneficial ownership of the
Portfolio Shares by AHAC.
ITEM 6. Contracts, Arrangements, Understandings
or Relationships With Respect to
Securities of the Issuer.
Contracts, arrangements, understandings or
relationships with respect to securities of the Company consist
of the Stock Purchase and Sale Agreement, the Registration
Rights Agreement, the Articles Supplementary, the Charter
Amendment, the Option to Purchase Insurance and an Amendment
Number 2 to Rights Plan dated July 15, 1994, a copy of which is
attached as Exhibit G hereto and is incorporated herein by
reference. The aforementioned documents are attached hereto as
Exhibits.
ITEM 7. Material to be Filed as Exhibits.
A. Executive Officers and Directors of AIG, the
Purchasers, SICO, The Starr Foundation and Starr.
B. Proxy Statement of the Company dated June 27,
1994.
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C. Articles Supplementary classifying 6,200,000
shares of Preferred Stock as 8% Series B Cumulative
Convertible Preferred Stock.
D. Articles of Amendment of the Charter of the
Company.
E. Stock Purchase and Sale Agreement, dated as of
June 6, 1994, between AIG and the Company.
F. Registration Rights Agreement, dated July 15,
1994, among the Purchasers and the Company.
G. Amendment Number 2 to Rights Plan of the Company
dated July 15, 1994.
H. Agreement of Joint Filing dated as of July 15,
1994 by and among AIG, AHAC, CIIC and ICP.
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SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth
in this statement is true, complete and correct.
Dated: July 18, 1994
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Vice Chairman-Finance
AMERICAN HOME ASSURANCE COMPANY
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
COMMERCE AND INDUSTRY INSURANCE
COMPANY
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
THE INSURANCE COMPANY OF THE STATE
OF PENNSYLVANIA
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
14
EXHIBIT INDEX
A. Executive Officers and Directors of AIG, the
Purchasers, SICO, The Starr Foundation and Starr.
B. Proxy Statement of the Company dated June 27,
1994.
C. Articles Supplementary classifying 6,200,000
shares of Preferred Stock as 8% Series B Cumulative
Convertible Preferred Stock.
D. Articles of Amendment of the Charter of the
Company.
E. Stock Purchase and Sale Agreement, dated as of
June 6, 1994, between AIG and the Company.
F. Registration Rights Agreement, dated July 15,
1994, among the Purchasers and the Company.
G. Amendment Number 2 to Rights Plan of the Company
dated July 15, 1994.
H. Agreement of Joint Filing dated as of July 18,
1994 by and among AIG, AHAC, CIIC and ICP.
1
EXHIBIT A
AMERICAN INTERNATIONAL GROUP, INC.
DIRECTORS
M. Bernard Aidinoff Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Marshall A. Cohen The Molson Companies Limited
40 King Street West
Toronto, Ontario M5H 3Z5
Barber B. Conable, Jr. P.O. Box 218
Alexander, New York 14005
Martin Feldstein National Bureau of Economic
Research, Inc.
1050 Massachusetts Avenue
Cambridge, Massachusetts 02138
Houghton Freeman American International Group,
Inc.
70 Pine Street
New York, New York 10270
Leslie L. Gonda International Lease Finance
Corporation
1999 Avenue of the Stars
Los Angeles, California 90067
M.R. Greenberg American International Group,
Inc.
70 Pine Street
New York, New York 10270
Carla A. Hills Hills & Company
1200 19th Street, N.W. - 5th Flr.
Washington, DC 20036
Frank Hoenemeyer 7 Harwood Drive
Madison, New Jersey 07940
John I. Howell Indian Rock Corporation
P.O. Box 2606
Greenwich, Connecticut
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AMERICAN INTERNATIONAL GROUP, INC.
DIRECTORS (cont'd)
Edward E. Matthews American International Group,
Inc.
70 Pine Street
New York, New York 10270
Dean P. Phypers 220 Rosebrook Road
New Canaan, Connecticut 06840
John J. Roberts American International Group,
Inc.
70 Pine Street
New York, New York 10270
Ernest E. Stempel American International Group,
Inc.
70 Pine Street
New York, New York 10270
Thomas R. Tizzio American International Group,
Inc.
70 Pine Street
New York, New York 10270
Honorary Directors
The Honorable Douglas
MacArthur, II 2101 Connecticut Ave., N.W.
Apartment #4
Washington, DC 20008
Edwin A.G. Manton American International Group,
Inc.
70 Pine Street
New York, New York 10270
K.K. Tse American Internatinal Group,
Inc.
70 Pine Street
New York, New York 10270
Marion E. Fajen 5608 N. Waterbury Road
Des Moines, Iowa 50312
3
AMERICAN INTERNATIONAL GROUP, INC.
OFFICERS
M.R. Greenberg 70 Pine Street
Chairman & Chief Executive New York, New York 10270
Officer
Thomas R. Tizzo 70 Pine Street
President New York, New York 10270
Edwin A.G. Manton 70 Pine Street
Senior Advisor New York, New York 10270
Edward F. Matthews 70 Pine Street
Vice Chairman-Finance New York, New York 10270
John J. Roberts 70 Pine Street
Vice Chairman-External New York, New York 10270
Affairs
Ernest E. Stempel 70 Pine Street
Vice Chairman-Life New York, New York 10270
Insurance
Brian Duperreault 70 Pine Street
Executive Vice President- New York, New York 10270
Foreign General Insurance
Jeffrey W. Greenberg Domestic General Insurance
Executive Vice President- New York, New York 10270
Domestic General Insurance
(Brokerage)
Edmund S.W. Tse 1 Stubbs Road
Executive Vice President- Hong Kong
Life Insurance
Lawrence W. English 70 Pine Street
Senior Vice President- New York, New York 10270
Administration
Axel Freudmann 72 Wall Street
Senior Vice President- New York, New York 10270
Human Resources
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AMERICAN INTERNATIONAL GROUP, INC.
OFFICERS (Cont'd)
John G. Hughes 70 Pine Street
Senior Vice President- New York, New York 10270
Worldwide Claims
Kevin H. Kelley 200 State Street
Senior Vice President- Boston, MA 02109
Domestic General
R. Kendall Nottingham 1 Alico Plaza
Senior Vice President- Wilmington, DE 19899
Life Insurance
Petros K. Sabatacakis 70 Pine Street
Senior Vice President- New York, New York 10270
Financial Services
Robert Sandler 70 Pine Street
Senior Vice President and New York, New York 10270
Senior Actuary and Senior
Claims Officer
Howard Smith 70 Pine Street
Senior Vice President and New York, New York 10270
Comptroller
Stephen Y.N. Tse 70 Pine Street
Senior Vice President New York, New York 10270
Aloysius B. Colayco 70 Pine Street
Vice President-Foreign New York, New York 10270
Investments
Robert Conry 99 John Street
Vice President and Director New York, NY 10270
of Internal Audit
Patrick J. Foley 70 Pine Street
Vice President and Associate New York, New York 10270
General Counsel
5
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AMERICAN INTERNATIONAL GROUP, INC.
OFFICERS (Cont'd)
L. Oakley Johnson 1455 Pennsylvania Ave.
Vice President-Corporate Suite 900
Affairs Washington, DC 20004
Christian Milton 99 John Street
Vice President-Reinsurance New York, New York 10038
Nicholas A. O'Kulich 70 Pine Street
Vice President-Life New York, New York 10270
Insurance
Douglas Paul 70 Pine Street
Vice President-Strategic New York, New York 10270
Planning
Frank Petralito 70 Pine Street
Vice President and Director New York, New York 10270
of Taxes
Kathleen E. Shannon 70 Pine Street
Vice President, Secretary New York, New York 10270
and Senior Counsel
Joseph Umansky 70 Pine Street
Vice President and Deputy New York, New York 10270
Comptroller
John T. Wooster, Jr. 72 Wall Street
Vice President- New York, New York 10270
Communications
Wayland M. Mead 70 Pine Street
Acting General Counsel New York, New York 10270
William N. Dooley 70 Pine Street
Treasurer New York, New York 10270
6
STARR INTERNATIONAL COMPANY, INC.
OFFICERS & DIRECTORS
Brian Dupperreault 70 Pine Street
Director New York, New York 10270
Houghton Freeman 70 Pine Street
Director New York, New York 10270
Jeffrey Greenberg 70 Pine Street
Director New York, New York 10270
Maurice R. Greenberg 70 Pine Street
Director & Chairman New York, New York 10270
of the Board
Joseph C.H. Johnson American International Bldg.
Executive Vice President Richmond Road
& Treasurer Pembroke 543 Bermuda
Edwin A.G. Manton 70 Pine Street
Director New York, New York 10270
Edward E. Matthews 70 Pine Street
Director New York, New York 10270
L. Michael Murphy American International Bldg.
Director Richmond Road
Pembroke 543 Bermuda
John J. Roberts 70 Pine Street
Director New York, New York 10270
Robert M. Sandler 70 Pine Street
Director New York, New York 10270
Ernest E. Stempel 70 Pine Street
Director New York, New York 10270
Thomas R. Tizzio 70 Pine Street
Director New York, New York 10270
Edmund Tse No. 1 Stubbs Road
Director Hong Kong
7
THE STARR FOUNDATION
OFFICERS & DIRECTORS
M.R. Greenberg 70 Pine Street
Director and Chairman New York, New York 10270
T.C. Hsu 70 Pine Street
Director and President New York, New York 10270
Marion Breen 70 Pine Street
Director and Vice President New York, New York 10270
John J. Roberts 70 Pine Street
Director New York, New York 10270
Ernest E. Stempel 70 Pine Street
Director New York, New York 10270
Houghton Freeman 70 Pine Street
Director New York, New York 10270
Edwin A.G. Manton 70 Pine Street
Director New York, New York 10270
Gladys Thomas 70 Pine Street
Vice President New York, New York 10270
Frank Tengi 70 Pine Street
Treasurer New York, New York 10270
Ida Galler 70 Pine Street
Secretary New York, New York 10270
8
C.V. STARR & CO., INC.
OFFICERS & DIRECTORS
Houghton Freeman 70 Pine Street
Director & Senior New York, New York 10270
Vice President
Maurice R. Greenberg 70 Pine Street
Director, President and New York, New York 10270
Chief Executive Officer
Edwin A.G. Manton 70 Pine Street
Director New York, New York 10270
Edward E. Matthews 70 Pine Street
Director, Senior Vice New York, New York 10270
President and Secretary
John J. Roberts 70 Pine Street
Director and Senior New York, New York 10270
Vice President
Robert M. Sandler 70 Pine Street
Director and Vice New York, New York 10270
President
Ernest E. Stempel 70 Pine Street
Director and Senior New York, New York 10270
Vice President
Thomas R. Tizzio 70 Pine Street
Director and Vice New York, New York 10270
President
Jeffrey W. Greenberg 70 Pine Street
Director and Vice President New York, New York 10270
Edmund Tse No. 1 Stubbs Road
Director and Vice President Hong Kong
Stephen Y.N. Tse 70 Pine Street
Director and Vice President New York, New York 10270
Gary Nitzsche 70 Pine Street
Treasurer New York, New York 10270
9
AMERICAN HOME ASSURANCE COMPANY
DIRECTORS
Michael J. Castelli American Home Assurance Company
99 John Street
New York, New York 10038
Brian Duperreault American International
Underwriters
70 Pine Street
New York, New York 10270
John G. Gantz, Jr. American International Group,
Inc.
70 Pine Street
New York, New York 10270
Jeffrey W. Greenberg American International Group,
Inc.
70 Pine Street
New York, New York 10270
M.R. Greenberg American International Group,
Inc.
70 Pine Street
New York, New York 10270
John G. Hughes American Home Assurance Company
70 Pine Street
New York, New York 10270
David M. Hupp American International Companies
70 Pine Street
Nedw York, New York 10270
Edwin A.G. Manton American International Group,
Inc.
70 Pine Street
New York, New York 10270
Edward E. Matthews American International Group,
Inc.
70 Pine Street
New York, New York 10270
10
-2-
AMERICAN HOME ASSURANCE COMPANY
DIRECTORS (Continued)
Wayland M. Mead American International Group,
Inc.
70 Pine Street
New York, New York 10270
Christian Milton American International Group,
Inc.
99 John Street
New York, New York 10038
Takaki Sakai A.I.U. K.K.
P.O. Box 951
Tokyo, Japan
Robert Sandler American International Group,
Inc.
70 Pine Street
New York, New York 10270
Michael B. Schlenke American Home Assurance Company
70 Pine Street
New York, New York 10270
Howard I. Smith American International Group,
Inc.
70 Pine Street
New York, New York 10270
William D. Smith National Union Fire Insurance
Company of Pittsburgh, Pa.
70 Pine Street
New York, New York 10270
Thomas R. Tizzio American International Group,
Inc.
70 Pine Street
New York, New York 10270
11
AMERICAN HOME ASSURANCE COMPANY
OFFICERS
Jeffrey W. Greenberg 70 Pine Street
Chairman of the Board New York, New York 10270
Michael B. Schlenke 70 Pine Street
President & Chief Executive New York, New York 10270
Officer
William D. Smith 70 Pine Street
Executive Vice President New York, New York 10270
Nicholas Creatore 70 Pine Street
Senior Vice President New York, New York 10270
Frank Douglas 70 Pine Street
Senior Vice President & New York, New York 10270
Actuary
Patrick J. Foley 70 Pine Street
Senior Vice President & New York, New York 10270
General Counsel
John G. Gantz, Jr. 70 Pine Street
Senior Vice President New York, New York 10270
John G. Hughes 70 Pine Street
Senior Vice President - New York, New York 10270
Domestic Claims
Debra E. Klugman 70 Pine Street
Senior Vice President - New York, New York 10270
Senior Associate General
Counsel
Edward E. Matthews 70 Pine Street
Senior Vice President - New York, New York 10270
Finance
Michael I.D. Morrison 70 Pine Street
Senior Vice President New York, New York 10270
Frank Neuhauser 70 Pine Street
Senior Vice President New York, New York 10270
12
-2-
AMERICAN HOME ASSURANCE COMPANY
OFFICERS (Continued)
Sherman Sitrin 70 Pine Street
Senior Vice President & New York, New York 10270
Associate General Counsel
Charles Schader 70 Pine Street
Senior Vice President New York, New York 10270
Richard L. Thomas 70 Pine Stret
Senior Vice President New York, New York 10270
James A. Allen 70 Pine Street
Vice President & New York, New York 10270
Senior Counsel
Nikolas Antonopoulos 70 Pine Street
Vice President New York, New York 10270
Martin H. Banker 70 Pine Street
Vice President New York, New York 10270
Mark Bender 70 Pine Street
Vice President New York, New York 10270
Cary A. Boddeker 70 Pine Street
Vice President New York, New York 10270
Douglas Brosky 70 Pine Street
Vice President New York, New York 10270
Michael J. Castelli 99 John Street
Vice President, Treasurer & New York, New York 10038
Comptroller
Joseph Cavolo 70 Pine Street
Vice President New York, New York 10270
John Colona 70 Pine Street
Vice President New York, New York 10270
John Costigan 70 Pine Street
Vice President New York, New York 10270
13
-3-
AMERICAN HOME ASSURANCE COMPANY
OFFICERS (Continued)
Virginia Doty 70 Pine Street
Vice President New York, New York 10270
David N. Fields 70 Pine Street
Vice President New York, New York 10270
Kevin Fitzpatrick One Chase Manhattan Plaza
Vice President New York, New York
Augustin Formoso 70 Pine Street
Vice President New York, New York 10270
Peter Gakos 70 Pine Street
Vice President New York, New York 10270
Frederick R. Gurba 70 Pine Street
Vice President New York, New York 10270
James Hooban 70 Pine Street
Vice President New York, New York 10270
Harold Jacobowitz 70 Pine Street
Vice President New York, New York 10270
Dee Klock 99 John Street
Vice President New York, New York 10038
Gary McMillan 145 Wellington Road
Vice President & Ontario, Canada
Chief Agent in Canada
Robert Meyer 200 Liberty Street
Vice President & New York, New York 10281
Assistant Treasurer
Christian Milton 99 John Street
Vice President - Reinsurance New York, New York 10038
Michael Mitrovic 70 Pine Street
Vice President New York, New York 10270
Lena Mkhitarian 70 Pine Street
Vice President New York, New York 10270
14
-4-
AMERICAN HOME ASSURANCE COMPANY
OFFICERS (Continued)
Kristian Moor 70 Pine Street
Vice President New York, New York 10270
Donald Nelson 70 Pine Street
Vice President New York, New York 10270
David Pinkerton 200 Liberty Street
Vice President - New York, New York 10281
Private Investments
John Schmacher 70 Pine Street
Vice President New York, New York 10270
Allen Silverstein 70 Pine Street
Vice President - Marketing New York, New York 10270
Gregory Springer 70 Pine Street
Vice President New York, New York 10270
Michael V. Tripp 70 Pine Street
Vice President New York, New York 10270
Edward Andrezejewski 70 Pine Street
Assistant Vice President New York, New York 10270
Kenneth Apfel 70 Pine Street
Assistant Vice President & New York, New York 10270
Associate Actuary
Mario Calbi 70 Pine Street
Assistant Vice President New York, New York 10270
Mary Di Fede 70 Pine Street
Assistant Vice President New York, New York 10270
Gary Enoch 70 Pine Street
Assistant Vice President New York, New York 10270
D. Allen Fippinger 70 Pine Street
Assistant Vice President New York, New York 10270
15
-5-
AMERICAN HOME ASSURANCE COMPANY
OFFICERS (Continued)
Mary Gaillard 70 Pine Street
Assistant Vice President & New York, New York 10270
Associate Actuary
Louis Lubrano 70 Pine Street
Assistant Vice President New York, New York 10270
Raymond Lui 145 Wellington Road
Assistant Vice President Ontario, Canada
Richard Thompson 200 Liberty Street
Assistant Vice President New York, New York 10281
Barbara Wegler 70 Pine Street
Assistant Vice President New York, New York 10270
Victor L. Chilelli 70 Pine Street
Assistant Treasurer New York, New York 10270
Robert E. Sherby 200 Liberty Street
Assistant Treasurer New York, New York 10281
Denis Walsh 200 Liberty Street
Assistant Treasurer New York, New York 10281
Eleanor Zoleta 70 Pine Street
Assistant Treasurer New York, New York 10270
Robert Beier 99 John Street
Assistant Comptroller New York, New York 10038
John Blumenstock 99 John Street
Assistant Comptroller New York, New York 10038
Roy Gandon 99 John Street
Assistant Comptroller New York, New York 10038
Kumar Gursahaney 99 John Street
Assistant Comptroller New York, New York 10038
Willaim Schuchert 99 John Street
Assistant Comptroller New York, New York 10038
16
-6-
AMERICAN HOME ASSURANCE COMPANY
OFFICERS (Continued)
Charles Torielli 99 John Street
Assistant Comptroller New York, New York 10038
Elizabeth Tuck 70 Pine Street
Secretary New York, New York 10270
Robert Valluzzo 70 Pine Street
Secretary New York, New York 10270
Allan Wadsworth 70 Pine Street
Assistant Secretary New York, New York 10270
Mark Gardner 70 Pine Street
Senior Counsel New York, New York 10270
Patrick Burns 70 Pine Street
Assistant Actuary New York, New York 10270
David Gelinne 70 Pine Street
Assistant Actuary New York, New York 10270
Scott Roth 70 Pine Street
Assistant Actuary New York, New York 10270
17
COMMERCE AND INDUSTRY INSURANCE COMPANY
DIRECTORS
Michael J. Castelli American Home Assurance Company
99 John Street
New York, New York 10038
Jeffrey W. Greenberg American International Group, Inc.
70 Pine Street
New York, New York 10270
M.R. Greenberg American International Group, Inc.
70 Pine Street
New York, New York 10270
John G. Hughes American Home Assurance Company
70 Pine Street
New York, New York 10270
David Hupp American Home Assurance Company
70 Pine Street
New York, New York 10270
Kevin H. Kelley Lexington Insurance Company
200 State Street
Boston, Massachusetts 02109
Edwin A.G. Manton American International Group, Inc.
70 Pine Street
New York, New York 10270
Edward E. Matthews American International Group, Inc.
70 Pine Street
New York, New York 10270
Wayland M. Mead American International Group Inc.
70 Pine Street
New York, New York 10270
Walter L. Mooney Commerce & Industry Insurance
Company
70 Pine Street
New York, New York 10270
18
-2-
COMMERCE AND INDUSTRY INSURANCE COMPANY
DIRECTORS (Continued)
Howard I. Smith American International Group, Inc.
70 Pine Street
New York, New York 10270
William D. Smith National Union Fire Insurance
Company of Pittsburgh, Pa.
70 Pine Street
New York, New York 10270
Thomas R. Tizzio American International Group, Inc.
70 Pine Street
New York, New York 10270
19
COMMERCE AND INDUSTRY INSURANCE COMPANY
OFFICERS
Kevin H. Kelley 200 State Street
Chairman of the Board Boston, MA 02109
Chief Executive Officer
Walter L. Mooney 70 Pine Street
President New York, New York 10270
Frank Douglas 70 Pine Street
Senior Vice President & New York, New York 10270
Actuary
Patrick J. Foley 70 Pine Street
Senior Vice President and New York, New York 10270
General Counsel
Debra E. Klugman 70 Pine Street
Senior Vice President & Senior New York, New York 10270
Associate General Counsel
Edward E. Matthews 70 Pine Street
Senior Vice President-Finance New York, New York 10270
Sherman Sitrin 70 Pine Street
Senior Vice President & New York, New York 10270
Associate General Counsel
William Thornhill 70 Pine Street
Senior Vice President New York, New York 10270
James A. Allen 70 Pine Street
Vice President & New York, New York 10270
Senior Counsel
Martin H. Banker 70 Pine Street
Vice President New York, New York 10270
Douglas Brosky 70 Pine Street
Vice President - Claims New York, New York 10270
Michael J. Castelli 99 John Street
Vice President, Treasurer & New York, New York 10038
Comptroller
20
-2-
COMMERCE AND INDUSTRY INSURANCE COMPANY
OFFICERS (cont'd)
Joseph Cavolo 70 Pine Street
Vice President New York, New York 10270
Kenneth Cornell 70 Pine Street
Vice President New York, New York 10270
David Fields 70 Pine Street
Vice President New York, New York 10270
Kevin Fitzpatrick One Chase Manhattan PLaza
Vice President New York, New York
Peter Gakos 70 Pine Street
Vice President New York, New York 10270
John G. Hughes 70 Pine Street
Vice President New York, New York 10270
Dee Klock 99 John Street
Vice President New York, New York 10038
Robert Meyer 200 Liberty Street
Vice President & New York, New York 10281
Assistant Treasurer
Christian Milton 99 John Street
Vice President New York, New York 10038
Clifford E. Moore 70 Pine Street
Vice President - New York, New York 10270
Administration
David Pinkerton 200 Liberty Street
Vice President - New York, New York 10281
Private Investments
Gregory W. Springer 70 Pine Street
Vice President New York, New York 10270
Michael E. Sullivan 70 Pine Street
Vice President New York, New York 10270
21
-3-
COMMERCE AND INDUSTRY INSURANCE COMPANY
OFFICERS (cont'd)
Richard L. Thomas 70 Pine Street
Vice President New York, New York 10270
Edward Andrezejewski 70 Pine Street
Assistant Vice President New York, New York 10270
Kenneth Apfel 70 Pine Street
Assistant Vice President & New York, New York 10270
Associate Actuary
Mario Calbi 70 Pine Street
Assistant Vice President New York, New York 10270
D. Allen Fippinger 70 Pine Street
Assistant Vice President New York, New York 10270
Michael Giese 70 Pine Street
Assistant Vice President New York, New York 10270
Gina Ottrando 70 Pine Street
Assistant Vice President New York, New York 10270
Richard Thompson 200 Liberty Street
Assistant Vice President New York, New York 10281
Barbara Wegler 70 Pine Street
Assistant Vice President New York, New York 10270
Victor Chilelli 70 Pine Street
Assistant Treasurer New York, New York 10270
Eleanor Zoletta 70 Pine Street
Assistant Treasurer New York, New York 10270
Robert Sherby 200 Liberty Street
Assistant Treasurer New York, New York 10281
Denis M. Walsh 200 Liberty Street
Assistant Treasurer New York, New York 10281
Mark Gardner 70 Pine Street
Senior Counsel New York, New York 10270
22
-4-
COMMERCE AND INDUSTRY INSURANCE COMPANY
OFFICERS (cont'd)
Robert Beier 99 John Street
Assistant Comptroller New York, New York 10038
John J. Blumenstock 99 John Street
Assistant Comptroller New York, New York 10038
Rogelio Gandon 99 John Street
Assistant Comptroller New York, New York 10038
Kumar Gursahaney 99 John Street
Assistant Comptroller New York, New York 10038
William P. Schuchert 99 John Street
Assistant Comptroller New York, New York 10038
Charles Torielli 99 John Street
Assistant Comptroller New York, New York 10038
Elizabeth M. Tuck 70 Pine Street
Secretary - corporate New York, New York 10270
Robert F. Valluzzo 70 Pine Street
Secretary New York, New York 10270
Allan Wadsworth 70 Pine Street
Assistant Secretary New York, New York 10270
23
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
DIRECTORS
Michael J. Castelli American Home Assurance Company
99 John Street
New York, New York 10038
Jeffrey W. Greenberg American International Group, Inc.
70 Pine Street
New York, New York 10270
M.R. Greenberg American International Group, Inc.
70 Pine Street
New York, New York 10270
John G. Hughes American Home Assurance Company
70 Pine Street
New York, New York 10270
David Hupp American Home Assurance Company
70 Pine Street
New York, New York 10270
Edwin A.G. Manton American International Group, Inc.
70 Pine Street
New York, New York 10270
Edward E. Matthews American International Group, Inc.
70 Pine Street
New York, New York 10270
Howard I. Smith American International Group, Inc.
70 Pine Street
New York, New York 10270
William D. Smith National Union Fire Insurance
Company of Pittsburgh, Pa.
70 Pine Street
New York, New York 10270
Thomas R. Tizzio American International Group, Inc.
70 Pine Street
New York, New York 10270
24
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
OFFICERS
Thomas R. Tizzio 70 Pine Street
Chairman of the Board New York, New York 10270
Jeffrey W. Greenberg 70 Pine Street
President New York, New York 10270
William D. Smith 70 Pine Street
Executive Vice President New York, New York 10270
Frank Douglas 70 Pine Street
Senior Vice President & Actuary New York, New York 10270
Patrick J. Foley 70 Pine Street
Senior Vice President & General New York, New York 10270
Counsel
John G. Gantz, Jr. 70 Pine Street
Senior Vice President New York, New York 10270
John G. Hughes 70 Pine Street
Senior Vice President-Domestic New York, New York 10270
Claims
Debra E. Klugman 70 Pine Street
Senior Vice President & Senior New York, New York 10270
Associate General Counsel
Edward E. Matthews 70 Pine Street
Senior Vice President - Finance New York, New York 10270
Michael I.D. Morrison 70 Pine Street
Senior Vice President New York, New York 10270
Charles Schader 70 Pine Street
Senior Vice President New York, New York 10270
Sherman Sitrin 70 Pine Street
Senior Vice President & New York, New York 10270
Associate General Counsel
James A. Allen 70 Pine Street
Vice President & Senior Counsel New York, New York 10270
25
-2-
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
OFFICERS (cont'd)
Martin H. Banker 70 Pine Street
Vice President New York, New York 10270
Mark Bender 70 Pine Street
Vice President New York, New York 10270
Douglas Brosky 70 Pine Street
Vice President - Claims New York, New York 10270
Michael J. Castelli 99 John Street
Vice President, Treasurer & New York, New York 10038
Comptroller
Joseph Cavolo 70 Pine Street
Vice President New York, New York 10270
John Colona 70 Pine Street
Vice President New York, New York 10270
John Costigan 70 Pine Street
Vice President New York, New York 10270
David Fields 70 Pine Street
Vice President New York, New York 10270
Kevin Fitzpatrick One Chase Manhattan Plaza
Vice President New York, New York
Peter Gakos 70 Pine Street
Vice President New York, New York 10270
Harold Jacobowitz 70 Pine Street
Vice President New York, New York 10270
Dee Klock 99 John Street
Vice President New York, New York 10038
Robert Meyer 200 Liberty Plaza
Vice President & New York, New York 10281
Assistant Treasurer
Christian Milton 99 John Street
Vice President New York, New York 10038
26
-3-
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
OFFICERS (cont'd)
Donald Nelson 70 Pine Street
Vice President New York, New York 10270
Frank Neuhauser 70 Pine Street
Vice President New York, New York 10270
David Pinkerton 200 Liberty Plaza
Vice President-Private New York, New York 10281
Investments
Gregory W. Springer 70 Pine Street
Vice President New York, New York 10270
Richard L. Thomas 70 Pine Street
Vice President New York, New York 10270
Edward Andrezejewski 70 Pine Street
Assistant Vice President New York, New York 10270
Mario Calbi 70 Pine Street
Assistant Vice President New York, New York 10270
D. Allen Fippinger 70 Pine Street
Assistant Vice President New York, New York 10270
Joseph Rosiker 70 Pine Street
Assistant Vice President New York, New York 10270
Richard Thompson 200 Liberty Street
Assistant Vice President New York, New York 10281
Barbara Wegler 70 Pine Street
Assistant Vice President New York, New York 10270
Victor Chilelli 70 Pine Street
Assistant Treasurer New York, New York 10270
Eleanor Zoleta 70 Pine Street
Assistant Treasurer New York, New York 10270
27
-4-
THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA
OFFICERS (cont'd)
Robert E. Sherby 200 Liberty Street
Assistant Treasurer New York, New York 10281
Denis M. Walsh 200 Liberty Street
Assistant Treasurer New York, New York 10281
Mark Gardner 70 Pine Street
Senior Counsel New York, New York 10270
Robert Beier 99 John Street
Assistant Comptroller New York, New York 10038
John J. Blumenstock 99 John Street
Assistant Comptroller New York, New York 10038
Rogelio Gandon 99 John Street
Assistant Comptroller New York, New York 10038
Kumar Gursahaney 99 John Street
Assistant Comptroller New York, New York 10038
William P. Schuchert 99 John Street
Assistant Comptroller New York, New York 10038
Charles Torielli 99 John Street
Assistant Comptroller New York, New York 10038
Elizabeth M. Tuck 70 Pine Street
Secretary - Corporate New York, New York 10270
Robert F. Valluzzo 70 Pine Street
Secretary New York, New York 10270
Allan Wadsworth 70 Pine Street
Assistant Secretary New York, New York 10270
1
EXHIBIT B
JUNE 27, 1994
[Alexander & Alexander Logo]
Dear Fellow Stockholder:
At a special meeting called for July 15, 1994, stockholders will be
asked to consider a proposed investment of $200 million in your Company by
American International Group, Inc. ("AIG"), one of the largest and most
successful insurance groups in the world.
The proposed AIG investment is described in the attached proxy
statement, which I invite you to review carefully. Stockholders are being asked
to authorize the sale of convertible preferred stock to the AIG group, as well
as the issuance of the underlying common stock. Stockholders are also being
asked to amend the Company's charter to authorize the shares to be issued,
including a related increase in the Company's authorized stock.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AIG INVESTMENT,
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS RELATING TO THAT
INVESTMENT.
The AIG investment, in my view, is an essential ingredient in restoring
Alexander & Alexander to its leadership role in the industry, and is a key part
of our plan to enhance long-term stock values. The investment helps your
Company to achieve three key objectives:
1. Increased capital. The $200 million to be invested by AIG
provides your Company the capital it needs to invest in its core
businesses, as well as to deal effectively with its contingent
liabilities relating to discontinued or sold insurance underwriting
operations. Significantly, the capital infusion does not involve a
transfer of control. AIG is buying non-voting preferred stock,
convertible into non-voting common stock, with certain exchange and
conversion features that would limit AIG's ultimate holding of voting
securities to no more than 9.9% of the Company's voting securities.
2. Reduced insurance exposure. Your Company, over the past
several years, has been adversely affected by its ongoing exposure to
risks relating to discontinued insurance underwriting operations. Part
of the proceeds from the AIG investment will be used to fund an
insurance or reinsurance arrangement with respect to such discontinued
operations, as described in the proxy statement.
3. Resources for leadership. The additional capital and the
reinsurance program will provide resources that we believe should
enable our new Chairman, Chief Executive Officer and President, Mr.
Frank G. Zarb, and our skilled, dedicated employees to succeed. Mr.
Zarb is superbly qualified to lead in the task of building on Alexander
& Alexander's strong franchise and enhancing earnings and value to
stockholders.
I urge you to vote FOR the proposals relating to the AIG investment.
It is important that your shares be represented and voted at the
meeting. Even if you plan to attend the meeting, please sign, date and mail
promptly the enclosed proxy card in the enclosed postage-paid envelope. Please
note that a failure to vote in effect constitutes a vote against the proposals
related to the AIG investment. Accordingly, we urge you to take a moment now to
sign, date and mail your proxy.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
Sincerely,
/s/ Robert E. Boni
Dr. Robert E. Boni
Chairman of the Executive Committee
2
ALEXANDER & ALEXANDER SERVICES INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
JULY 15, 1994
NEW YORK, NEW YORK
To the Stockholders of
ALEXANDER & ALEXANDER SERVICES INC.:
A Special Meeting of Stockholders of Alexander & Alexander Services
Inc. (the "Company") has been called for Friday, July 15, 1994 at 11:00 a.m.,
local time, at The Equitable Center Auditorium, 787 Seventh Avenue (between
51st and 52nd Streets), New York, New York, to consider and act on two
proposals (the "Investment Proposals") related to the Stock Purchase and Sale
Agreement, dated as of June 6, 1994, between the Company and American
International Group, Inc. ("AIG"), as it may be amended from time to time (the
"Purchase Agreement"), a copy of which as presently in effect is attached as
Appendix I to the enclosed Proxy Statement. The two Investment Proposals are
summarized as follows:
1. To approve the Purchase Agreement and the performance by the
Company of all transactions and acts on the part of the Company
contemplated pursuant to the Purchase Agreement, including the
issuance and sale to AIG of shares of Series B Cumulative
Convertible Preferred Stock, par value $1.00 per share ("Series
B Preferred Stock"), of the Company and the issuance of shares
of non-voting Class D Common Stock, par value $1.00 per share
("Class D Stock"), of the Company upon the conversion of shares
of Series B Preferred Stock in accordance with their terms, and
the issuance of shares of Common Stock in exchange for shares of
Class D Stock or, in certain circumstances, conversion of Series
B Preferred Stock (Proposal 1);
2. To approve certain amendments (together, the "Charter
Amendment") to the Company's charter to (i) increase the number
of authorized shares of stock of the Company, (ii) establish the
terms of the Class D Stock and (iii) effect other minor
amendments as set forth in the proposed Articles of Amendment, a
copy of which is attached as Appendix II to the enclosed Proxy
Statement (Proposal 2).
THE APPROVAL OF EACH INVESTMENT PROPOSAL IS CONTINGENT ON THE APPROVAL
OF BOTH INVESTMENT PROPOSALS. UNLESS BOTH INVESTMENT PROPOSALS ARE APPROVED BY
THE STOCKHOLDERS AT THE MEETING, NEITHER PROPOSAL WILL BE EFFECTED BY THE
COMPANY. Under the rules of the New York Stock Exchange, approval of Proposal 1
requires the affirmative vote of a majority of the votes cast on the proposal
provided that the total vote cast on the proposal represents more than 50
percent in interest of all securities entitled to vote on the matter. Under
Maryland law, approval of Proposal 2 requires the affirmative vote of a
majority of all the votes entitled to be cast on the proposal by the
stockholders of the Company.
Holders of record of shares of Common Stock, Class A Common Stock and
Class C Common Stock of the Company at the close of business on June 27, 1994
are entitled to notice of and to vote at the meeting and any adjournments
thereof.
By order of the Board of Directors,
Frank R. Wieczynski
Secretary
June 27, 1994
IF YOU DO NOT EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
3
TABLE OF CONTENTS
PROXY STATEMENT.............................................................................................. 1
INTRODUCTION................................................................................................. 1
VOTING SECURITIES AND PRINCIPAL HOLDERS...................................................................... 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.............................................................. 2
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS....................................................... 3
INVESTMENT PROPOSALS......................................................................................... 4
Background of and Reasons for the Investment Proposals..................................................... 4
Board of Directors' Recommendations........................................................................ 7
Opinion of Financial Advisor............................................................................... 8
Use of Proceeds............................................................................................ 10
Source of Funds; Information Concerning AIG................................................................ 11
Certain Considerations..................................................................................... 11
PROPOSAL 1--THE PURCHASE AGREEMENT........................................................................... 13
Purchase and Sale of Series B Preferred Stock.............................................................. 13
Terms of Series B Preferred Stock.......................................................................... 13
Terms of Class D Stock..................................................................................... 17
AIG Standstill Provisions.................................................................................. 18
Registration Rights........................................................................................ 19
Non-Solicitation........................................................................................... 19
Covenants.................................................................................................. 19
Conditions to Closing...................................................................................... 21
Termination................................................................................................ 22
Rights Agreement Amendment................................................................................. 22
Required Vote.............................................................................................. 22
PROPOSAL 2--CHARTER AMENDMENT................................................................................ 23
Increase of Authorized Stock............................................................................... 23
Existing Anti-Takeover Provisions.......................................................................... 24
Terms of Series B Preferred Stock and Class D Common Stock................................................. 27
Required Vote.............................................................................................. 27
MISCELLANEOUS................................................................................................ 27
STOCKHOLDER PROPOSALS FOR 1995 MEETING....................................................................... 27
OTHER MATTERS................................................................................................ 28
APPENDIX I -- Stock Purchase and Sale Agreement, dated as of June 6, 1994, between the Company and
American International Group, Inc.
APPENDIX II -- Form of Articles of Amendment of the Charter of the Company
APPENDIX III -- Form of Articles Supplementary Classifying 6,200,000 Shares of Preferred Stock as 8%
Series B Cumulative Convertible Preferred Stock of the Company
APPENDIX IV -- Opinion of CS First Boston Corporation
i
4
ALEXANDER & ALEXANDER SERVICES INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
------------------------
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
JULY 15, 1994
------------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Alexander & Alexander Services Inc. (the
"Company") to be voted at a Special Meeting of Stockholders which will be held
at The Equitable Center Auditorium, 787 Seventh Avenue, New York, New York at
11:00 a.m., local time, on Friday, July 15, 1994, and at any adjournments
thereof (the "Special Meeting") for the purpose of submitting to a vote of the
stockholders the proposals described in the attached Notice of Special Meeting
(the "Investment Proposals").
Shares represented by properly executed proxies received prior to or at
the meeting, unless such proxies have been revoked, will be voted in accordance
with the instructions indicated in the proxies. If no instructions are indicated
on a properly executed proxy of the Company, the proxy will be voted in
accordance with the recommendations of the Board of Directors.
A stockholder may revoke a proxy at any time before it is exercised by
filing with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date or by voting in person at the Special Meeting. Any
written notice revoking a proxy should be sent to the attention of Frank R.
Wieczynski, Secretary, Alexander & Alexander Services Inc., 10461 Mill Run
Circle, Owings Mills, Maryland 21117.
This Proxy Statement and the accompanying form of proxy are being mailed
to stockholders on or about June 27, 1994.
If a stockholder is the beneficial owner of the Company's Class A Common
Stock, a direction and proxy will be delivered to Montreal Trust Company, as
trustee, in connection with the shares beneficially owned by said stockholder
and held by the trustee. The trustee will vote the Class A Common Stock in
accordance with the directions received from the beneficial owners.
The cost of soliciting proxies will be borne by the Company. In addition
to the solicitation by mail, proxies may be solicited by officers, directors and
regular employees of the Company in person or by telephone, telegraph or
facsimile. The Company has retained D.F. King & Co., Inc. to assist in the
solicitation for a fee estimated at $20,000 plus reasonable expenses. The
Company may also reimburse brokers, custodians, nominees and other fiduciaries
for their reasonable expenses in forwarding proxy materials to principals.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Only holders of record of the Company's Common Stock, par value $1.00
("Common Stock"), Class A Common Stock, par value $.00001 ("Class A Stock"), and
Class C Common Stock, par value $1.00 ("Class C Stock"), at the close of
business on June 27, 1994 (the "Record Date") are entitled to vote at the
Special Meeting. As of the close of business on June 21, 1994, there were
outstanding 41,037,453 shares of Common Stock, 2,409,600 shares of Class A Stock
and 382,130 shares of Class C Stock. Such shares are each entitled to one vote.
5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following sets forth information as of June 2, 1994, regarding
persons who, to the best of the Company's knowledge, beneficially own more than
five percent of the outstanding shares of the Common Stock, Class A Stock or
Class C Stock.
PERCENTAGE PERCENT
AND CLASS NUMBER OF TOTAL
NAME AND ADDRESS OF STOCKHOLDER OF STOCK OF SHARES VOTING SHARES
- -------------------------------------------------------------- ------------------ ----------- ---------------
The Prudential Insurance Company of America(1)................ 9.91% 4,039,500 9.27%
Prudential Plaza Common
Newark, NJ 07102-3777 Stock
13.79% 317,252 0%
Series A
Convertible
Preferred Stock
Southeastern Asset Management, Inc.(1)........................ 9.53% 3,886,470 8.92%
Suite 301 Common
860 Ridgelake Boulevard Stock
Memphis, TN 38120
Delaware Management Company, Inc.(1).......................... 8.19% 3,337,700 7.66%
1818 Market Street Common
Philadelphia, PA 19103 Stock
Norwest Corporation(1)(2)..................................... 7.25% 2,955,950 6.79%
Norwest Center Common
Sixth and Marquette Stock
Minneapolis, MN 55479
Ontario Municipal Employees Retirement
System(1)................................................... 55.89% 1,346,823 3.1%
One University Avenue Class A
Suite 1100 Toronto, Canada M5J 2P1 Stock
Trustees of the Alexander & Alexander
U.K. Voluntary Equity Scheme(1)............................. 65.28% 249,980 .57%
145 St. Vincent Street Class C
Glasgow, Scotland G2 5NX Stock
.32% 130,130 .30%
Common
Stock
- ---------------
(1) As reported on the Schedule 13G most recently filed by the stockholder with
the Securities and Exchange Commission.
(2) Together with subsidiaries: Norwest Colorado, Inc. and Norwest Bank
Colorado, National Association.
2
6
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of June 2, 1994 regarding
the beneficial ownership of outstanding shares of Common Stock and Class A Stock
by directors and certain officers and all directors and executive officers as a
group.
COMMON
STOCK COMMON STOCK CLASS A STOCK
BENEFICIALLY SUBJECT TO BENEFICIALLY
NAME OWNED(1) OPTIONS(2) OWNED
- -------------------------------------------------------------------- ------------------ ----------- ---------------
Tinsley H. Irvin(3)................................................. 39,991 211,946 --
Kenneth Black, Jr................................................... 500 -- --
John A. Bogardus, Jr................................................ 91,700 -- --
Robert E. Boni...................................................... 1,000 -- --
Lawrence E. Burk.................................................... 28,618 25,750 --
Ronald W. Forrest(3)................................................ 8,595 42,440 --
Peter C. Godsoe..................................................... 500 -- --
Angus M.M. Grossart................................................. -- -- --
Ronald A. Iles(4)................................................... 32,195 50,601 --
Vincent R. McLean................................................... 200 -- --
Michael K. White(5)................................................. 38,688 98,425 --
William M. Wilson................................................... 2,346 83,925 26,975
All directors and executive officers as a group
(18 persons)(4)(5)(6)(7)(8)....................................... 288,710 435,686 26,975
- ---------------
(1) Includes the number of shares: (i) that are held directly or indirectly for
the benefit of the individuals listed or directly for the benefit of members
of an individual's family as to which beneficial ownership is disclaimed;
(ii) that represent such individuals' interests in shares vested as of March
31, 1994 in the stock fund under the Company's Thrift Plan or similar plans;
and (iii) that represent restricted stock that may vest in the future.
(2) Represents shares which are subject to options exercisable within 60 days
from June 2, 1994.
(3) Mr. Irvin retired from the Company effective April 1, 1994. Mr. Forrest
retired from the Company effective January 1, 1994. The information as to
beneficial ownership by Messrs. Irvin and Forrest reflects information
available to the Company as of their respective retirement dates.
(4) Does not include 83 shares of Common Stock and 159 shares of Class C Stock
held under the U.K. Voluntary Equity Scheme attributed to Mr. Iles, who does
not have any present voting or dispositive power.
(5) As of June 16, 1994, Mr. White stepped down as President of the Company and
Dr. Boni stepped down as Chairman of the Board of Directors. Dr. Boni
continues as a director and as Chairman of the Executive Committee of the
Board of Directors.
(6) Mr. Wilson beneficially owns 1.1 percent of the Class A Stock. No other
individual director or executive officer beneficially owns more than 1
percent of any class of the Company's voting shares. All officers and
directors as a group own approximately 1.8 percent of the Common Stock,
approximately 1.1 percent of the Class A Stock, none of the Class C Stock
and approximately 1.7 percent of the total outstanding voting shares.
(7) Does not include Common Stock shares beneficially owned or subject to
options that are held by Messrs. Irvin and Forrest.
(8) As of June 17, 1994, Mr. Frank G. Zarb, whose appointment as Chairman,
Chief Executive Officer and President of the Company became effective on
June 16, 1994, received a restricted stock grant for 271,307 shares of
Common Stock, which will generally vest on June 16, 1996 and is subject to
reduction based on the amount of the bonus that is paid to Mr. Zarb by his
former employer with respect to 1994.
3
7
INVESTMENT PROPOSALS
CERTAIN ASPECTS OF THE INVESTMENT PROPOSALS ARE SUMMARIZED BELOW. THIS
SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PURCHASE AGREEMENT, ATTACHED AS APPENDIX I, THE CHARTER
AMENDMENT, SUBSTANTIALLY IN THE FORM ATTACHED AS APPENDIX II, AND THE ARTICLES
SUPPLEMENTARY, SUBSTANTIALLY IN THE FORM ATTACHED AS APPENDIX III, EACH OF WHICH
IS HEREBY INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS ARE URGED TO READ THE
APPENDICES TO THIS PROXY STATEMENT IN THEIR ENTIRETY.
THE APPROVAL OF EACH INVESTMENT PROPOSAL IS CONTINGENT ON THE APPROVAL
OF BOTH INVESTMENT PROPOSALS. UNLESS BOTH INVESTMENT PROPOSALS ARE APPROVED BY
THE STOCKHOLDERS AT THE MEETING, BOTH INVESTMENT PROPOSALS WILL BE DEEMED TO
HAVE BEEN REJECTED BY THE STOCKHOLDERS.
BACKGROUND OF AND REASONS FOR THE INVESTMENT PROPOSALS
On January 14, 1994, the Board of Directors of the Company effected the
following significant changes in the management of the Company: (i) the
Executive Committee of the Board of Directors assumed added responsibilities for
oversight of policy and management controls of the Company; (ii) the functions
of chairman of the Board of Directors and chief executive officer of the Company
were separated; (iii) T.H. Irvin resigned as chairman of the Board of Directors
and chairman of its Executive Committee and agreed to continue to serve as chief
executive officer of the Company through March 1994 and complete his term on the
Board of Directors; (iv) Dr. Robert E. Boni, a non-employee member of the
Company's Board of Directors for the past five years, was elected as
non-executive Chairman of the Board of Directors and Chairman of its Executive
Committee; and (v) the Board of Directors authorized the Executive Committee to
establish a committee to conduct an international search for a new chief
executive officer.
On April 25, 1994, the Company announced a net loss of $0.15 per share
for the first quarter of 1994. As reported in the Company's Form 10-Q for the
first quarter of 1994, at March 31, 1994, the Company was not in compliance with
one of the financial covenants in its long-term credit agreement, under which no
borrowings were outstanding. The Company's bank group granted a waiver of this
covenant requirement for the first quarter of 1994. Effective as of March 31,
1994, the long-term credit agreement was amended to reduce the amount available
from $150 million to $75 million and to require the Company, before making any
committed borrowings under the agreement, to be in compliance with all of the
agreement's financial covenants, without giving effect to any waivers of
compliance, for two consecutive quarters. While the Company believed it had
adequate cash resources to meet operating needs through the first quarter of
1995, the Company, based on its financial projections, would not be able to
borrow under its long-term credit agreement until the first quarter of 1995, at
the earliest.
Following the Company's January announcement and the announcement of its
first quarter 1994 results, the Company from time to time received preliminary
unsolicited expressions from third parties as to possible business combinations,
including a possible acquisition by the Company of another business in exchange
for shares of the Company, and possible acquisitions of the Company. The Company
expressed no interest in pursuing these approaches.
A number of the candidates for the chief executive officer position who
were interviewed by the Company's search committee (including Mr. Frank G. Zarb)
indicated their views that the Company needed additional capital to enable it to
build its core businesses. Mr. Zarb indicated that a satisfactory arrangement
for the obtaining of additional capital was a pre-condition to his willingness
to accept an offer to become chief executive officer of the Company.
4
8
On April 20, Maurice R. Greenberg, Chairman and Chief Executive Officer
of American International Group, Inc. ("AIG"), and Dr. Robert E. Boni, who had
been appointed non-executive Chairman of the Board of the Company on January 14,
1994, discussed the Company's strategic opportunities and its need for
additional capital to realize those opportunities. On May 4, Mr. Greenberg and
Dr. Boni met again, with other representatives of the two companies. At that
meeting Mr. Greenberg expressed interest in the making by AIG or an AIG
subsidiary of a significant minority investment in the Company, by means of a
purchase of convertible preferred stock of the Company. Mr. Greenberg said that
AIG was not interested in acquiring control of the Company, was not looking for
representation on the Company's Board of Directors and was instead interested in
acquiring equity in the Company. Dr. Boni said that the Company was interested
in an arrangement to assist it with respect to its contingent exposures relating
to its discontinued operations, including the Company's indemnification
obligations to purchasers of Sphere Drake Insurance Group (an insurance business
the Company had acquired in 1982 as part of its acquisition of Alexander
Howden). Mr. Greenberg indicated that AIG, as a company whose insurance
subsidiaries sell insurance through the Company's insurance brokerage
operations, was interested in seeing the Company remain an independent insurance
broker.
Dr. Boni indicated to Mr. Greenberg that the Company might be interested
in exploring an investment in the Company by AIG, but only if it was clear that
the investment did not involve a change of control of the Company (since the
investment was for only a minority of the Company's equity).
In mid-May, the Company retained CS First Boston Corporation ("CS First
Boston") to act as its financial advisor in connection with the Company's review
of strategic and financial planning matters, including the possible sale of
equity or equity-linked securities of the Company to an investor and also
retained J.P. Morgan Securities Inc. ("JP Morgan") as its advisor on strategic
issues.
On May 16, the Board of Directors of the Company considered the
Company's cash needs and sources of capital, and discussed AIG's expression of
interest in a minority investment in the Company. On May 19, the Board of
Directors of the Company considered these matters further, and also reviewed the
discussions with the Company's lenders and the Company's prospects as an
independent company. In addition, the Board, with the assistance of its
financial advisors CS First Boston and JP Morgan, considered whether and on what
terms and timetable alternative sources of capital might be available, including
a sale of a minority interest to a financial investor or to a strategic investor
other than AIG, a public offering or underwritten private placement of
convertible or debt securities, a rights offering to existing shareholders, and
a sale of assets. After considering these alternatives the Board authorized the
Chairman, the Treasurer and the Chief Financial Officer of the Company to
conduct discussions with AIG and to negotiate preliminary terms for such an
investment, with the final terms of the investment to be subject to the Board's
approval.
In the weeks that followed, the terms of the proposed Series B Preferred
Stock were intensively negotiated between representatives of the Company and of
AIG. The Company had explored the possibility of a simultaneous rights offering
to stockholders, with AIG acting as standby underwriter. However, AIG declined
to act as standby underwriter, and the $200 million investment by AIG was
perceived as adequate for the Company's capital needs. Negotiations regarding
the structure and terms of the Series B Preferred Stock included discussions for
the inclusion of standstill provisions in the Purchase Agreement; anti-dilution
protection included in the conversion feature; the existence of a class vote for
the Series B Preferred Stock upon the occurrence of certain specified corporate
actions; the terms of certain conditions precedent to the redemption of the
Series B Preferred Stock at the option of the Company; and the events giving
rise to a special redemption right at the option of the holders of Series B
Preferred Stock. After review of various proposals by each of the parties, it
was agreed that the purchase agreement would include standstill provisions; that
anti-dilution protection of the conversion feature would apply if the Company
issued shares below the conversion price then in effect; that the holders of the
Series B Preferred Stock would not have a separate class vote for certain
specified corporate actions; that the Series B Preferred Stock would be
redeemable at the option of the Company only after the Common Stock of the
Company had traded at a price in excess of 150% of the conversion
5
9
price then in effect for a period of 30 consecutive trading days; that
the initial conversion price would be set at $17 per share (or approximately
120% of the opening price of $14 1/4 per share of Common Stock on May 13, the
date the conversion price was set); and that the special redemption at the
option of the holders would be triggered, among other things, if: dividends and
other equity payments on any class or series of stock of the Company, Reed
Stenhouse Companies Limited ("RSC") or Alexander & Alexander Services UK plc
("AAE") or any of their respective subsidiaries (other than dividends on $3.625
Series A Convertible Preferred Stock ("Series A Preferred Stock") and Series B
Preferred Stock and certain intercompany dividends) were in excess of $0.075 per
share of Common Stock, RSC Class A Shares and AAE Dividend Shares in the
aggregate in the last seven months of 1994, cumulatively 25% of the Company's
earnings in 1995 and 1996, and thereafter cumulatively 50% of earnings in
subsequent years; 35% of the Company's assets were sold; or 35% (or in certain
circumstances, 10%) of the total voting power of the Company's voting stock were
purchased by third parties. For a description of the rights and privileges of
the Series B Preferred Stock, see "THE PURCHASE AGREEMENT--Terms of Series B
Preferred Stock."
During the period prior to the finalization of the Stock Purchase and
Sale Agreement, dated as of June 6, 1994 (as it may be amended from time to
time, the "Purchase Agreement"), between the Company and AIG, the Company also
concluded negotiations with Mr. Frank G. Zarb concerning his appointment as
Chairman, Chief Executive Officer and President of the Company. Dr. Boni
informed Mr. Greenberg of the proposed appointment of Mr. Zarb, and informed Mr.
Zarb of AIG's proposed investment in the Company.
The Company intends to enter into an insurance or reinsurance
arrangement to further protect its financial position with respect to certain of
its discontinued underwriting exposures. An insurance or reinsurance arrangement
reasonably acceptable to AIG with an insurer or reinsurer reasonably acceptable
to AIG is a condition precedent to AIG's obligation to make its investment under
the Purchase Agreement. See "THE PURCHASE AGREEMENT--Conditions to Closing."
On June 6 and 7, the Board of Directors held a special meeting to
consider the Investment Proposals. On June 7, the Board of Directors unanimously
approved the Investment Proposals and the election of Mr. Zarb (effective as of
the commencement of his employment with the Company which began on June 16) as
Chairman, Chief Executive Officer and President of the Company. On June 7, the
Board of Directors reduced the Company's regular quarterly dividend on its
Common Stock from $0.25 to $0.025.
On June 1, Standard & Poor's Ratings Group ("S&P") placed its BB-rating
of the Company's $60 million 11% convertible subordinated debentures due 2007 on
CreditWatch with negative implications, reflecting the ongoing difficult
conditions for the Company's U.S. retail brokerage operations, reduced financial
flexibility relating to the reduction of its long term credit agreement and
uncertainty toward reserves for insurance operations of sold businesses. On June
8, subsequent to the announcement of the proposed AIG investment and the
appointment of Mr. Zarb, S&P announced that the Company's 11% convertible
subordinated debentures due 2007 remained on CreditWatch with negative
implications. S&P also indicated its intent to discuss with the management of
the Company its plans for the business before making a final rating
determination.
On June 7, 1994, Fitch Investors Services Inc. placed the Company's F-2
commercial paper rating on FitchAlert with negative implications. The rating
agency said the action is a result of the Company's continuing poor performance
in its core retail insurance brokerage operations, uncertainty regarding
eventual liabilities stemming from its previously owned Shand Morahan and Sphere
Drake operations and its being out of compliance with one of the financial
covenants in its long-term credit agreement. The Company has no commercial paper
outstanding. On June 14, the Company sent a written request to Fitch Investor
Services Inc. requesting that it withdraw its rating on the Company's commercial
paper.
6
10
After the announcement of the AIG Investment, Mr. Zarb's appointment as
Chairman of the Board of Directors, Chief Executive Officer and President of the
Company and the dividend reduction, on June 9, Moody's Investors Service Inc.
("Moody's") placed the ba3 rating on the Series A Preferred Stock of the Company
under review for possible upgrade. The rating agency said that the review will
focus on the possible changes in the Company's strategic direction and on its
long-term financial profile. Moody's also stated that the direct effects of the
proposed preferred stock investment by AIG will also be reviewed.
BOARD OF DIRECTORS' RECOMMENDATIONS
The Board of Directors has reviewed and considered the terms and
conditions of the Investment Proposals and believes that the Investment
Proposals are fair to, and are advisable and in the best interests of, the
Company and its stockholders and has unanimously approved the Investment
Proposals and unanimously recommends that stockholders vote for approval of the
Investment Proposals. The Company's directors and executive officers (who
currently hold Common Stock and Class A Stock representing in the aggregate less
than 1% of the total voting power of the Common Stock, the Class A Stock and the
Class C Stock) have indicated that they intend to vote all shares of voting
stock over which they exercise voting power as of the close of business on the
Record Date in favor of approval of the Investment Proposals.
The Board of Directors, in recommending that the stockholders of the
Company approve the Investment Proposals, considered a number of factors,
including (a) the current business, properties and prospects of the Company and
its subsidiaries, the financial and operational condition of the Company and its
subsidiaries and the long-term strategy of the Company; (b) the substantial
increase in the Company's available cash and access to capital that will occur
as a result of AIG's investment and the resulting increased ability of the
Company to take advantage of strategic opportunities which may be available from
time to time and to generally strengthen its competitive position in the
insurance industry; (c) the terms of the Purchase Agreement, the Charter
Amendment and other documents relating to the Investment Proposals; (d) the
extent of independence that the Company will retain following the consummation
of the transactions contemplated by the Purchase Agreement; (e) the alternatives
to AIG's investment (the "Investment") in the Company, including alternative
public or private financing and seeking an alternative investor; (f) the written
opinion of CS First Boston to the effect that the consideration to be received
by the Company in the Investment is fair to the Company from a financial point
of view (see "--Opinion of Financial Advisor" below); (g) certain consequences
that could result from the transactions contemplated by the Investment Proposals
that are described below under "Certain Considerations"; (h) that the closing of
the transactions contemplated by the Purchase Agreement is conditioned upon
approval by the Company's stockholders of the Investment Proposals; and (i)
certain possible implications of a single large minority shareholding in the
Company, including the conflicts of interest that might arise and the potential
discouraging effect on other transactions that might result from such
shareholding. See "--Certain Considerations--Diminished Ability to Sell the
Company".
THE BOARD OF DIRECTORS BELIEVES THAT THE INVESTMENT PROPOSALS ARE FAIR
TO, AND ARE ADVISABLE AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE INVESTMENT PROPOSALS AND
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE "FOR" APPROVAL
OF THE INVESTMENT PROPOSALS.
The Board of Directors reserves its right, pursuant to the Purchase
Agreement, to amend or waive the provisions of the Purchase Agreement and the
other documents related thereto in all respects before or after approval of the
Investment Proposals by the Company's stockholders. In addition, the Board of
Directors reserves the right to terminate the Purchase Agreement in accordance
with its terms notwithstanding stockholder approval.
7
11
OPINION OF FINANCIAL ADVISOR
As described under "Background of and Reasons for the Investment
Proposals" above, the Company engaged CS First Boston to act as its financial
advisor in connection with the Company's review of strategic and financial
planning matters, including the possible sale of equity or equity-linked
securities of the Company. CS First Boston assisted the Company in the
negotiation of AIG's proposed investment in the Company, through the issuance,
pursuant to the Purchase Agreement, of 4,000,000 shares of Series B Preferred
Stock at a cash purchase price of $50.00 per share. In connection with the
engagement, the Company requested that CS First Boston evaluate the fairness to
the Company of the consideration to be received by the Company in connection
with the Investment. On June 7, 1994, CS First Boston delivered to the Board of
Directors its oral opinion to the effect that, as of such date and based upon
and subject to certain matters described to the Board of Directors, the
consideration to be received by the Company in exchange for the Series B
Preferred Stock is fair to the Company from a financial point of view. No
limitations were imposed by the Board of Directors upon CS First Boston with
respect to the investigations made or procedures followed by CS First Boston in
rendering its opinion, except that CS First Boston was not authorized to seek
any other potential investors in the Company or acquirors for all or any portion
of the Company's business or assets.
On June 10, 1994, CS First Boston delivered a written opinion to the
Board of Directors confirming the oral opinion rendered on June 7, 1994. A copy
of CS First Boston's written opinion, which sets forth the assumptions made,
matters considered and limits on the review undertaken, is attached to this
Proxy Statement as Appendix IV and should be read by stockholders carefully in
its entirety.
In connection with its opinion, CS First Boston reviewed, among other
things, the Purchase Agreement, the Registration Rights Agreement, the Articles
Supplementary, the Charter of the Company and the Charter Amendment; the Annual
Reports on Form 10-K of the Company for the three years ended December 31, 1993;
certain interim reports to stockholders and Quarterly Reports on Form 10-Q;
certain other communications from the Company to its stockholders; and certain
internal financial analyses for the Company prepared by its management,
including analyses giving effect to the Investment. CS First Boston also had
discussions with members of the senior management of the Company regarding its
past and current business operations, financial condition and future prospects.
CS First Boston considered the view of senior management of the Company that the
Investment represents a significant business opportunity for the Company and
that certain strategic and operational benefits will be derived from the
transactions contemplated by the Purchase Agreement. In addition, CS First
Boston reviewed the reported price and trading activity for the Common Stock;
compared certain financial and stock market information for the Company with
similar information for certain other companies engaged in businesses similar to
the Company's and the securities of which are publicly traded; reviewed the
financial terms of certain recent strategic investment transactions and
performed such other studies and analyses as CS First Boston considered
appropriate. CS First Boston, in rendering its opinion, took into account the
extent to which certain provisions contained in the Purchase Agreement, the
Company's Charter, the Articles Supplementary and the Charter Amendment could
impede a change of control of the Company. CS First Boston relied without
independent verification upon the accuracy and completeness of all of the
financial and other information reviewed by it for purposes of its opinion. CS
First Boston assumed that the financial analyses for the Company, both with and
without giving effect to the Investment, have been reasonably prepared on a
basis reflecting the best currently available judgments and estimates of the
management of the Company. In addition, CS First Boston made no independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries, and CS First Boston was not furnished with any such evaluation
or appraisal.
The following is a summary of the material financial analyses performed
by CS First Boston in arriving at its oral opinion delivered June 7, 1994 and
its written opinion dated June 10, 1994, but does not purport to be a complete
description of the analyses performed by CS First Boston for such purposes.
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Comparable Public Company Analysis. CS First Boston reviewed and
compared certain actual and estimated financial, operating and stock market
information for the Company with similar information for the following publicly
traded insurance brokerage companies: Acordia, Inc.; Aon Corporation; Arthur J.
Gallagher & Co.; E.W. Blanch Holdings, Inc.; Hilb, Rogal and Hamilton Company;
Marsh & McLennan Companies, Inc. and Poe & Brown, Inc. (the "U.S. Comparable
Companies"); C.E. Health plc; Hogg Group plc; JIB Group plc; Lowndes Lambert
Group Holdings plc; Sedgwick Group plc; Steel Burrill Jones Group plc; and
Willis Corroon Group plc (the "U.K. Comparable Companies") (collectively, the
"Comparable Companies"). The Comparable Companies were selected because they are
publicly traded companies that derive a significant portion of their revenues
from insurance brokerage and risk management services. CS First Boston reviewed
the Comparable Companies in terms of various historical financial measures and
in terms of various multiples that certain of this information represents in
comparison to certain other information. In particular, such analysis indicated
that, as of June 3, 1994, the market price of shares of common stock of such
companies (a) as a multiple of latest twelve month ("LTM") earnings, equity
research analysts' consensus 1994 estimated earnings and equity research
analysts' consensus 1995 estimated earnings, ranged from 12.3x to 19.4x, 11.3x
to 17.0x and 10.2x to 14.8x, respectively, for the U.S. Comparable Companies,
and from 14.2x to 18.2x, 10.4x to 17.8x, and 9.2x to 14.0x, respectively, for
the U.K. Comparable Companies, versus multiples of 181.9x, 26.0x and 15.0x,
respectively, for the Company; and (b) as a multiple of stated book value,
ranged from 2.0x to 4.8x for the U.S. Comparable Companies and from 1.5x to
15.6x for the U.K. Comparable Companies, versus a multiple of 4.9x for the
Company. The analysis further indicated that the adjusted market value (defined
as equity market capitalization plus the principal amount of outstanding debt
plus the book value of preferred stock, if any) of the Comparable Companies as a
multiple of revenues and as a multiple of EBITDA (earnings before interest,
taxes, depreciation and amortization), in each case based on the LTM financial
results, ranged from 1.2x to 4.3x and 6.3x to 10.7x for the U.S. Comparable
Companies and 0.8x to 1.6x and 5.6x to 14.8x for the U.K. Comparable Companies,
respectively, as compared to 0.7x and 11.5x for the Company.
Comparison With Other Transactions. CS First Boston examined
transactions involving the purchase of a minority interest in various companies
in a variety of industries that had occurred since 1984, or were pending as of
June 3, 1994. CS First Boston then analyzed the proposed terms of the Investment
as compared to the corresponding terms of such prior transactions, including,
without limitation, the size of the investment, voting power and board
representation, if any, acquired by the investor, dividend or interest rates
applicable to the investment, the relationship between conversion price and
market price of the underlying common stock (in the case of investments in
convertible preferred stock or convertible debentures), and the relationship
between purchase price and market price (in the case of direct common stock
investments).
Pro Forma Analysis. CS First Boston analyzed the pro forma effects of
the Investment on the Company's balance sheet at March 31, 1994 and anticipated
operating results for 1994 and 1995, based on management's then current
expectations for 1994 results and certain other assumptions supplied by the
Company and CS First Boston.
Public Offering Analysis. CS First Boston analyzed a hypothetical public
offering by the Company of convertible preferred stock as an alternative
financing method for the Company to raise equity capital. CS First Boston
compared the terms of a hypothetical public offering, including, but not limited
to, dividend rates and payment options, optional redemption provisions, and
conversion features, with those of the AIG Investment. In addition, CS First
Boston analyzed the likelihood of completing a public offering of various sizes
for the Company based on then current market conditions.
Historical Relative Trading and Valuation Comparisons. CS First Boston
examined the history of the trading prices for the Company's common stock, and
the relationship between the movements in the prices of such shares and
movements in certain stock indices. CS First Boston also compared the
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consideration to be received by the Company pursuant to the Investment to the
historical public trading prices of the Common Stock.
Other Analysis. CS First Boston reviewed and analyzed selected
investment research reports on the Company and the insurance brokerage industry
and analyzed certain publicly available information regarding the foregoing.
The preparation of a fairness opinion is a complex process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. In arriving at its opinion, CS First Boston considered each of
the analyses described above, among other things, and did not assign any
particular weight to the results of any particular analysis. The analyses were
prepared for the purpose of enabling CS First Boston to evaluate whether the
consideration to be received by the Company in exchange for the Series B
Preferred Stock is fair to the Company from a financial point of view, and do
not purport to be appraisals or to necessarily reflect the prices at which
businesses or securities of the Company actually may be sold. Analyses based
upon forecasts of future results are not necessarily indicative of actual future
results, which may be significantly more or less favorable than suggested by
such analyses. The foregoing summary is qualified by reference to the written
opinion of CS First Boston which is attached to this Proxy Statement as Appendix
IV.
CS First Boston has advised the Company that, in the ordinary course of
business, it may actively trade the securities of the Company and AIG for its
own account or for the account of its customers and, accordingly, may at any
time hold a long or short position in such securities.
CS First Boston was selected by the Company as its financial advisor
based on its reputation, experience and expertise. CS First Boston is an
internationally recognized investment banking firm that is continually engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. CS First Boston is familiar
with the Company, having provided financial advisory and other investment
banking services to the Company over a period of years, including acting as lead
placement agent in the offering of the Company's Series A Preferred Stock in
March 1993.
The Company retained CS First Boston as its financial advisor in
connection with the AIG Investment pursuant to a letter agreement dated May 19,
1994. As compensation for its services, the Company has paid CS First Boston a
financial advisory fee of $250,000 and CS First Boston will be entitled to
receive an additional $750,000 upon the mailing of this proxy statement to the
Company's stockholders. The Company has also agreed to reimburse CS First Boston
for its out-of-pocket expenses incurred in performing its services, including
reasonable attorney's fees and expenses, and to indemnify CS First Boston and
related persons against certain liabilities, including liabilities under Federal
securities laws, arising out of CS First Boston's engagement.
USE OF PROCEEDS
On the date of the initial purchase of shares of Series B Preferred
Stock under the Purchase Agreement (the "Closing"), the Company will receive
approximately $200 million in cash (the "Transaction Proceeds") from the AIG
Group in consideration for the issuance to AIG of shares of Series B Preferred
Stock. Expenses of the transaction to be borne by the Company, together with the
cost of an option for an insurance arrangement (see "THE PURCHASE
AGREEMENT--Conditions to Closing"), are estimated to be $3,800,000. The Company
anticipates that, pending the application of the Transaction Proceeds as
described below, the Transaction Proceeds will be invested in interest bearing
securities.
The Transaction Proceeds will be available to the Company for general
corporate purposes. The Company anticipates that it will principally utilize the
Transaction Proceeds (i) to invest in its continuing businesses and (ii) to fund
an insurance or reinsurance arrangement with respect to
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discontinued operations. Except as described above, the Company does not
currently have any commitments or understandings regarding the use of the
Transaction Proceeds.
There can be no assurance that the Company will be successful in its
efforts to utilize the Transaction Proceeds in a manner that contributes to the
profitable growth of the Company's business or that the Transaction Proceeds
will not be used in such a way as to dilute the per share earnings or equity of
the Company after giving effect to the purchase of shares of Series B Preferred
Stock by AIG. See "THE PURCHASE AGREEMENT--Terms of Series B Preferred
Stock--Repurchase at Holder's Option."
SOURCE OF FUNDS; INFORMATION CONCERNING AIG
AIG has informed the Company that the $200 million to be used to
purchase the Series B Preferred Stock will come from working capital generated
in the ordinary course of its operations.
AIG is the leading U.S.-based international insurance organization and
the largest underwriter of commercial and industrial insurance in the United
States. Its member companies write property, casualty, marine, life and
financial services insurance in approximately 130 countries and jurisdictions,
and are engaged in a range of financial services businesses. AIG's common stock
is listed on the New York Stock Exchange, as well as the stock exchanges in
London, Paris, Switzerland and Tokyo.
CERTAIN CONSIDERATIONS
While the Board of Directors is of the opinion that the Investment
Proposals are fair to, and their approval is advisable and in the best interests
of, the Company and its stockholders, stockholders should consider the following
possible effects in evaluating the Investment Proposals.
Dilution. The Investment Proposals involve the issuance by the Company
of substantial amounts of additional securities. These issuances could have the
effect of diluting the rights of the existing holders of Common Stock. Series B
Preferred Stock will be entitled to cumulative quarterly dividends at the rate
of 8% per annum per share, in preference to payment of dividends on all series
of Preferred Stock of the Company other than the Series A Preferred Stock as to
which it shall rank pari passu. Until December 15, 1996, dividends shall be
payable in kind on the Series B Preferred Stock and thereafter, at the election
of the Board of Directors, in cash or in kind until December 15, 1999, provided
that if the Company at any time pays dividends in cash on or after December 15,
1996, the Company may not thereafter declare or pay dividends in kind. Series B
Preferred Stock is initially convertible into Class D Stock at a conversion
price of $17 per share (the "Conversion Price"). Class D Stock is exchangeable
for Common Stock on a share-for-share basis.
Repurchase at Option of the Holder. The holders of the Series B
Preferred Stock will have the right to require the Company to repurchase their
shares at a specified premium if a "Special Event" occurs. This right may tend
to deter the Company from engaging in a Special Event, which includes, for
example, the declaration or payment of dividends aggregating in excess of $0.075
per share of Common Stock during the last seven months of 1994, cumulatively 25%
of earnings in 1995 and 1996, and cumulatively 50% of earnings thereafter; the
disposition by the Company of assets representing 35% or more of the Company's
book value or gross revenues; and certain mergers of the Company or any of its
principal subsidiaries with or into any other firm or entity. Other Special
Events include the acquisition by a third party, with the consent or approval of
the Company, of beneficial ownership of securities representing 35% or more of
the Company's total outstanding voting power. The repurchase price, in the event
of a Special Event, is at a specified premium plus accrued and unpaid dividends
on the Series B Preferred Stock. See "THE PURCHASE AGREEMENT--Terms of Series B
Preferred Stock--Repurchase at the Holder's Option."
Diminished Ability to Sell the Company. As a result of AIG's substantial
ownership interest in the Company's securities, it may be more difficult for a
third party to acquire the Company without the consent of AIG, even though the
Series B Preferred Stock is non-voting and is convertible into Class D Stock,
which also is non-voting, and AIG has agreed to limit to less than 10% the
percentage of the
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Company's voting stock it may acquire, absent certain events described below
under "THE PURCHASE AGREEMENT--AIG Standstill Provisions". In addition, as
noted in the previous paragraph, holders of the Series B Preferred Stock would
be able to require the Company to repurchase their shares in the event of a
merger or the acquisition, with the consent or approval of the Company, by a
third party of beneficial ownership of securities representing 35% or more of
the Company's total outstanding voting power. Accordingly, approval of the
Investment Proposals may hinder a change in control of the Company should the
Board of Directors ever choose to seek a buyer, or may tend to require a stated
amount of the proceeds of a sale of the Company to be paid to holders of the
Series B Preferred Stock. It should also be noted, however, that AIG has
agreed, with specified exceptions, to refrain from attempting to increase its
interest in or influence over the Company by tender offer or proxy solicitation
for a period of eight years following the Closing, subject to the occurrence of
certain events that would terminate AIG's standstill covenants. See "THE
PURCHASE AGREEMENT--AIG Standstill Provisions" below. In addition, the Board of
Directors believes consummation of the Investment Proposals will enhance the
long-term value of Common Stock, although there can be no assurance that they
will have this result. In addition to the possible effects of the Investment
Proposals in the context of a sale of the Company, certain existing features of
the Company's Charter and the Rights Agreement, dated as of June 11, 1987,
between the Company and First Chicago Trust Company of New York, as amended and
restated as of March 22, 1990 and as further amended as of April 21, 1992 (as
amended, the "Rights Agreement"), in conjunction with Maryland law, may already
have the effect of deterring a sale of the Company, but these other provisions
are generally subject to administration by the Board of Directors. See "CHARTER
AMENDMENT--Existing Anti-Takeover Provisions".
Company Payments in Certain Events. Under the Purchase Agreement, the
Company has agreed to make certain payments to AIG if tax payments and reserves
relating to periods before March 31, 1994 exceed the Company's tax reserves as
of March 31, 1994, or if the Company determines that certain liabilities (as
defined in the Purchase Agreement) as of March 31, 1994 were greater than, or
that certain assets (as defined in the Purchase Agreement) as of March 31, 1994
had an ultimate realizable value less than, the related amounts shown on the
Company's balance sheet as of March 31, 1994. The making of any such payments by
the Company would, in effect, reduce the consideration received by the Company
for the Series B Preferred Stock. See "THE PURCHASE AGREEMENT--
Covenants--Company Payments in Certain Events."
Employment of New Chief Executive Officer. Under the terms of Mr. Zarb's
employment agreement with the Company, in the event that the investment by AIG,
or a substantially comparable equity investment by one or more third party
investors, does not take place on or before October 31, 1994, Mr. Zarb will have
the right voluntarily to terminate his employment with the Company. In such
event, the Company will be obligated to pay Mr. Zarb a cash severance payment in
the amount of $12,000,000, and Mr. Zarb's rights in certain restricted stock
awards and stock options granted to him by the Company will vest, provided that
in no event may the cash severance payment and the value of the portion of the
options and awards vesting as a result of such termination exceed $20,000,000.
There can be no assurance that, if the Investment Proposals are not approved by
the stockholders, the Company will be able to obtain a substantially comparable
equity investment by one or more third party investors prior to October 31,
1994. Accordingly, the failure by the stockholders to approve the Investment
Proposals could result in the termination of Mr. Zarb's employment as President
and Chief Executive Officer of the Company and give rise to a severance payment
obligation of $12,000,000 as well as to the vesting of award rights and stock
options referred to above.
Effect on Capital and on Earnings Available for Common Stockholders.
After giving effect to estimated transaction expenses and the cost of an option
for an insurance arrangement (see "THE PURCHASE AGREEMENT--Conditions to
Closing"), the sale of the Series B Preferred Stock to AIG would increase the
Company's capital by approximately $196 million. However, dividends on the
Series B Preferred Stock would reduce the amount of earnings otherwise available
for common stockholders by approximately $16 million in the first year after
issuance, and by approximately $23 million in the fifth year after issuance,
assuming dividends on the Series B Preferred Stock were to be paid in kind
throughout the first five years after issuance.
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PROPOSAL 1--THE PURCHASE AGREEMENT
On June 7, 1994, the Company and AIG executed the Purchase Agreement.
Certain provisions of the Purchase Agreement are discussed in more detail below;
however, stockholders are urged to read the Purchase Agreement, which is
attached as Appendix I, in its entirety.
PURCHASE AND SALE OF SERIES B PREFERRED STOCK
Pursuant to the terms of the Purchase Agreement, the Company has agreed,
subject to the terms and conditions set forth therein, to issue to AIG or any of
its wholly owned subsidiaries at the closing of the transactions contemplated by
the Purchase Agreement (the "Closing") 4,000,000 shares of Series B Preferred
Stock, at a purchase price of $50 per share. Each share of Series B Preferred
Stock will initially be convertible into the number of shares of Class D Common
Stock obtained by dividing $50 by the then current conversion price. The initial
conversion price is $17 per share (the "Conversion Price"). Each share of Class
D Stock will be exchangeable on a share-for-share basis with Common Stock. The
approximately 11,765,000 shares of Common Stock initially issuable upon such
exchange represent approximately 21% of the aggregate number of shares of Common
Stock, Class A Stock and Class C Stock outstanding after giving effect to such
issuance based on shares of Common Stock, Class A Stock and Class C Stock
outstanding as of June 2, 1994. If dividends on the Series B Preferred Stock are
paid in kind for the full five year period permitted, 17,950,245 shares of
Common Stock will be issuable upon such exchange, representing approximately
29.2% of the total number of shares of Common Stock, Class A Stock and Class C
Stock outstanding after giving effect to such issuance, based on shares
outstanding as of June 2, 1994.
TERMS OF SERIES B PREFERRED STOCK
Rank. With respect to dividend rights and rights on liquidation,
dissolution and winding up, Series B Preferred Stock ranks senior to Common
Stock, Class A Stock, Class C Stock, Class D Stock and Series A Junior
Participating Preferred Stock (when and if issued) and pari passu with Series A
Preferred Stock.
Liquidation Preference. In the event of any liquidation, dissolution or
winding up of the Company, holders of Series B Preferred Stock will be entitled
to receive in preference to holders of any stock ranking junior to Series B
Preferred Stock in the event of a liquidation, dissolution or winding up
("Junior Stock") $50 per share plus an amount equal to all accrued but unpaid
dividends thereon on the date of final distribution to such holders.
Dividends. Holders of Series B Preferred Stock are entitled to receive,
when and as declared by the Board of Directors, cumulative dividends at the rate
of 8% per annum per share, payable in equal quarterly payments on the 15th day
of March, June, September and December (each, a "Dividend Payment Date").
Dividends shall be payable in kind in shares of Series B Preferred Stock
("Additional Shares") until December 15, 1996 and, thereafter, at the Board of
Directors' election, in cash, or in kind, until December 15, 1999; provided that
if the Company shall at any time pay dividends in cash, the Company shall not
thereafter be entitled to elect to declare or pay dividends in kind in shares of
Series B Preferred Stock. Beginning December 16, 1999, dividends on Series B
Preferred Stock shall be payable in cash. Quarterly dividends which have not
been paid in full in Additional Shares will cumulate, as if quarterly dividends
had been paid on the relevant Dividend Payment Date in Additional Shares. Each
fractional share of Series B Preferred Stock outstanding shall be entitled to a
ratably proportionate amount of all dividends accruing with respect to each
outstanding share of Series B Preferred Stock, and all such dividends with
respect to such outstanding fractional shares shall be cumulative and shall
accrue (whether or not declared), and shall be payable in the same manner and at
such times as dividends on each outstanding share of Series B Preferred Stock.
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Voting Rights. The Series B Preferred Stock shall be non-voting stock,
except that (i) if dividends on the Series B Preferred Stock or any other class
or series of stock ranking pari passu as to dividends with the Series B
Preferred Stock shall be in arrears in an aggregate amount equal to at least six
quarterly dividends, then the holders of Series B Preferred Stock (voting
separately as a class with all other affected classes or series of stock ranking
pari passu as to dividends with the Series B Preferred Stock) will have the
right to vote to elect two additional members of the Board of Directors, (ii)
without the approval of the holders of two-thirds of the shares of Series B
Preferred Stock then outstanding, (x) the Company's Charter cannot be amended or
modified so as to adversely affect the holders of the Series B Preferred Stock,
the Class D Stock or the Common Stock, or (y) the Company cannot create any
class or series of stock that ranks senior to Series B Preferred Stock with
respect to dividend or liquidation rights, and (iii) following the occurrence of
a Specified Corporate Action (as hereinafter defined) of the Company, the
holders of shares of Series B Preferred Stock shall have the right to vote as a
class with the holders of Common Stock and Class D Stock on all matters as to
which the holders of Common Stock are entitled to vote.
Conversion. Each share of Series B Preferred Stock shall be convertible
(subject to the anti-dilution provisions thereof) at any time at the option of
the holder thereof, unless previously redeemed, into a number of shares of Class
D Stock of the Company obtained by dividing $50 by a conversion price of $17 per
share, subject to adjustment (as it may be adjusted, the "Conversion Price").
The Series B Preferred Stock shall have antidilution provisions similar to the
Series A Preferred Stock, except that in addition (w) adjustments shall be made
for Extraordinary Equity Payments (as defined below), (x) adjustments shall be
made for any issuance of Common Stock, Class A Stock or Class C Stock of the
Company at a price per share below the then effective Conversion Price and (y)
adjustments shall be made, at the option of the holder in the event of spin-offs
or other similar circumstances so that the Series B Preferred Stock (and related
conversion rights) shall be fully protected against dilution and the Series B
Preferred Stock shall be the obligation of the spun-off entities as well as the
Company. The Series B Preferred Stock, like the Series A Preferred Stock,
provides for adjustments upon the occurrence of certain events including, but
not limited to, stock dividends, stock subdivisions or reclassification or
combinations, issuance of rights or warrants to holders of Common Stock
generally entitling them to purchase Common Stock at a price less than the
current market price thereof or distributions to holders of Common Stock
generally of evidences of indebtedness or assets (other than dividends paid
exclusively in cash other than Extraordinary Equity Payments) or rights or
warrants to subscribe to securities of the Company (other than those described
in the preceding clause). In addition, upon the occurrence of any merger or
combination or similar transaction, the Series B Preferred Stock is convertible
into the consideration received by the holders of the Common Stock in such
merger, combination or similar transaction.
Redemption Provisions. The Series B Preferred Stock is not redeemable
prior to December 15, 1999 ("Redemption Starting Date"). On and after such date,
so long as the shares of Common Stock of the Company have traded on the New York
Stock Exchange after such date for each business day during a consecutive 30
trading day period at a price in excess of 150% of the then effective Conversion
Price, the Series B Preferred Stock shall be redeemable in cash, at the option
of the Company, in whole at any time or in part from time to time upon no less
than 45 days and no more than 60 days prior written notice to the holders
thereof, unless previously converted (conversions shall be permitted until the
close of business on the business day immediately preceding the redemption
date), at a redemption price of $54.00 per share, plus an amount equal to all
accrued and unpaid dividends thereon to the date fixed for redemption if
redeemed on or prior to December 14, 2000, and at the following redemption
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prices per share, plus accrued and unpaid dividends, if redeemed during the
12-month period beginning December 15 of the years set forth below:
YEAR REDEMPTION PRICE
-------------------------------- ----------------
2000 $ 53.50
2001 53.00
2002 52.50
2003 52.00
2004 51.50
2005 51.00
2006 50.50
and thereafter at $50 per share, plus an amount equal to all accrued and unpaid
dividends thereon to the date fixed for redemption.
All redemptions shall be made pro rata. The Company shall not redeem
less than all of the shares of Series B Preferred Stock at any time outstanding
until all dividends accrued and in arrears upon all shares of Series B Preferred
Stock then outstanding shall have been paid for all past dividend periods.
Repurchase at Holder's Option. If a Special Event (as defined below)
shall occur, holders of the Series B Preferred Stock shall have the right, at
their individual option exercisable at any time within 120 days after such
occurrence, to require the Company to purchase all or any part of the shares of
Series B Preferred Stock then held by them as such holders may elect at a
redemption price equal (i) in the event a Special Event occurs on or before six
months after the initial date on which the shares of Series B Preferred Stock
are issued (the "Original Issue Date"), $58.82 per share plus accrued and unpaid
dividends thereon to the date of redemption, (ii) in the event a Special Event
occurs more than six months after the Original Issue Date and on or before
twelve months after the Original Issue Date, $66.18 per share plus accrued and
unpaid dividends thereon to the date of redemption, or (iii) in the event a
Special Event occurs more than twelve months after the Original Issue Date,
$72.06 per share plus accrued and unpaid dividends thereon to the date of
redemption.
As set forth in the Articles Supplementary:
"Special Event" shall mean (a) the declaration or payment on or after
the original issue date for the Series B Preferred Stock by the Company, Reed
Stenhouse Companies Limited ("RSC") or Alexander & Alexander Services U.K. plc
("AAE") of an "Extraordinary Equity Payment" (defined below), (b) the sale or
other disposition, directly or indirectly, by the Company or any of its
subsidiaries in one or a series of related transactions of assets representing
35% or more of the then book value of the Company's assets on a consolidated
basis or 35% or more of the Company's gross revenues on a consolidated basis in
either of the two most recently ended fiscal years, (c) the merger or
consolidation of the Company or any of its principal subsidiaries with or into
any other firm, corporation or other legal entity other than (i) a merger or
consolidation of one subsidiary of the Company into another or the Company and
(ii) a merger or consolidation involving the issuance by the Company of equity
securities having a market value of less than 20% of the total market value of
the Company's equity securities outstanding prior to such issuance, or (d) the
occurrence of a "Specified Corporate Action" on or after the original date of
issuance of the Series B Preferred Stock.
"Extraordinary Equity Payment" shall mean (a) the declaration or payment
on or after June 1, 1994 by the Company, RSC or AAE, or any of their respective
subsidiaries of any dividend or distribution (except for any dividend or
distribution from one subsidiary of the Company to another subsidiary of the
Company or from a subsidiary of the Company to the Company, RSC or AAE or any of
their respective wholly owned subsidiaries; provided that all of such dividend
paid or distribution made, net of applicable withholding taxes, is received by
the Company, RSC or AAE or such recipient subsidiary) on any class or series of
its stock (other than regularly scheduled quarterly cash dividends on
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the Series A Preferred Stock and Series B Preferred Stock in accordance
with the terms thereof as in effect on the date of the Closing) other than the
declaration and payment by the Company, RSC and AAE of dividends on the Common
Stock, the RSC Class A Shares and the AAE Dividend Shares, respectively, which
do not exceed (i) on and after June 1, 1994 and on and prior to December 31,
1994, more than $0.075 per share, (ii) on and after January 1, 1995 and on and
prior to December 31, 1996, in the aggregate more than 25% of the Company's net
income available for distribution to common shareholders (after preferred
dividends) through the end of the last fiscal quarter prior to the date of
declaration of such dividend and (iii) on and after January 1, 1997, in the
aggregate more than the sum of (A) 50% of the Company's net income available for
distribution to common shareholders (after preferred dividends) on and after
such date and through the end of the last fiscal quarter prior to the date of
declaration of such dividend and (B) the excess, if any, of (1) 25% of the
Company's net income available for distribution to common shareholders (after
preferred dividends) during the period ending on and after January 1, 1995
through December 31, 1996 over (2) the aggregate amount of dividends declared
during the period from January 1, 1995 through December 31, 1996 and (b) any
repurchases, redemptions, retirements or other acquisitions directly or
indirectly by the Company or any of its subsidiaries on or after June 1, 1994 of
any stock of the Company or any of its subsidiaries (other than a wholly-owned
subsidiary) (other than redemptions or repurchases of the Series B Preferred
Stock in accordance with the Charter at the option of the Company or AIG) in
excess of net proceeds on or after June 1, 1994 to the Company from sales of
stock of the Company (less amounts expended on redemptions or repurchases of
Series A Preferred Stock and Series B Preferred Stock on or after June 1, 1994).
"Specified Corporate Action" shall mean such time as (i) the Company
shall consent or agree to the acquisition of, or the commencement of a tender
offer for, or the Board of Directors of the Company shall recommend or, within
ten business days after the commencement of the tender offer, not recommend that
shareholders reject, a tender offer for, "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) by any "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (other than AIG or its affiliates or any
transferee thereof) of, voting securities of the Company or securities
convertible into voting securities (collectively, "Restricted Securities"),
representing, when added to the Restricted Securities already owned by such
person or groups, thirty-five percent (35%) or more of such Restricted
Securities; (ii) the Company shall amend, modify or supplement, or waive the
benefit of, the Rights Agreement, so as to permit any acquisition of beneficial
ownership of thirty-five percent (35%) or more of the Restricted Securities
without causing such person or group (other than AIG or its affiliates or any
transferee thereof) to become an Acquiring Person (as defined in the Rights
Agreement) or without causing the Distribution Date or the Shares Acquisition
Date (each as defined in the Rights Agreement) to occur or without giving rise
to a Section 11(a)(ii) Event (as defined in the Rights Agreement); (iii) the
Company shall take any action under Section 3-603(c) of the Maryland General
Corporation Law to exempt any transaction between the Company and any of its
subsidiaries, on the one hand, and any person or group (other than AIG or its
affiliates or any transferee thereof), or any affiliates of any such person or
group, on the other hand, who (A) acquire, own or hold beneficial ownership of
Restricted Securities representing thirty-five percent (35%) or more of such
Restricted Securities, on the other hand, from the provisions of Title 3,
Subtitle 6 of the Maryland General Corporation Law or (B) acquire, own or hold
beneficial ownership of Restricted Securities representing ten percent (10%) or
more of such Restricted Securities unless such other person or group, or any
affiliate of such person or group, enters into a standstill agreement with the
Company limiting the acquisition of Restricted Securities by such other person
or group, or any affiliates of such person or group, to less than thirty-five
percent (35%) of the Restricted Securities and such stand-still agreement
remains in full force and effect; (iv) the Company shall issue, sell or
transfer, in one or a series of related transactions, Restricted Securities to
any person or group (other than AIG or its affiliates or any transferee thereof)
if after giving effect thereto said person or group shall have, or shall have
the then contractual right to acquire through conversion, exercise of warrants
or otherwise, more than thirty-five percent (35%) of the
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combined voting power to vote generally in the election of directors of
the Company; or (v) the Company shall agree to merge or consolidate with or into
any person, firm, corporation or other legal entity or shall agree to sell all
or substantially all its assets to any person, firm, company or other legal
entity other than (a) a merger or consolidation of one subsidiary of the Company
into another or the Company, or (b) a merger or consolidation in which the
securities of the Company outstanding before the merger or consolidation are not
affected and in which the Company issues equity securities having an aggregate
market value of less than 20% of the total market value of the Company's equity
securities outstanding prior to such merger or consolidation. For a general
description of the Rights Agreement and the defined terms used above, see
"CHARTER AMENDMENT--Existing Anti-Takeover Provisions--Rights Agreement."
Transfer Restrictions. The Series B Preferred Stock will be subject to
the same transfer restrictions applicable to the Class D Stock described below.
There are no other limitations on the transferability of the Series B Preferred
Stock except as provided under the Securities Act of 1933, as amended (the
"Securities Act"). See "--Terms of Class D Stock."
Permissible Distributions. In determining whether a distribution (other
than upon voluntary or involuntary liquidation), by dividend, redemption or
other acquisition of shares or otherwise, is permitted under the Maryland
General Corporation Law, amounts that would be needed, if the Company were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of holders of Series B Preferred Stock whose preferential
rights upon dissolution are superior to those receiving the distribution shall
not be added to the Company's total liabilities.
TERMS OF CLASS D STOCK
Class D Stock shall have a par value of $1.00 per share. The payment of
dividends to holders of the Common Stock will be subject to the right of the
holders of the Class D Stock to have the Company declare a dividend on the Class
D Stock in an amount per share equal to the per share amount of the dividend
paid on the Common Stock. In the event of the voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the holders of Class D
Stock and Common Stock will participate ratably in proportion to the number of
shares held by each such holder in any distribution of assets of the Company to
such stockholders.
In addition, in the event the Company effects a subdivision or
combination or consolidation of the outstanding shares of Class D Stock into a
greater or lesser number of shares of Class D Stock, then in each such case the
Company will effect an equivalent subdivision or combination or consolidation of
the outstanding shares of Common Stock into a greater or lesser number of shares
of Common Stock.
The holders of the Class D Stock shall not be entitled to any vote,
provided that the Charter of the Company cannot be amended or modified so as to
adversely affect the holders of the Class D Stock without the approval of the
holders of two-thirds of such shares then outstanding, for purposes of which
vote the holders of Series B Preferred Stock shall be deemed to be holders of
that number of shares of Class D Stock into which such Series B Preferred stock
would then be convertible. The holders of the Class D Stock shall have the right
to exchange Class D Stock for Common Stock, at any time or from time to time, on
a share-for-share basis, provided, however, that no person shall be entitled to
acquire Common Stock upon such exchange if after giving effect thereto such
person shall have, or shall have the then contractual right to acquire through
conversion, exercise of warrants, or otherwise, more than 9.9% of the combined
voting power of the Common Stock, Class A Stock and Class C Stock then
outstanding.
The Company shall not be required to register any transfer of Class D
Stock, except as follows: (a) to any person which acquired shares of Class D
Stock on the original issuance of Class D Stock by the Company (a "Purchaser");
(b) to the ultimate parent corporation of any Purchaser (an "Approved Parent")
or any wholly-owned direct or indirect subsidiary of any Approved Parent (a
"Controlled Subsidiary"); (c) in a transfer (otherwise than to a Purchaser, an
Approved Parent or a Controlled
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Subsidiary) pursuant to Rule 144 under the Securities Act; and (d) in a private
sale (otherwise than to a Purchaser, an Approved Parent or a Controlled
Subsidiary), provided that the transferor shall not sell to any single person
or group of persons acting in concert a number of shares of Class D Stock which,
if exchanged for Common Stock, when added to other securities owned by the
person or group and to securities that the person or group has the right to
acquire by conversion, exercise of warrants, or otherwise, would cause the
person or group to own or to have the right to acquire more than 9.9% of the
combined voting power of the shares of Common Stock, Class A Stock and Class C
Stock then outstanding.
In connection with any sale or transfer of Class D Stock in accordance
with clauses (c) or (d) above, the Company shall issue Common Stock in exchange
for the Class D Stock to be so sold or transferred, provided that in no event
shall the number of shares of Common Stock issued to such purchaser or
transferee cause the combined voting power of the shares of Common Stock, Class
A Stock and Class C Stock held by such purchaser or transferee to exceed 9.9% of
the combined voting power of all such shares then outstanding.
In addition to the foregoing, in the event that shares of Series B
Preferred Stock and/or Common Stock underlying Class D Stock are to be offered
in any bona fide public offering of shares that is registered under the
Securities Act, the Company shall provide: (i) in the event that Series B
Preferred Stock is offered publicly, for the conversion of such Series B
Preferred Stock into Common Stock and (ii) in the event that such Common Stock
is offered publicly, for the exchange of the Class D Stock for Common Stock, in
each case so that such offerings can be made without restriction.
AIG STANDSTILL PROVISIONS
For a period of time not to exceed eight years after the Closing (the
"Standstill Period"), neither AIG nor any of its affiliates will, subject to
certain exceptions, (i) acquire, offer to acquire or agree to acquire by
purchase or by joining a "group" (hereinafter, a "13D Group"), within the
meaning of Section 13(d)(3) of the Exchange Act, any Restricted Securities, (ii)
participate in or encourage the formation of a 13D Group which owns or seeks to
own Restricted Securities, (iii) make or participate in any "solicitation" of
"proxies," within the meaning of Regulation 14A under the Exchange Act, or
become a "participant" in any "election contest," within the meaning of Rule
14a-11 of the Exchange Act, or initiate, propose or solicit the approval of a
stockholder proposal with respect to the Company, (iv) call or seek to have
called a meeting of the Company's stockholders, (v) seek to control the
management, Board of Directors, policies or affairs of the Company, (vi)
solicit, propose or negotiate with respect to any form of business combination,
restructuring, recapitalization or similar transaction involving the Company or
any affiliate of the Company, (vii) solicit, make, propose, negotiate or
announce any tender offer or exchange offer for any Restricted Securities, or
(viii) disclose an intent with respect to the Company or any Restricted
Securities that would require the Company to waive or amend any restrictions
relating to standstill provisions contemplated by the Purchase Agreement.
There shall be an early termination of the Standstill Period upon the
occurrence of certain events, including (i) certain bankruptcy or insolvency
events relating to the Company or any of its subsidiaries, which in the case of
a subsidiary of the Company has had or would have a material adverse effect on
the business of the Company, (ii) the material breach by the Company of any of
its obligations under the Registration Rights Agreement, (iii) the acquisition
of, the commencement of a tender offer for, or the public announcement of an
intention to acquire beneficial ownership of 35% or more of the total voting
power of Restricted Securities by a person or 13D Group with the consent
(whether tacit or explicit) of the Company, (iv) the designation of any date as
the termination of the Standstill Period by the Company's Board of Directors,
(v) default in the payment of principal or interest after the expiration of any
grace periods with respect to indebtedness of the Company and its subsidiaries
for money borrowed in the aggregate amount of $15,000,000 or (vi) the
termination of the Purchase Agreement prior to the Closing.
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REGISTRATION RIGHTS
On up to three occasions on or after the first anniversary of the
Closing, AIG will have the right to require the Company to use its best efforts
to register under the Securities Act, at the Company's expense, all or any
portion of the Series B Preferred Stock or the Common Stock into which the
Series B Preferred Stock, directly or indirectly, is convertible ("Registrable
Securities") for sale in an underwritten public offering. The Company will not
be entitled to sell its securities in any such registration for its own account
without the consent of AIG.
In addition, if the Company at any time before the third anniversary of
the Closing seeks to register under the Securities Act for sale to the public
any of its securities, the Company must include, at AIG's request, AIG's
Registrable Securities in the registration statement, subject to underwriter
cutbacks and except, at any time prior to the first anniversary of the Closing,
with respect to a registered secondary offering pursuant to registration rights
granted by the Company prior to the signing of the Purchase Agreement.
NON-SOLICITATION
The Company has agreed in the Purchase Agreement that prior to the
Closing neither the Company nor any of its subsidiaries nor any of the
respective officers and directors of the Company or any of its subsidiaries
will, and the Company will direct and use its best efforts to cause its
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making of any proposal or offer with respect to a merger,
consolidation or similar transaction involving, or any sale of all or any
substantial portion of the assets or any equity securities of, the Company and
any of its subsidiaries, taken as a whole (an "Acquisition Proposal") or engage
in negotiations, provide information or discuss an Acquisition Proposal with any
person, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal.
Nothing contained in the Purchase Agreement, however, prohibits the
Company and its directors from making to the stockholders any recommendation and
related filing with the SEC, as required by Rules 14e-2 and 14d-9 under the
Exchange Act, with respect to any tender offer, or from informing the
stockholders of the Company in the proxy materials with respect to the meeting
of stockholders called to consider the transactions contemplated by the Purchase
Agreement of information that is material to the vote with respect to such
transactions, or from changing or withdrawing the recommendation of the
directors with respect to such transactions if the directors conclude that such
change or withdrawal is required by their fiduciary duties (as determined in
good faith by the Board of Directors of the Company upon the advice of counsel).
COVENANTS
The Purchase Agreement contains certain covenants including the
following:
Hart-Scott-Rodino. To the extent applicable, the Company and AIG shall
make all filings and furnish all information required with respect to the
transactions contemplated by the Purchase Agreement by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and shall use their best efforts to obtain
the early termination of the waiting period thereunder, provided that neither
the Company nor AIG shall be required to agree to dispose of or hold separate
any portion of its business or assets.
Access. Upon reasonable notice, the Company shall, and shall cause its
subsidiaries to, offer AIG's officers, employees, counsel, accountants and other
authorized representatives reasonable access during normal business hours before
the Closing to its properties, books, contracts and records and personnel and
advisors and the Company shall, and shall cause its subsidiaries to furnish
promptly to AIG all
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information concerning its business, properties and personnel as AIG or its
representatives may reasonably request.
Publicity. The Company and AIG will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated by the Purchase Agreement and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or by obligations pursuant to any
listing agreement with any securities exchange.
Pre-Closing Activities. From and after the date of the Purchase
Agreement until the Closing, each of the Company and AIG shall act with good
faith towards, and shall use its best efforts to consummate, the transactions
contemplated by the Purchase Agreement, and neither the Company nor AIG will
take any action that would prohibit or impair its ability to consummate the
transactions contemplated by the Purchase Agreement.
Restriction on Amendments to By-Laws. The Company shall not amend its
by-laws so as to affect the exemption contained therein from Subtitle 7 of Title
3 of the Maryland General Corporation Law (the "Maryland Control Share Act").
The Maryland Control Share Act provides that "control shares" of a Maryland
corporation acquired in a "control share acquisition" have no voting rights
except to the extent approved by a vote of two-thirds of the votes entitled to
be cast on the matter, excluding shares of stock owned by the acquiror, by
officers or by directors who are employees of the corporation. "Control Shares"
are voting shares of stock which, if aggregated with all other such shares of
stock previously acquired by the acquiror, or in respect of which the acquiror
is able to exercise or direct the exercise of voting power (except solely by
virtue of a revocable proxy), would entitle the acquiror to exercise voting
power in electing directors within one of the following ranges of voting power:
(i) one-fifth or more but less than one-third, (ii) one-third or more but less
than a majority, or (iii) a majority or more of all voting power. Control shares
do not include shares the acquiring person is then entitled to vote as a result
of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions. On January 31, 1991 the Board of Directors of the Company amended
the by-laws by adding a new Section 4 to Article IX, opting out of the Maryland
Control Share Act. The Board of Directors concluded that the Maryland Business
Combination Moratorium Act is more effective than the Control Share Act in
enabling the Company to protect the interests of stockholders against the abuses
of hostile takeover strategies and in encouraging a prospective acquiror to
negotiate with the Board of Directors. See "CHARTER AMENDMENT-- Existing
Anti-Takeover Provisions."
Company Payments in Certain Events. In the Purchase Agreement, the
Company has agreed to make certain payments to AIG relating to changes in the
Company's assets and liabilities as at March 31, 1994 as summarized below.
If, at any time or from time to time, the amount of (x) all reserves,
accruals or payments by or on behalf of the Company or any of its Subsidiaries
(without duplication) on account of liabilities, expenses, penalties, fines or
interest with respect to any income or other tax (foreign, federal, state or
local) with respect to any period ending on or prior to March 31, 1994 exceeds
(y) the stated amount of the Company's tax reserve included in its consolidated
balance sheet at March 31, 1994 set forth in its Quarterly Report on Form 10-Q
for the three months ended March 31, 1994 (the "March 31, 1994 Balance Sheet")
(such amount, a "Tax Amount"), the Company shall pay to AIG , as an adjustment
to the purchase price, its pro rata share (based on AIG's fully diluted
ownership percentage of the Common Stock as of the date of determination) of the
Tax Amount.
In addition, the Company has agreed to furnish, within 90 days after the
end of its fiscal year December 31, 1994, to AIG a certification (the "AIG
Certification") signed by each of its chief executive officer, chief financial
officer and principal accounting officer certifying (A) whether there were any
liabilities as of March 31, 1994 (1) which were not set forth on the March 31,
1994 Balance Sheet or, (2) which are in an amount in excess of the amount stated
therefor on the March 31, 1994
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Balance Sheet or (3) as to which the full amount of such liability is not then
determinable (specifying, in each case, as to type, determinability and
amount); and (B) whether there were any assets set forth on the March 31, 1994
Balance Sheet the ultimate realizable value of which is less than that of the
carrying value of such assets at such date (specifying, in each case, as to
type and amount.)
For purposes of this covenant, a liability shall be deemed to be in an
amount in excess of the amount set forth in the March 31, 1994 Balance Sheet or
an asset shall be deemed to have a carrying value below the amount set forth in
such Balance Sheet based upon all facts or circumstances in existence on or
prior to March 31, 1994, whether or not then known by the Company or any of its
subsidiaries and whether or not, under generally accepted accounting principles,
such liabilities or assets were, as of March 31, 1994 or as of the date of such
AIG Certification, correctly stated or a reserve would not have been required.
Assets shall be carried at the lower of stated book value or realizable value,
and liabilities shall be stated without discount.
If an adjustment is made to any balance sheet subsequent to the March
31, 1994 Balance Sheet based upon any of the matters referred to in the AIG
Certification or if a liability set forth in the AIG Certification is paid
("Other Adjustments"), then the Company shall promptly pay to AIG, as an
adjustment to the purchase price, an amount in cash in immediately available
funds equal to AIG's pro rata share of each such Other Adjustment. The Company
will not, however, be required to make payments under this covenant in respect
of (i) liabilities relating to the indemnities contained in the Shand Morahan &
Company, Inc. Sale Agreement, dated October 7, 1987; (ii) assets or liabilities
relating to operations discontinued prior to the date of the Purchase Agreement;
(iii) any reserve for restructuring that is approved by the new Chief Executive
Officer of the Company and that is taken in the year ended December 31, 1994;
and (iv) liabilities that do not individually exceed $2,000,000 or in the
aggregate exceed $10,000,000.
CONDITIONS TO CLOSING
AIG's obligation to effect the Closing is subject to various conditions
which include the following:
(a) Approval of the issuance and sale of the Series B Preferred
Stock as required by the rules of any securities exchange on which
securities of the Company are listed.
(b) Approval and effectiveness of the Charter Amendment.
(c) Compliance by the Company in all material respects with the
terms, covenants and conditions of the Purchase Agreement.
(d) Amendment of the Rights Agreement, in form and substance
reasonably satisfactory to AIG.
(e) AIG shall be satisfied in its sole discretion as to the
non-applicability of insurance holding company and broker controlled
insurer statutes of each of the States of the United States of America
and each other material jurisdiction with respect to its purchase and
holding of the Series B Preferred Stock and related matters (including,
as AIG shall determine, such approvals or advice from such regulatory
authorities in respect thereof). AIG shall be satisfied as to the
applicability of foreign investment and other similar laws or
regulations of each jurisdiction outside the United States of America
where AIG or its subsidiaries or the Company and its subsidiaries
conduct business with respect to the purchase and holding by AIG or its
affiliates of the Series B Preferred Stock, the Class D Stock and the
Common Stock issued in exchange for Class D Stock such that the
application of such laws or regulations would not in its reasonable
discretion have, individually or in the aggregate, a material adverse
effect on AIG and its subsidiaries taken as a whole or the Company and
its subsidiaries taken as a whole.
(f) Entry by the Company on or before July 5, 1994 into an
insurance or reinsurance arrangement with respect to discontinued
operations that is reasonably satisfactory to AIG.
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(g) The Company shall have furnished to AIG legal opinions as
described in the Purchase Agreement, in form reasonably satisfactory to
AIG.
(h) Other customary conditions precedent for a transaction
similar to the issuance and sale of the Series B Preferred Stock to AIG.
The Company's obligation to effect the Closing is subject to conditions
reciprocal to the conditions contained in (a), (b), (c) and (e) above. The
Company is in advanced stages of negotiation for an arrangement that the Company
believes would satisfy the condition referred to in paragraph (f) above. At the
time the Company entered into the Purchase Agreement with AIG, the Company had
entered into an option to purchase insurance from an affiliate of AIG that would
satisfy the condition, and had paid an affiliate of AIG a non-refundable fee of
$1,000,000 for the option. This fee is in addition to the estimated $2,800,000
of transaction expenses to be borne by the Company.
There can be no assurance that each of the conditions to the Closing
will be satisfied prior to October 31, 1994. If the Closing does not occur on or
prior to October 31, 1994, the Purchase Agreement will terminate without any
action by AIG or the Company. See "Termination" below.
TERMINATION
At any time prior to the Closing, the Purchase Agreement and the
transactions contemplated thereby may be terminated, (i) by a written instrument
executed and delivered by the Company and AIG, (ii) by AIG upon any material
breach or default by the Company under the Purchase Agreement, or (iii) by the
Company upon any material breach or default by AIG under the Purchase Agreement.
If the Closing shall not have occurred on or before October 31, 1994, the
Purchase Agreement will terminate without any action by AIG or the Company.
RIGHTS AGREEMENT AMENDMENT
The Board of Directors has approved an amendment to the Company's Rights
Agreement, pursuant to which the acquisition of Series B Preferred Stock upon
closing of the Purchase Agreement, the acquisition of Class D Stock upon
conversion of Series B Preferred Stock, the acquisition of Common Stock upon
exchange for Class D Stock or the acquisition by AIG or its affiliates or any
transferee thereof of any securities of the Company (if such acquisition is
permitted by the Purchase Agreement) will not (i) cause any person to become an
Acquiring Person, (ii) cause the Distribution Date or the Shares Acquisition
Date to occur, or (iii) give rise to a Section 11(a)(ii) Event (as such
capitalized terms are defined in the Rights Agreement). See "CHARTER
AMENDMENT--Existing Anti-Takeover Provisions."
REQUIRED VOTE
Approval of Proposal 1 requires the affirmative vote of a majority of
the votes cast on the proposal, provided that the total vote cast on the
proposal represents over 50% in interest of all Common Stock, Class A Stock and
Class C Stock entitled to vote on the proposal. For this purpose, abstentions
and broker non-votes will not be counted as votes cast and will have no effect
on the vote on Proposal 1.
Approval of Proposal 1 is conditioned on the approval of the related
Charter Amendment.
The Board of Directors unanimously recommends that stockholders approve
Proposal 1.
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PROPOSAL 2--CHARTER AMENDMENT
The Closing is conditioned upon the approval of the Charter Amendment by
the stockholders of the Company and the filing of the Charter Amendment with the
State Department of Assessments and Taxation of Maryland. The following is a
summary of certain provisions of the Charter Amendment, which is attached as
Appendix II to this Proxy Statement and is incorporated herein by reference.
Such summary is qualified in its entirety by reference to the Charter Amendment.
Approval of the Charter Amendment by the stockholders shall be deemed
also to constitute approval of a resolution authorizing the Board of Directors,
at any time prior to the filing of the Charter Amendment with the State
Department of Assessments and Taxation of Maryland, to abandon such proposed
amendment without further action by the stockholders, in connection with the
termination of the Purchase Agreement or otherwise, notwithstanding approval of
the Charter Amendment by the stockholders of the Company. Furthermore, the
Company does not intend to file the Charter Amendment with the State Department
of Assessments and Taxation of Maryland until the time of the Closing under the
Purchase Agreement.
INCREASE OF AUTHORIZED STOCK
General. The Restated Articles currently authorize the Company to issue
eighty-eight million five hundred thousand (88,500,000) shares of four classes
of stock, consisting of sixty million (60,000,000) shares of Common Stock, par
value $1.00; thirteen million (13,000,000) shares of Class A Common Stock, par
value $.00001; five million five hundred thousand (5,500,000) shares of Class C
Common Stock, par value $1.00; and ten million (10,000,000) shares of Preferred
Stock, par value $1.00. The aggregate par value of all shares of all classes of
stock which the Company has authority to issue is $75,500,130. The Charter
Amendment would increase the number of authorized and unissued shares of capital
stock of the Company to two hundred ninety-two million (292,000,000) shares of
five classes consisting of two hundred million (200,000,000) shares of Common
Stock, par value $1.00; twenty-six million (26,000,000) shares of Class A Common
Stock, par value $.00001; eleven million (11,000,000) shares of Class C Common
Stock, par value $1.00; forty million (40,000,000) shares of Class D Common
Stock, par value $1.00; and fifteen million (15,000,000) shares of Preferred
Stock, par value $1.00. The aggregate par value of all shares of all classes of
stock which the Company will, pursuant to the Charter Amendment, have authority
to issue is $266,000,260.
Reasons for and Effects of the Increase of Authorized Capital Stock. In
addition to authorizing the Series B Preferred Stock and the Class D Stock, the
Charter Amendment would increase the number of authorized shares of Common Stock
and Preferred Stock. Of the 88,500,000 shares currently authorized, as of June
21, 1994 41,037,453 shares of Common Stock, 2,409,600 shares of Class A Common
Stock, 382,130 shares of Class C Common Stock and 2,300,000 shares of Preferred
Stock were outstanding. Furthermore, following the Closing, for each share of
Class D Stock issued or reserved for issuance the Company will be required to
reserve one share of Common Stock for issuance upon exchange of the Class D
Stock. The Company does not have sufficient authorized, unissued and unreserved
shares of Common Stock to permit the issuance of the number of shares of Common
Stock that would be required to be issued upon exchange of the Class D stock
into which the Series B Preferred Stock is convertible.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to increase the number of authorized shares of
Common Stock and Preferred Stock so that a sufficient number of additional
shares of Common Stock and Preferred Stock will be available to effect the
transactions contemplated by the Purchase Agreement and for issuance from time
to time in connection with possible future financing programs, stock dividends,
acquisitions, stock option and other employee benefit plans and other general
corporate purposes. Having such additional authorized shares of Common Stock and
Preferred Stock available for issuance in the future will give the Company
greater flexibility and allow additional shares of Common Stock and Preferred
Stock, in excess of the number of
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such shares presently authorized, to be issued without the expense and delay of
a special meeting of stockholders unless such meeting is required for the
particular transaction by applicable law or regulations or the rules of any
stock exchange on which the shares of Common Stock may then be listed or
quoted.
Stockholders will have no preemptive rights with respect to any issuance
of the newly authorized shares of Common Stock or Preferred Stock. The issuance
of additional shares of Common Stock or Preferred Stock could have the effect of
diluting the economic and voting rights of the existing holders of Common Stock.
Finally, although generally the newly authorized Common Stock and Preferred
Stock could be issued at the discretion of the Board of Directors, in certain
circumstances (involving certain issuances of stock (i) to related parties or
under employee benefit plans, (ii) equal to or more than 20% of the shares of
Common Stock then outstanding or (iii) resulting in a change of control of the
Company), the rules of the New York Stock Exchange may require specific
stockholder authorization of a proposed issuance of the newly authorized Common
Stock and Preferred Stock.
In addition, although the Company does not have any present intention to
issue the additional shares of Common Stock and Preferred Stock to oppose a
takeover bid, and the Company does not view the proposed amendment as an
anti-takeover measure, the authorization of additional shares of Common Stock
and Preferred Stock could possibly deter, or the issuance of such shares could
be utilized to frustrate, a takeover attempt which is not approved by incumbent
management, but which stockholders may deem to be in their best interests or in
which stockholders might receive a premium for their shares over the present
market value of such shares. To the extent that it impedes any such attempts,
the proposal may serve to perpetuate management. The proposal is not the result
of any knowledge of the Company of any specific effort to accumulate the
Company's securities or to obtain control of the Company by means of a merger,
tender offer, proxy solicitation or otherwise. The Company has no plans at the
present time to submit to the stockholders for approval, or take any other
action with respect to, any other proposal that might be deemed to have an
anti-takeover effect. Cumulative voting in the election of directors is not
provided for under the Restated Articles of the Company. See "Existing
Anti-Takeover Provisions" below.
EXISTING ANTI-TAKEOVER PROVISIONS
The consummation of the Investment may diminish the ability of current
stockholders to sell the Company without the concurrence of AIG. See "Certain
Considerations--Diminished Ability to Sell the Company". The Charter of the
Company and the Maryland General Corporation Law contain certain other
provisions that could have the effect of delaying, deferring or preventing a
change in control of the Company.
Maryland Business Combination Law. The Maryland Business Combination Law
prohibits any "Business Combination" (as defined generally to include a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation (such as the Company) and any "Interested Stockholder" (defined
generally as any person that, directly or indirectly, beneficially owns 10
percent or more of the outstanding voting stock of the corporation) for a period
of five years after the date the person becomes an Interested Stockholder. After
such five year period, a Business Combination between a Maryland corporation and
such Interested Stockholder is prohibited unless either certain "fair price"
provisions are complied with or the Business Combination is approved by certain
supermajority stockholder votes. The Maryland Business Combination Law
restrictions do not apply to a Business Combination with an Interested
Stockholder if such Business Combination is approved by a resolution of the
board of directors of the corporation adopted prior to the date on which the
Interested Stockholder became such.
In connection with the execution of the Purchase Agreement, the Board of
Directors of the Company adopted a resolution to exempt further transactions
between the Company and its subsidiaries and AIG and its subsidiaries from the
provisions of the Maryland Business Combination Law but only if
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AIG or its subsidiaries shall have become an Interested Stockholder as a result
of the acquisition of securities of the Company in a manner and to the extent
permitted under the Purchase Agreement.
Rights Agreement. On June 11, 1987, at the time of the execution of the
Company's Rights Agreement, the Company's Board of Directors declared a dividend
of one Right, as defined in the Rights Agreement (a "Right"), for each
outstanding share of Common Stock, Class A Stock and Class C Stock. The Common
Stock, Class C Stock and Class A Stock are collectively referred to herein as
the "Voting Stock." The Rights Agreement was amended and restated as of March
22, 1990 and further amended as of April 21, 1992. The following description
summarizes the Rights Agreement, as amended.
The Rights are currently traded with the Voting Stock and detach and
become exercisable only upon the earlier to occur of (i) ten (10) days following
a public announcement by the Company that a person or group of affiliated or
associated persons (a "Person") has acquired, or obtained the right to acquire,
"beneficial ownership" (as defined in the Rights Agreement) of 10% or more of
the outstanding Voting Stock (such Person, an "Acquiring Person") (the date of
such announcement, the "Shares Acquisition Date") or (ii) ten (10) business days
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in any Person becoming an
Acquiring Person (the earlier of such dates being called the "Distribution
Date").
Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value per share (the "Preferred Shares"), of the Company, at a price
of $85 per one one-hundredth of a Preferred Share.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per share of Common Stock.
In the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per share
of Common Stock. Each Preferred Share will have 100 votes, voting together with
the Common Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each right should approximate the value of one
share of Common Stock.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets, earning
power, or cash flow are sold, proper provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof
at the then-current exercise price of the Right, that number of shares of common
stock of the acquiring company (or the Company, as the case may be) which at the
time of such transaction will have a market value of two times the exercise
price of the Right.
In the event that any Person becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of one-hundredths
of a Preferred Share (or, under certain circumstances, other equity securities,
debt securities, cash, a reduction in the exercise price of the Right, and/or
other property, or a combination of the foregoing) having a value of two times
the exercise price of the Right.
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At any time after any Person becomes an Acquiring Person and prior to
the acquisition by such Person of 50% or more of the outstanding Voting Stock,
the Board of Directors of the Company may exchange the Rights (other than Rights
beneficially owned by such Person which have become void), in whole or in part,
at an exchange ratio of one one-hundredth of a Preferred Share per Right
(subject to adjustment).
The Rights will expire on July 6, 1997 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are earlier
redeemed by the Company. At any time prior to any Person becoming an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors ordering redemption of the
Rights, the right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company in any respect without the consent of the holders of the Rights prior to
there being an Acquiring Person. Thereafter, the Board of Directors of the
Company may amend the terms of the Rights without the consent of the holders of
the Rights, including an amendment to extend the Final Expiration Date, except
that no such amendment may adversely affect the interests of the holders of the
Rights.
In connection with the sale of the Series B Preferred Stock, the Company
has agreed to amend the Rights Agreement to the extent necessary to ensure that
the transactions contemplated by the Purchase Agreement do not cause any person
to become an Acquiring Person, cause the Distribution Date or the Shares
Acquisition Date to occur or give rise to a "Section 11(a) Event" (that is, an
event giving holders of Rights, other than the Acquiring Person, the right to
buy shares of Common Stock at half-price). See "THE PURCHASE AGREEMENT--Rights
Agreement Amendment."
The Rights Agreement was not intended to deter all takeover bids for the
Company and will not do so. For example, the Rights Agreement does not foreclose
an attractive offer to acquire all the Voting Stock at the same price or a
transaction approved by the Board of Directors. To the extent an acquiror is
discouraged by the Rights Agreement from acquiring an equity position in the
Company, stockholders may be deprived of receiving a premium for their shares.
The issuance of additional shares of Common Stock prior to the Distribution Date
will result in an increase in the number of Rights outstanding.
Other Maryland Law Provisions. Under the Maryland General Corporation
Law, an action required to be taken at a meeting of stockholders may be taken
without a meeting only if a written consent is signed by each stockholder
entitled to vote on the matter. The written request of one or more stockholders
entitled to cast at least 25% of all votes entitled to be cast at a meeting of
stockholders is required to initiate a call of a special meeting by the
stockholders.
Other By-Law Provisions. Article I, Section 12, of the Company's by-laws
provides that for any proposal (other than election of directors) to be properly
brought by a stockholder before an annual meeting, written notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 60 days nor more than 90 days prior to the meeting. If
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, to be timely, notice from a stockholder
proposing business must be received by the Company by the 10th day following the
date notice of the meeting date was mailed or public disclosure of the meeting
date was made, whichever occurs first. The stockholder's written notice must
contain a brief description of the proposal and reasons for conducting such
business at the annual meeting, the stockholder's name and address (as they
appear on the Company's books), the class and number of shares beneficially
owned by the stockholder, and any material interest of the stockholder in such
business.
The Company's by-laws further provide that (i) in the event the
presiding officer of the meeting determines that the timely written notice
requirements have not been complied with, such presiding officer shall disregard
the defective business proposal or disregard the defective nomination, and (ii)
notwithstanding the provisions of the by-laws with respect to the matters set
forth in Article I,
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Section 12, a stockholder shall also comply with all applicable requirements of
the Securities and Exchange Act of 1934 and the rules and regulations
thereunder.
The provisions of the by-laws of the Company described above do not
affect the rights and obligations of stockholders under the Securities and
Exchange Commission Rule 14a-8, which relates to the inclusion of stockholder
proposals in proxy materials.
TERMS OF SERIES B PREFERRED STOCK AND CLASS D COMMON STOCK
The terms of the proposed Series B Preferred Stock and Class D Stock are
summarized above under "THE PURCHASE AGREEMENT--Terms of Series B Preferred
Stock" and "--Terms of Class D Stock."
REQUIRED VOTE
Approval of Proposal 2 requires the concurrence of a majority of the
aggregate of the votes entitled to be cast on the proposal by stockholders of
the Company. For this purpose, abstentions and broker non-votes will have the
effect of votes against Proposal 2.
Approval of Proposal 2 is conditioned on approval of Proposal 1.
The Board of Directors unanimously recommends that stockholders approve
Proposal 2.
MISCELLANEOUS
In the event that sufficient votes in favor of the Investment Proposals
are not received by July 15, the persons named in the enclosed proxy card may
propose one or more adjournments of the meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a majority
of the votes cast on the matter at the meeting. The persons named in the
enclosed proxy card will vote in favor of such adjournment those proxies which
they are entitled to vote in favor of the Investment Proposal for which further
solicitation of proxies is to be made. They will vote against any such
adjournment those proxies required to be voted against such Investment Proposal.
The costs of any such additional solicitation and of any adjourned session will
be borne by the Company.
STOCKHOLDER PROPOSALS FOR 1995 MEETING
Stockholders are advised that any proposals of stockholders intended to
be presented at the 1995 Annual Meeting of Stockholders must be received by the
Company on or before December 15, 1994 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. In addition, the by-laws
of the Company establish an advance notice requirement for any proposal of
business to be considered at an annual meeting of stockholders that is not made
by or at the recommendation of a majority of the directors then in office. In
general, written notice must be delivered to the Secretary of the Company at its
principal executive office, 1211 Avenue of the Americas, New York, New York
10036, within certain time periods in advance of the meeting and must contain
specified information concerning the matter to be brought before the meeting and
the stockholder proposing the matter. Any stockholder desiring a copy of the
by-laws of the Company will be furnished one without charge upon written request
to the Secretary of the Company.
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OTHER MATTERS
Under Maryland law and the by-laws of the Company, no other business may
be transacted at the Special Meeting.
By order of the Board of Directors,
Frank R. Wieczynski
Secretary
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APPENDIX I
- --------------------------------------------------------------------------------
STOCK PURCHASE AND SALE AGREEMENT
- --------------------------------------------------------------------------------
BETWEEN
ALEXANDER & ALEXANDER SERVICES INC.
AND
AMERICAN INTERNATIONAL GROUP, INC.
------------------------
Dated as of June 6, 1994
33
TABLE OF CONTENTS
SECTION HEADING PAGE
- ------- ------------------------------------------------------------------------------------------------------ ---------
1. Definitions; Certain References....................................................................... 1
a. Definitions................................................................................ 1
2. Closing............................................................................................... 3
a. Time and Place of the Closing.............................................................. 3
b. Transactions at the Closing................................................................ 3
3. Conditions to the Closing............................................................................. 3
a. Conditions Precedent to the Obligations of the Purchasers.................................. 3
1. Compliance by A&A...................................................................... 3
2. No Legal Action........................................................................ 4
3. Amendment of Charter................................................................... 4
4. Shareholder Approval................................................................... 4
5. Stock Exchange Listing................................................................. 4
6. Rights Agreement....................................................................... 4
7. Regulatory Matters..................................................................... 4
8. Insurance Arrangement.................................................................. 4
9. Legal Opinions......................................................................... 4
10. Registration Rights Agreement.......................................................... 9
11. Other.................................................................................. 9
12. Hart-Scott-Rodino...................................................................... 9
13. Articles Supplementary; Articles of Amendment.......................................... 9
14. Exemption from Special Voting Requirements............................................. 9
15. Special Events......................................................................... 9
b. Conditions Precedent to Obligations of A&A................................................. 9
1. Compliance by AIG...................................................................... 9
2. No Legal Action........................................................................ 9
3. Amendment of Charter................................................................... 10
4. Shareholder Approval................................................................... 10
5. Regulatory Matters..................................................................... 10
4. Representations and Warranties of A&A................................................................. 10
a. Organization, Good Standing, Power, Authority, Etc......................................... 10
b. Capitalization of A&A...................................................................... 10
c. Registration Rights........................................................................ 11
d. SEC Documents.............................................................................. 11
e. Proxy Statement............................................................................ 11
f. Authority and Qualification of A&A......................................................... 11
g. Subsidiaries............................................................................... 11
h. Outstanding Securities..................................................................... 12
i. No Contravention, Conflict, Breach, Etc.................................................... 12
j. Consents................................................................................... 12
k. No Existing Violation, Default, Etc........................................................ 12
l. Licenses and Permits....................................................................... 13
m. Title to Properties........................................................................ 13
n. Environmental Matters...................................................................... 13
o. Taxes...................................................................................... 13
p. Litigation................................................................................. 14
q. Labor Matters.............................................................................. 14
r. Contracts.................................................................................. 14
s. Finder's Fees.............................................................................. 14
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t. Financial Statements....................................................................... 14
u. ERISA...................................................................................... 14
v. Contingent Liabilities..................................................................... 15
w. No Material Adverse Change................................................................. 15
x. Investment Company......................................................................... 15
y. Exemption from Registration; Restrictions on Offer and
Sale of Same or Similar Securities......................................................... 16
z. Use of Proceeds............................................................................ 16
5. Representations and Warranties of the Purchasers...................................................... 16
a. Organization, Good Standing, Power, Authority, Etc......................................... 16
b. No Conflicts; No Consents.................................................................. 16
c. Investment Intent, Etc..................................................................... 16
6. Covenants of the Parties.............................................................................. 17
a. Restrictive Legends........................................................................ 17
b. Certificates for Shares and Conversion Shares To Bear Legends.............................. 17
c. Removal of Legends......................................................................... 18
d. Pre-Closing Activities..................................................................... 18
e. Information................................................................................ 18
f. Restriction on Issuance of Stock........................................................... 19
g. Restriction on Amendments to By-Laws....................................................... 19
h. Stockholders Meeting....................................................................... 19
i. Hart-Scott-Rodino.......................................................................... 19
j. Acquisition Proposals...................................................................... 19
k. Access..................................................................................... 20
l. Publicity.................................................................................. 20
m. Certain Special Events..................................................................... 20
n. Reservation of Shares...................................................................... 20
o. Adjustment Payments........................................................................ 20
7. Standstill............................................................................................ 21
8. Termination........................................................................................... 24
9. Survival of Representations and Warranties............................................................ 24
10. Performance; Waiver................................................................................... 24
11. Successors and Assigns................................................................................ 24
12. Miscellaneous......................................................................................... 25
a. Notices.................................................................................... 25
b. Expenses................................................................................... 25
c. Governing Law.............................................................................. 25
d. Severability; Interpretation............................................................... 25
e. Headings................................................................................... 26
f. Entire Agreement........................................................................... 26
g. Counterparts............................................................................... 26
Exhibits
Exhibit 1--Articles of Amendment
Exhibit 2--Articles Supplementary
Exhibit 3--Registration Rights Agreement
Exhibit 4--Rights Agreement Amendment
Exhibit 5--Charter of A&A
Exhibit 6--By-laws of A&A
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STOCK PURCHASE AND SALE AGREEMENT
STOCK PURCHASE AND SALE AGREEMENT ("AGREEMENT") dated as of June 6,
1994, between ALEXANDER & ALEXANDER SERVICES INC., a Maryland corporation
("A&A"), and AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation ("AIG").
WHEREAS, A&A desires to sell to one or more of AIG and its wholly-owned
subsidiaries as designated by AIG (the "Purchasers" and each a "Purchaser"), and
the Purchaser or Purchasers desire to purchase, an aggregate of 4,000,000 shares
(the "Shares") of 8% Series B Cumulative Convertible Preferred Stock, par value
$1.00 per share, of A&A (the "Series B Stock") for the consideration and upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, each of A&A and AIG agree as follows:
1. DEFINITIONS; CERTAIN REFERENCES.
a. Definitions. The terms defined in this Section 1, whenever used in
this Agreement, shall have the following meanings for all purposes of this
Agreement:
"A&A" has the meaning set forth in the first paragraph of this
Agreement.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act.
"AIG" has the meaning set forth in the first paragraph of this
Agreement.
"AIG Group" has the meaning set forth in Section 7.a.
"Annual Report" has the meaning set forth in Section
3.a.9(A)(i).
"Articles of Amendment" means the Articles of Amendment of the
Charter of A&A, to be filed for record by A&A, subject to the approval
thereof by the stockholders of A&A as contemplated by Section 3.a.3,
with the State Department of Assessments and Taxation of Maryland on or
prior to the date and time of the Closing, a true and correct copy of
which is attached as Exhibit 1 hereto.
"Articles Supplementary" means the Articles Supplementary
classifying 6,200,000 shares of A&A's preferred stock as Series B Stock,
to be filed for record by A&A with the State Department of Assessments
and Taxation of Maryland on or prior to the date and time of the
Closing, a true and correct copy of which is attached as Exhibit 2
hereto.
"Charter" means the Articles of Restatement of the charter of
A&A as filed for record with the State Department of Assessments and
Taxation of Maryland, as amended to date and as it is to be amended by
the Articles of Amendment.
"Class A Common Stock" means the Class A Common Stock, par value
$.00001 per share, of A&A.
"Class C Common Stock" means the Class C Common Stock, par value
$1.00 per share, of A&A.
"Class D Common Stock" means the Class D Common Stock, par value
$1.00 per share, of A&A, to be created by A&A as described in the
Articles of Amendment.
"Closing" has the meaning set forth in Section 2.a of this
Agreement.
"Closing Date" has the meaning set forth in Section 2.a of this
Agreement.
"Common Stock" means the common stock, par value $1.00 per
share, of A&A.
36
"Conversion Shares" means the shares of Class D Common Stock
issuable or issued upon conversion of the Shares pursuant to the terms
of this Agreement and the Articles Supplementary.
"Encumbrances" has the meaning set forth in Section 4.g of this
Agreement.
"Environmental Laws" has the meaning set forth in Section 4.k of
this Agreement.
"ERISA" has the meaning set forth in Section 4.u of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Shares" means the shares of Common Stock issuable or
issued in exchange for the Conversion Shares (or, in the case of a
registered public offering of Series B Stock, upon conversion of Series
B Stock) pursuant to the terms of this Agreement and the Charter.
"Incorporated Document" has the meaning set forth in Section
3.a.9(A)(v) of this Agreement.
"Licenses" has the meaning set forth in Section 4.l of this
Agreement.
"Material Adverse Effect" has the meaning set forth in Section
4.f of this Agreement.
"Proxy Statement" means the proxy statement with respect to the
transactions contemplated by this Agreement sent to the holders of
Common Stock, Class A Common Stock and Class C Common Stock in
compliance with the Exchange Act, as the same may be amended or
supplemented.
"Purchase Price" means, in the case of each Purchaser, $50
multiplied by the number of Shares to be purchased by such Purchaser and
$200,000,000 in the aggregate.
"Purchaser" has the meaning set forth in the first recital of
this Agreement.
"Purchasers" has the meaning set forth in the first recital of
this Agreement.
"Registrable Securities" means the Series B Stock, the
Conversion Shares, the Exchange Shares and any other securities issued
or issuable with respect to the Series B Stock, the Conversion Shares or
the Exchange Shares by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization; provided, however, that a
security ceases to be a Registrable Security when it is no longer a
Transfer Restricted Security.
"Registration Rights Agreement" means the Registration Rights
Agreement to be dated as of the date of the Closing among A&A and the
Purchasers party thereto, in the form attached as Exhibit 3 hereto, as
amended, supplemented and modified from time to time in accordance with
the terms thereof.
"Restricted Securities" has the meaning set forth in Section
7.a(i) of this Agreement.
"Rights Agreement" means the Rights Agreement between A&A and
First Chicago Trust Company of New York, dated as of June 11, 1987, as
amended and restated on March 22, 1990, as amended on April 21, 1992 and
as it is to be amended pursuant to Section 3.a.6 hereof.
"Rights Agreement Amendment" has the meaning set forth in
Section 3.a.6 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all documents filed by A&A with the SEC
since January 1, 1993.
"Series B Stock" has the meaning set forth in the first recital
of this Agreement.
"Shares" has the meaning set forth in the first recital of this
Agreement.
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37
"Significant Subsidiary" means each of Alexander & Alexander
Services UK plc, Reed Stenhouse Companies Limited and each other
Subsidiary of A&A that had consolidated assets at December 31, 1993 with
a book value, net of intercompany accounts, in excess of 10% of the
consolidated assets of A&A at such date or that, net of intercompany
items, contributed more than 10% to the consolidated revenues or
consolidated operating income of A&A for the year ended December 31,
1993.
"Special Event" has the meaning specified in the Articles
Supplementary.
"Standstill Period" has the meaning set forth in Section 7.c of
this Agreement.
"Subsidiary" means, with respect to any person, any corporation,
limited or general partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or other entity analogous
to any of the foregoing of which a majority of the equity ownership
(whether voting stock or comparable interest) is, at the time, owned,
directly or indirectly by such person.
"Transaction Documents" means the Articles of Amendment, the
Articles Supplementary, the Rights Agreement Amendment and the
Registration Rights Agreement.
"Transfer Restricted Security" means a share of Series B Stock,
a Conversion Share, an Exchange Share and any other security which is a
Registrable Security until such share of Series B Stock, Conversion
Share, Exchange Share or other security (i) has been effectively
registered under the Act and disposed of in accordance with a
registration statement filed under the Act covering it or (ii) is
distributed to the public pursuant to Rule 144 under the Act.
2. CLOSING.
a. Time and Place of the Closing. The Closing (the "Closing") shall take
place at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, New
York, at 10:00 A.M., New York time, on the third business day following the
first date on which the conditions to Closing set forth in Section 3 hereof have
first been satisfied or waived. A&A shall give AIG two business days prior
written notice of the date the Closing is scheduled to occur. The "Closing Date"
shall be the date the Closing occurs.
b. Transactions at the Closing. At the Closing, subject to the terms and
conditions of this Agreement, A&A shall issue and sell to AIG and the other
Purchasers and AIG shall purchase, or shall cause the other Purchasers to
purchase, the Shares. At the Closing, A&A shall deliver to each Purchaser a
certificate or certificates representing the number of Shares to be purchased by
such Purchaser as reflected in a schedule delivered to A&A one business day
prior to the Closing registered in the name of such Purchaser or its nominee
against payment of the Purchase Price with respect thereto by wire transfer of
immediately available funds to an account or accounts previously designated by
A&A.
3. CONDITIONS TO THE CLOSING.
a. Conditions Precedent to the Obligations of the Purchasers. The
obligations of the Purchasers to be discharged under this Agreement on or prior
to the Closing are subject to satisfaction of the following conditions at or
prior to the Closing (unless expressly waived in writing by AIG at or prior to
the Closing):
1. Compliance by A&A. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by A&A at or prior
to the Closing shall have been complied with and performed by it in all
material respects, and the representations and warranties made by A&A in
this Agreement shall be true and correct in all material respects at and
as of the Closing, with the same force and effect as though such
representations and warranties had been made at and as of
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the Closing, except for changes expressly contemplated by this
Agreement and except for representations and warranties that are made as
of a specific time which shall be true and correct in all material
respects only as of such time.
2. No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have
been instituted or threatened before any court or by any governmental
body which presents a substantial risk of the restraint or prohibition
of the transactions contemplated hereby or the obtaining of material
damages or other material relief in connection therewith.
3. Amendment of Charter. The Articles of Amendment shall have
been duly approved by the required holders of A&A's stock, shall have
been filed with the State Department of Assessments and Taxation of
Maryland and shall have become effective.
4. Shareholder Approval. The transactions contemplated by this
Agreement, including the issuance of the Series B Stock, the Conversion
Shares and the Exchange Shares, shall have been duly approved by the
holders of A&A's stock as required by the rules of the New York Stock
Exchange, Inc. and any other securities exchange on which the Common
Stock is listed.
5. Stock Exchange Listing. The Exchange Shares shall have been
approved for listing, subject to notice of issuance, by the New York
Stock Exchange, Inc. and any other securities exchange on which the
Common Stock is listed.
6. Rights Agreement. The Rights Agreement shall have been
amended by an amendment in the form of Exhibit 4 hereto (the "Rights
Agreement Amendment") and shall otherwise be in full force and effect
and not have been otherwise amended, modified or supplemented on or
after the date of this Agreement.
7. Regulatory Matters. AIG shall be satisfied in its sole
discretion as to the non-applicability of the insurance holding company
and broker-controlled insurer statutes of each jurisdiction (x) in the
United States of America or any state, territory or possession thereof
and (y) each other jurisdiction wherever located which is material to
the conduct of the business conducted by it and its Subsidiaries, in
each case with respect to the purchase and holding by the Purchasers of
the Series B Stock, the Conversion Shares and the Exchange Shares
(including the receipt of such approvals or advice from regulatory
authorities with respect thereto as AIG may determine). AIG shall be
satisfied as to the applicability of foreign investment and other
similar laws or regulations of each jurisdiction outside the United
States of America where AIG or its subsidiaries or A&A or its
Subsidiaries conduct business with respect to the purchase and holding
by the Purchasers of the Series B Stock, the Conversion Shares and the
Exchange Shares such that the application of such laws or regulations
would not in its reasonable discretion have, individually or in the
aggregate, a material adverse effect on AIG and its subsidiaries taken
as a whole or A&A and its Subsidiaries taken as a whole.
8. Insurance Arrangement. On or before July 5, 1994, A&A shall
have entered into an insurance or reinsurance arrangement with respect
to its discontinued operations that is reasonably satisfactory to AIG
with an insurer reasonably satisfactory to AIG.
9. Legal Opinions.
(A) A&A shall have furnished to the Purchasers on the
Closing Date the opinion of Ronald J. Roessler, Senior Vice
President and General Counsel of A&A, dated the Closing Date, in
form reasonably satisfactory to the Purchasers, to the effect
that:
(i) each of A&A and the Significant Subsidiaries has
been duly incorporated and, where applicable, is validly
existing as a corporation in good standing under the laws of
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the jurisdiction in which it is chartered or organized,
with full corporate power and authority to own its properties
and conduct its business as described in A&A's Annual Report
on Form 10-K for the year ended December 31, 1993 as filed
with the SEC ("Annual Report"); A&A is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of New York; Alexander Reinsurance
Intermediaries Inc. is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
Connecticut;
(ii) all the outstanding shares of stock of each
Significant Subsidiary have been duly and validly authorized
and issued and are full paid and nonassessable (or, with
respect to foreign subsidiaries, have similar status), and
all outstanding shares (except for directors' qualifying
shares) of stock of the Significant Subsidiaries are owned by
A&A either directly or through wholly-owned subsidiaries
(except as set forth in Exhibit 21 to A&A's Annual Report and
as disclosed in a single writing from A&A to AIG specifically
identified as such and dated the date hereof) free and clear
of any perfected security interest and, to the best knowledge
of such counsel, any other security interests, claims, liens
or encumbrances, except where the failure to so own the stock
of a Significant Subsidiary would not have a Material Adverse
Effect;
(iii) to the actual knowledge of such counsel, neither
A&A nor any of the Significant Subsidiaries incorporated
under the laws of New York or Maryland is in violation of any
term or provision of (A) its charter or bylaws or (B) any
judgment, decree or order specifically applicable to A&A or
such Significant Subsidiary, or any applicable United States
federal, New York or Maryland statute, rule or regulation,
except with respect to clause (B) of this paragraph (iii)
such violations which would not individually or in the
aggregate have a Material Adverse Effect;
(iv)] except as set forth in the Annual Report or in
A&A's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994 (the "Quarterly Report"), to the actual
knowledge of such counsel no default exists, and no event has
occurred which with notice, lapse of time, or both, would
constitute a default, in the due performance and observance
of any term, covenant or condition of any debt agreement to
which A&A or any of the Significant Subsidiaries is a party
or by which it or any of them is bound, except such defaults
which would not individually or in the aggregate have a
Material Adverse Effect;
(v) to the actual knowledge of such counsel, there is no
pending or threatened action or suit or proceeding before any
court or governmental agency or body or any arbitrator
involving A&A or any of the Subsidiaries which is reasonably
likely to have a Material Adverse Effect and which is not
adequately disclosed in the Annual Report, the Quarterly
Report, another SEC Document filed after the date of this
Agreement or a document filed with the SEC and incorporated
by reference therein ("Incorporated Document") after the date
of this Agreement;
(vi) to the actual knowledge of such counsel, there is
no pending or threatened action, suit or proceeding before
any court or governmental agency or body or any arbitrator to
which A&A is a party that questions the validity of this
Agreement or the Registration Rights Agreement or any action
to be taken pursuant hereto or thereto, with only such
exceptions as shall have been disclosed in reasonable detail
to AIG;
(vii) A&A's authorized equity capitalization is as set
forth in Section 4.b of this Agreement; the outstanding
shares of stock of A&A have been duly and validly authorized
and issued and are full paid and nonassessable; and the
holders of outstanding shares of stock of A&A are not
entitled pursuant to A&A's Charter or bylaws or any agreement
known to such counsel to preemptive or other rights to
subscribe for the Shares, the Conversion Shares or the
Exchange Shares;
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40
(viii) A&A has all requisite corporate power and
authority, and has taken all requisite corporate action,
necessary to enter into this Agreement, the Rights Agreement
Amendment and the Registration Rights Agreement, to carry out
the provisions and conditions of this Agreement, the Rights
Agreement Amendment and the Registration Rights Agreement and
the transactions contemplated in this Agreement, the Rights
Agreement Amendment and the Registration Rights Agreement, to
issue and sell the Shares in the manner contemplated by this
Agreement, to issue shares of Series B Stock as dividends on
the Shares (subject only to declaration by the Board of
Directors of A&A), to issue the Conversion Shares issuable
upon conversion of the Series B Stock, to issue Exchange
Shares upon the exchange of shares of Class D Common Stock or
(in the case of a registered public offering of the Series B
Stock) conversion of the shares of Series B Stock as provided
for in the Charter and Articles Supplementary and to
otherwise perform its obligations hereunder;
(ix) the issuance and sale of the Shares in the manner
contemplated herein, the issuance of the Conversion Shares
issuable upon conversion of shares of the Series B Stock in
accordance with the terms of the Charter and the Articles
Supplementary, the issuance of the Exchange Shares upon
exchange of the Class D Common Stock or (in the case of a
registered public offering of the Series B Stock) conversion
of shares of the Series B Stock in accordance with the terms
of the Charter and the Articles Supplementary, the execution,
delivery and performance by A&A of this Agreement, the Rights
Agreement Amendment and the Registration Rights Agreement and
the consummation of any other transaction contemplated in
this Agreement, the Rights Agreement Amendment and the
Registration Rights Agreement, and the performance, as of the
Closing Date if performed on such date, by A&A of the
obligations under the Charter and the Articles Supplementary
will not conflict with, result in a breach or violation of,
or constitute a default under (A) the charter or bylaws of
A&A or any of its Subsidiaries or (B) the terms of any
indenture or other agreement or instrument known to such
counsel and to which A&A or any of its Subsidiaries is a
party or by which it or any of them is bound, or (C) any
judgment, order or decree known to such counsel to be
specifically applicable to A&A or any of its Subsidiaries of
any court, regulatory body, administrative agency,
governmental body or arbitrator, except with respect to
clauses (B) and (C) of this paragraph (ix), such conflicts,
breaches, violations or defaults which would not,
individually or in the aggregate, have a Material Adverse
Effect; and
(x) those provisions of any contract or agreement that
are described in the Annual Report conform in all material
respects to the description thereof contained in the Annual
Report.
Such counsel shall state that, without independent check or
verification of the factual accuracy or completeness of the Annual
Report or the Quarterly Report (except to the limited extent set forth
in paragraphs (iv), (v), (vii) and (x) above) or the Proxy Statement, no
facts have come to the attention of such counsel which causes such
counsel to believe that the statements in the Annual Report and the
Quarterly Report at their respective filing dates with the SEC or the
Proxy Statement at its mailing date and the date of the meeting of
shareholders to which it relates (other than the financial statements
and other financial and statistical information contained therein, as to
which such counsel need express no belief) contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
States of Maryland and New York or the federal laws of the United
States, to the extent such counsel deems proper and specifies in such
opinion, upon the opinion of other counsel of good standing believed by
such counsel to be reliable and which opinion and
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41
counsel are satisfactory to the Purchasers (provided that such
counsel states that the Purchasers are justified in relying on such
specified opinion or opinions), and (B) as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible
officers of A&A and public officials.
(B) A&A shall have furnished to the Purchasers on the
Closing Date the opinion of Debevoise & Plimpton, special
counsel for A&A, dated the Closing Date, in form reasonably
satisfactory to the Purchasers, to the effect that:
(i) to the actual knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court, or governmental agency or body or any arbitrator to
which A&A is or is threatened to be made a party that
questions the validity of this Agreement, the Rights
Agreement Amendment or the Registration Rights Agreement or
any action to be taken pursuant hereto or thereto;
(ii) the certificates representing the Shares are in
valid and sufficient form; and the holders of outstanding
shares of stock of A&A are not entitled pursuant to A&A's
Charter or the Articles Supplementary or bylaws to preemptive
or other rights as shareholders to subscribe for the Series B
Stock or the Conversion Shares issuable upon conversion of
the Series B Stock or the shares of Common Stock issuable
upon exchange for Class D Stock or (in the case of a
registered public offering of Series B Stock) conversion of
Series B Stock;
(iii) the Series B Stock and the Articles of Amendment
and the Articles Supplementary have been duly authorized,
and, when issued and delivered in accordance with the terms
of this Agreement and as a dividend on shares of Series B
Stock, the Series B Stock will be validly issued, full paid
and nonassessable;
(iv) upon due execution, issuance and delivery in
accordance with this Agreement, the Charter and the Articles
Supplementary, the Shares will be convertible into the
Conversion Shares or (in the case of a registered public
offering of the Series B Stock) into the Exchange Shares in
accordance with the terms of the Charter and the Articles
Supplementary; the Conversion Shares issuable upon such
conversion have been duly authorized and validly reserved for
issuance upon conversion and, when so issued upon conversion
in accordance with the terms of the Charter and the Articles
Supplementary, will be validly issued, full paid, and
nonassessable; the shares of Common Stock issuable upon
exchange of the Class D Common Stock or (in the case of a
registered public offering of the Shares) upon conversion of
the Series B Stock have been duly authorized and validly
reserved for issuance upon exchange of the Class D Common
Stock or conversion of the Series B Stock, and when so issued
upon exchange or conversion in accordance with the terms of
the Charter and the Articles Supplementary will be validly
issued, full paid and nonassessable; the holders of shares of
the Series B Stock, Conversion Shares, or Exchange Shares of
A&A will not be subject to personal liability for obligations
of A&A by reason of being such holders; all consents,
approvals, authorizations, orders, registration and
qualifications of or with any New York, Maryland or Federal
court or governmental agency or body, if any, and all
corporate approvals and authorizations, required to be
obtained or taken by A&A for or in connection with the
authorization, issuance and delivery of the Series B Stock
and for the consummation of the transactions contemplated
hereby have been validly and sufficiently obtained or taken
(other than the declaration of dividends on Series B Stock in
Series B Stock) and are in full force and effect, except such
as may be required under the securities or blue sky laws of
any jurisdiction in connection with the purchase and
distribution of the Series B Stock by the Purchasers and such
other approvals (specified in such opinion) as have been
obtained;
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(v) each of this Agreement, the Rights Agreement
Amendment and the Registration Rights Agreement has been duly
authorized, executed and delivered by A&A and, assuming due
authorization, execution and delivery thereof by the other
parties hereto and thereto, is the valid and binding
obligation of A&A, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(vi) the issuance and sale of the Series B Stock in the
manner contemplated herein, the issuance of the Conversion
Shares issuable upon conversion of shares of the Series B
Stock in accordance with the terms of the Charter and the
Articles Supplementary, the issuance of the Exchange Shares
upon exchange of the Class D Common Stock or (in the case of
a registered public offering of Series B Stock) upon
conversion of the Series B Stock in accordance with the terms
of the Charter and the Articles Supplementary, the execution,
delivery and performance by A&A of this Agreement, the Rights
Agreement Amendment and the Registration Rights Agreement and
the consummation of any other of the transactions
contemplated in this Agreement, the Rights Agreement
Amendment and the Registration Rights Agreement, and the
performance, as of the Closing Date if performed on such
date, by A&A of the obligations under the Charter and the
Articles Supplementary will not conflict with, result in a
violation or breach of, or constitute a default under (A) the
charter or bylaws of A&A or (B) any United States federal,
Maryland or New York statute, rule or regulation applicable
to A&A or any of the Significant Subsidiaries, except with
respect to clause (B) of this paragraph (vi), such conflicts,
breaches, violations or defaults which would not have a
Material Adverse Effect;
(vii) A&A is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended;
and
(viii) in connection with the offer and sale of the
Shares and the delivery of the certificates representing the
Shares delivered on such Closing Date by A&A to the
Purchasers pursuant to this Agreement, and assuming the
correctness of all representations and warranties made by the
Purchasers in Section 5.c and by A&A in Section 4.y, it is
not necessary to register such Shares under the Act.
Such counsel shall state that (x) such counsel have not
themselves checked the accuracy and completeness of, or otherwise
verified, and are not passing upon and assume no responsibility for the
accuracy or completeness of, he statements contained in the Proxy
Statement, and (y) in the course of such counsel's review and discussion
of the contents of the Proxy Statement with certain officers and
employees of A&A, including its general counsel and his staff, the
Purchasers and their counsel and A&A's independent accountants, but
without independent check or verification, no facts have come to the
attention of such counsel which causes such counsel to believe that the
statements in the Proxy Statement at its mailing date and the date of
the meeting of shareholders to which it relates contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
such counsel need not express any view with respect to the adequacy or
accuracy of, or the application of generally accepted accounting
principles to, the financial statements or other financial or numerical
data included in the Proxy Statement.
In rendering such opinion, such counsel may (A) rely as to
matters involving the application of laws other than the State of New
York or the federal laws of the United States, to the extent such
counsel deems proper and specifies in such opinion, upon the opinion of
other counsel of good standing believed by such counsel to be reliable
and which counsel and opinion are satisfactory to the Purchasers
(provided that such counsel states that the Purchasers are justified in
relying upon
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43
such specified opinion or opinions), and (B) rely as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of A&A and public officials.
(C) The Purchasers shall have received from Cahill
Gordon & Reindel, counsel for the Purchasers, such opinion or
opinions, dated such Closing Date, with respect to the exemption
from registration under the Act for the offer and sale of such
Shares and delivery of the Shares by A&A to the Purchasers
pursuant to this Agreement, and other related matters as they
may reasonably require, and A&A shall have furnished to such
counsel such documents as they reasonably request for the
purpose of enabling them to pass upon such matters.
10. Registration Rights Agreement. A&A shall have executed and
delivered at the Closing for the benefit of the Purchasers and their
successors and assigns the Registration Rights Agreement.
11. Other. A&A shall have furnished to the Purchasers such
executed and conformed copies of such other opinions and such
certificates, letters and documents as the Purchasers may reasonably
request and as are customary for transactions such as those contemplated
by this Agreement.
12. Hart-Scott-Rodino. The waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall have expired
or been terminated, to the extent applicable.
13. Articles Supplementary; Articles of Amendment. The Articles
Supplementary and the Articles of Amendment shall each have been filed
for record with the State Department of Assessments and Taxation of
Maryland and shall have become effective.
14. Exemption from Special Voting Requirements. The Board of
Directors of A&A shall have irrevocably taken all action necessary under
Section 3-603(c) of the Maryland General Corporation Law to exempt
future transactions between A&A and its Subsidiaries, on the one hand,
and AIG and its subsidiaries, on the other hand, from the provisions of
Subtitle 6 of the Maryland General Corporation Law, provided that such
exemption shall be applicable only if AIG or its Subsidiaries shall have
become "interested stockholders" as a result of the acquisition of
securities of A&A in a manner and to an extent permitted by this
Agreement.
15. Special Events. No Special Event shall have occurred on or
after the date of this Agreement and on or prior to the Closing, other
than the execution and delivery of the Rights Agreement Amendment.
b. Conditions Precedent to Obligations of A&A. The obligations of A&A to
be discharged under this Agreement on or prior to the Closing are subject to
satisfaction of the following conditions at or prior to the Closing (unless
waived by A&A at or prior to the Closing):
1. Compliance by AIG. All of the terms, covenants and conditions
of this Agreement to be complied with and performed by AIG at or prior
to the Closing shall have been complied with and performed by AIG in all
material respects, and the representations and warranties made by the
Purchasers in this Agreement shall be true and correct in all material
respects at and as of the Closing, with the same force and effect as
though such representations and warranties had been made at and as of
the Closing, except for changes contemplated by this Agreement.
2. No Legal Action. No action, suit, investigation or other
proceeding relating to the transactions contemplated hereby shall have
been instituted before any court or instituted or threatened by any
governmental body which presents a substantial risk of the restraint or
prohibition of the transactions contemplated hereby or the obtaining of
material damages or other material relief in connection therewith.
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3. Amendment of Charter. The Articles of Amendment shall have
been approved by the required holders of A&A's stock, shall have been
filed with the State Department of Assessments and Taxation of the State
of Maryland and shall have become effective.
4. Shareholder Approval. The transactions contemplated by this
Agreement, including the issuance of the Series B Stock, the Conversion
Shares and the Exchange Shares, shall have been approved by the holders
of A&A's capital stock as required by the rules of the New York Stock
Exchange, Inc. and any other securities exchange on which the Common
Stock is listed.
5. Regulatory Matters. A&A shall be satisfied in its sole
discretion as to the non-applicability of the insurance holding company
and broker-controlled insurer statutes of each jurisdiction (x) in the
United States of America or any state, territory or possession thereof
and (y) each other jurisdiction wherever located which is material to
the conduct of the business conducted by it and its Subsidiaries, in
each case with respect to the purchase and holding by the Purchasers of
the Series B Stock, the Conversion Shares and the Exchange Shares
(including the receipt of such approvals or advice from regulatory
authorities with respect thereto as A&A may determine). A&A shall be
satisfied as to the applicability of foreign investment and other
similar laws or regulations of each jurisdiction outside the United
States of America where A&A or its Subsidiaries or AIG or its
Subsidiaries conduct business with respect to the purchase and holding
by the Purchasers of the Series B Stock, the Conversion Shares and the
Exchange Shares such that the application of such laws or regulations
would not in its reasonable discretion have, individually or in the
aggregate, a material adverse effect on A&A and its Subsidiaries taken
as a whole.
4. REPRESENTATIONS AND WARRANTIES OF A&A.
A&A hereby represents and warrants to each of the Purchasers that,
except as specifically disclosed in a single writing from A&A to AIG
specifically identified as such and dated the date hereof:
a. Organization, Good Standing, Power, Authority, Etc. A&A is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland. A&A has the full corporate power and authority to
execute and deliver this Agreement and each Transaction Document and to perform
its obligations under this Agreement and each Transaction Document. A&A has
taken all action required by law, its Charter, its by-laws or otherwise required
to be taken by it to authorize the execution, delivery and performance by it of
this Agreement and each Transaction Document. This Agreement is, and after the
Closing each Transaction Document will be, a valid and binding obligation of
A&A, enforceable in accordance with their respective terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
and general principles of equity and except that rights to indemnity and
contribution may be limited by federal or state securities laws or policies
underlying such laws. True and complete copies of the Charter and bylaws of A&A
as in effect on the date hereof are attached as Exhibits 5 and 6 hereto.
b. Capitalization of A&A. After giving effect to the Articles of
Amendment and the Articles Supplementary the authorized stock of A&A will at the
Closing consist of: 200,000,000 shares of Common Stock, of which at May 1, 1994,
40,766,215 shares were outstanding; 26,000,000 shares of Class A Common Stock,
of which at May 1, 1994, 2,366,690 shares were outstanding; 11,000,000 shares of
Class C Common Stock, of which at June 2, 1994, 385,594 shares were outstanding;
40,000,000 shares of Class D Common Stock, none of which will be issued and
outstanding at the Closing; and 15,000,000 shares of preferred stock, of which
(w) 2,300,000 shares have been designated as $3.625 Series A Convertible
Preferred Stock and at June 2, 1994, 2,300,000 shares were outstanding, (x)
600,000 shares have been designated as Series A Junior Participating Preferred
Stock, and at June 2, 1994 none of which were outstanding, and (y) 6,200,000
shares will be designated as Series B Stock, of which 4,000,000 shares will be
issued and outstanding at the Closing and 2,200,000 shares will be reserved for
issuance to holders of Series B Stock as dividends pursuant to the Charter and
the
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Articles Supplementary. Since May 1, 1994, the Company has only issued
shares of Common Stock and Class A Common Stock in accordance with the terms of
its employee benefit plans as in existence on May 1, 1994, in all cases in the
ordinary course of business and in a manner and in amounts consistent with past
practice. All of the shares of Series B Stock issued at the Closing or issued as
dividends pursuant to the Charter and the Articles Supplementary will be duly
authorized, validly issued, full paid and nonassessable and entitled to the
benefits of, and have the terms and conditions set forth in, the Charter and the
Articles Supplementary. The Conversion Shares will be duly authorized and will
be reserved for such issuance and, when issued in accordance with the Charter
and the Articles Supplementary, will be duly and validly issued, full paid and
nonassessable. The Exchange Shares are duly authorized and, when issued in
accordance with the Charter and the Articles Supplementary, will be duly and
validly issued, full paid and nonassessable. All outstanding shares of stock of
A&A have been duly authorized, are validly issued, full paid and nonassessable
and have been issued in compliance with applicable federal and state securities
laws. The shareholders of A&A have no preemptive or similar rights with respect
to the securities of A&A. No further approval or authority of the shareholders
or of the Board of Directors of A&A will be required for the consummation by A&A
of the transactions contemplated by this Agreement and each of the Transaction
Documents, except for the declaration of dividends on Series B Stock in Series B
Stock and such as have been obtained or made and are in full force and effect.
c. Registration Rights. Each Purchaser shall, by virtue of its purchase
of Shares hereunder, be a holder of Registrable Securities, as defined in the
Registration Rights Agreement, and be entitled to the rights of such a holder
under the Registration Rights Agreement.
d. SEC Documents. Each of the SEC Documents, as of the date of its
filing with the SEC, did not include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
e. Proxy Statement. The Proxy Statement will not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
f. Authority and Qualification of A&A. A&A has the corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the SEC Documents and as currently owned or leased and
conducted. A&A is duly qualified to transact business as a foreign corporation
and is in good standing in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of property requires such
qualification, other than any failure to be so qualified or in good standing as
would not singly or in the aggregate with all such other failures reasonably be
expected to have a material adverse effect on the assets, liabilities, results
of operations, prospects or condition (financial or otherwise) of A&A and the
Subsidiaries taken as a whole (each a "Material Adverse Effect").
g. Subsidiaries. Exhibit 21 to the Annual Report is a true, accurate and
correct statement of all of the information required to be set forth therein by
the regulations of the SEC. Each Subsidiary has been duly incorporated or
organized and is validly existing as a corporation or other legal entity in good
standing under the laws of the jurisdiction of its incorporation or formation,
has the corporate or other power and authority to own, lease and operate its
properties and to conduct its business as described in the SEC Documents and as
currently owned or leased and conducted and is duly qualified to transact
business as a foreign corporation or other legal entity and is in good standing
(if applicable) in each jurisdiction in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, other
than any failure to be so qualified or in good standing as would not singly or
in the aggregate with all such other failures reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the SEC Documents filed with the
SEC prior to the date of this Agreement, all of the outstanding capital stock of
each Subsidiary has been duly authorized and validly
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issued, is fully paid and nonassessable and is owned by A&A, directly or
through Subsidiaries (other than directors' qualifying shares), free and clear
of any mortgage, pledge, lien, security interest, restriction upon voting or
transfer, claim or encumbrance of any kind ("Encumbrance") (other than such
transfer restrictions as may exist under federal and state securities laws), and
there are no rights granted to or in favor of any third party (whether acting in
an individual, fiduciary or other capacity) other than A&A to acquire any such
capital stock, any additional capital stock or any other securities of any
Subsidiary.
h. Outstanding Securities. Except as set forth in the SEC Documents
filed with the SEC prior to the date of this Agreement and except as
contemplated by this Agreement, there are no outstanding (A) securities or
obligations of A&A convertible into or exchangeable for any capital stock of
A&A, (B) warrants, rights or options to subscribe for or purchase from A&A any
such capital stock or any such convertible or exchangeable securities or
obligations or (C) obligations of A&A to issue such shares, any such convertible
or exchangeable securities or obligations, or any such warrants, rights or
options.
i. No Contravention, Conflict, Breach, Etc. The execution, delivery and
performance of each of this Agreement and each of the Transaction Documents by
A&A and the consummation of the transactions herein and therein contemplated
will not (A) contravene any provision of the charter, by-laws or other
organization documents of it or of any of the Subsidiaries, or (B) conflict with
or result in a breach or violation of any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets or properties of it or of any of the
Subsidiaries under, any statute, rule, regulation, order or decree of any
governmental agency or body or any court having jurisdiction over it or the
Subsidiaries or any of its or their respective properties, assets or operations,
or any indenture, mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any agreement or instrument for
borrowed money or any lease, permit, license or other agreement or instrument to
which it or any of the Subsidiaries is a party or by which it or any such
Subsidiary is bound or to which any of the properties, assets or operations of
it or any such Subsidiary is subject which conflict, breach, violation, default,
creation or imposition has, or will have, individually or in the aggregate, a
Material Adverse Effect.
j. Consents. No consent, approval, authorization, order, registration,
filing or qualification of or with any (A) court or (B) government agency or
body or (C) other third party (whether acting in an individual, fiduciary or
other capacity) is required for the consummation of the transactions
contemplated by this Agreement or by any of the Transaction Documents to be
performed by A&A, except (1) such as will have been obtained and made and will
be in full force and effect as of the Closing and (2) such as may be required
under the Act and state securities laws in connection with the performance by
A&A of its obligations under the Registration Rights Agreement.
k. No Existing Violation, Default, Etc. Neither A&A nor any of the
Subsidiaries is in violation of (A) its charter, by-laws or other organization
documents or (B) any applicable law, ordinance, administrative or governmental
rule or regulation or (C) any order, decree or judgment of any court of
governmental agency or body having jurisdiction over A&A or any Subsidiary. The
properties, assets and operations of A&A and the Subsidiaries are in compliance
in all material respects with all applicable federal, state, local and foreign
laws, rules and regulations, orders, decrees, judgments, permits and licenses
relating to public and worker health and safety and to the protection and
clean-up of the natural environment and activities or conditions related
thereto, including, without limitation, those relating to the generation,
handling, disposal, transportation or release of hazardous materials
(collectively, "Environmental Laws"), other than any such failure to be in
compliance as would not singly or in the aggregate with all such other failures
reasonably be expected to have a Material Adverse Effect. With respect to such
properties, assets and operations, including any previously owned, leased or
operated properties, assets or operations, to the best knowledge of A&A, after
due inquiry, there are no past, present or reasonably anticipated future events,
conditions, circumstances, activities, practices,
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incidents, actions or plans of A&A or any of the Subsidiaries that may
interfere with or prevent compliance or continued compliance in all material
respects with applicable Environmental Laws, other than any such interference or
prevention as would not singly or in the aggregate with any such other
interference or prevention reasonably be expected to have a Material Adverse
Effect. The term "hazardous materials" shall mean those substances that are
regulated by or form the basis for liability under any applicable Environmental
Laws.
Except as set forth in SEC Documents filed with the SEC prior to the
date of this Agreement, no event of default or event that, but for the giving of
notice or the lapse of time or both, would constitute an event of default exists
or, upon the consummation by A&A of the transactions contemplated by this
Agreement or any of the Transaction Documents, will exist under any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any
lease, permit, license or other agreement or instrument to which A&A or any of
the Subsidiaries is a party or by which A&A or any such Subsidiary is bound or
to which any of the properties, assets or operations of A&A or any such
Subsidiary is subject.
l. Licenses and Permits. A&A and the Subsidiaries have such
certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate governmental agencies and bodies
("Licenses") as are necessary to own, lease or operate their properties and to
conduct their businesses in the manner described in the SEC Documents and as
currently owned or leased and conducted and all such Licenses are valid and in
full force and effect except such licenses which the failure to have or to be in
full force and effect individually or in the aggregate do not have a Material
Adverse Effect. To the best of A&A's knowledge, after due inquiry, A&A and the
Subsidiaries are in compliance in all material respects with their respective
obligations under such Licenses, with such exceptions as individually or in the
aggregate do not have a Material Adverse Effect, and no event has occurred that
allows, or after notice or lapse of time would allow, revocation or termination
of such Licenses.
m. Title to Properties. A&A and the Subsidiaries have sufficient title
to all material properties (real and personal) owned by A&A and the Subsidiaries
which are necessary for the conduct of the business of A&A and the Subsidiaries
as described in the SEC Documents and as currently conducted, free and clear of
any Encumbrance that may materially interfere with the conduct of the business
of A&A and the Subsidiaries, taken as a whole, and to the best of A&A's
knowledge, after due inquiry, all material properties held under lease by A&A or
the Subsidiaries are held under valid, subsisting and enforceable leases.
n. Environmental Matters. Neither A&A nor any of the Subsidiaries is the
subject of any federal, state, local or foreign investigation, and neither A&A
nor any of the Subsidiaries has received any notice or claim (or is aware of any
facts that would form a reasonable basis for any claim), nor entered into any
negotiations or agreements with any third party, relating to any material
liability or remedial action or potential material liability or remedial action
under Environmental Laws, nor are there any pending, reasonably anticipated or,
to the best knowledge of A&A, threatened actions, suits or proceedings against
or affecting A&A, any of the Subsidiaries or their properties, assets or
operations in connection with any such Environmental Laws.
o. Taxes. A&A and the Subsidiaries have filed all federal, and all
material state, local and foreign, tax returns which, to the best knowledge of
A&A's officers, are required to be filed, and each has paid all taxes as shown
on such returns and on assessments received by it to the extent that such taxes
and assessments have become due. United States Federal income tax returns of A&A
and its Subsidiaries have been examined and closed through the fiscal year ended
December 31, 1978. The charges, accruals and reserves on the books of A&A and
its Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of A&A, adequate.
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p. Litigation. Except as set forth in SEC Documents filed with the SEC
prior to the date of this Agreement, there are no pending actions, suits,
proceedings, arbitrations or investigations against or affecting A&A or any of
the Subsidiaries or any of their respective properties, assets or operations, or
with respect to which A&A or any of the Subsidiaries is responsible by way of
indemnity or otherwise, that are required under the Exchange Act to be described
in such SEC Documents, that questions the validity of this Agreement or any of
the Transaction Documents or any action to be taken pursuant to this Agreement
or any of the Transaction Documents, or that would singly or in the aggregate,
with all such other actions, suits, investigations or proceedings, reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
or could reasonably be expected to have a material adverse effect on the ability
of A&A to perform its obligations under this Agreement or any of the Transaction
Documents; and, to the best knowledge of A&A, after due inquiry, except as set
forth in SEC Documents filed with the SEC prior to the date of this Agreement,
no such actions, suits, proceedings or investigations are threatened or
contemplated and there is no basis for any such action, suit, proceeding or
investigation.
q. Labor Matters. No labor disturbance by the employees of A&A or any of
the Subsidiaries that has had or that is reasonably likely to have a Material
Adverse Effect exists or, to the best knowledge of A&A, after due inquiry, is
threatened.
r. Contracts. All of A&A's material contracts that are required to be
described in the SEC Documents or to be filed as exhibits thereto are described
in the SEC Documents or filed as exhibits thereto and are in full force and
effect. Neither A&A nor any of the Subsidiaries nor, to the best knowledge of
A&A, any other party is in breach of or default under any such contracts except
for such breaches and defaults as in the aggregate have not had and would not
have a Material Adverse Effect.
s. Finder's Fees. No broker, finder or other party is entitled to
receive from A&A, any of the Subsidiaries or any other person any brokerage or
finder's fee or any other fee, commission or payment as a result of the
transactions contemplated by this Agreement for which any Purchaser would have
any liability or responsibility.
t. Financial Statements. The audited consolidated financial statements
and related schedules and notes included in the SEC Documents comply in all
material respects with the requirements of the Exchange Act and the Act and the
rules and regulations of the SEC thereunder, were prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period involved and fairly present the financial condition, results of
operations, cash flows and changes in stockholders' equity of the A&A and the
Subsidiaries at the dates and for the periods presented. The unaudited quarterly
consolidated financial statements and the related notes included in the SEC
Documents present fairly the financial condition, results of operations and cash
flows of A&A and the Subsidiaries at the dates and for the periods to which they
relate, subject to year-end audit adjustments (consisting only of normal
recurring accruals), have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis except as otherwise stated
therein and have been prepared on a basis substantially consistent with that of
the audited financial statements referred to above except as otherwise stated
therein.
u. ERISA. Each Plan complies in all material respects with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended (the "Code") and all other applicable statutes
and governmental rules and regulations, and (i) no "reportable event" (within
the meaning of Section 4043 of ERISA) has occurred with respect to any Plan,
(ii) neither A&A nor any of its ERISA Affiliates has withdrawn from any Plan or
Multiemployer Plan or instituted steps to do so, and (iii) no steps have been
instituted to terminate any Plan. No condition exists or event or transaction
has occurred in connection with any Plan which could result in the incurrence by
A&A or any of its ERISA Affiliates of a material liability. No Plan, or any
trust created thereunder, has incurred any "accumulated funding deficiency" as
defined in Section 302 of ERISA,
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whether or not waived. To the best knowledge of A&A, there are no actions,
suits or claims pending or threatened (other than routine claims for
benefits) with respect to any Plan. Neither A&A nor any of its ERISA Affiliates
has incurred or reasonably expects to incur any material liability under or
pursuant to Title IV of ERISA. No prohibited transactions described in Section
406 of ERISA or Section 4975 of the Code have occurred which could result in
material liability to A&A or its Subsidiaries. Neither A&A nor any of its ERISA
Affiliates has incurred or expects to incur any "withdrawal liability" (within
the meaning of Part 1 of Subtitle E of Title IV of ERISA). Neither A&A nor any
of its ERISA Affiliates has been notified by any Multiemployer Plan that such
Multiemployer Plan is currently in reorganization or insolvency under and within
the meaning of Section 4241 or 4245 of ERISA or that such Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of ERISA. As
used herein the term "Plan" means a "pension plan", as such term is defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) established or
maintained by A&A or any of its ERISA Affiliates or as to which A&A or any of
its ERISA Affiliates has contributed or otherwise may have any liability.
"Multiemployer Plan" shall mean a "multiemployer plan", as such term is defined
in Section 4001(a)(3) of ERISA, to which A&A or any of its ERISA Affiliates is
obligated to contribute or otherwise may have any liability. "ERISA Affiliate"
means any trade or business (whether or not incorporated) which is under common
control or would be considered a single employer with A&A within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations promulgated
under those sections or within the meaning of Section 4001(b) of ERISA and the
regulations promulgated thereunder.
v. Contingent Liabilities. Except as fully reflected or reserved against
in the financial statements included in the Annual Report or the Quarterly
Report, or disclosed in the footnotes contained in such financial statements,
A&A and its Subsidiaries had no liabilities (including tax liabilities) at the
date of such financial statements, absolute or contingent, that were material
either individually or in the aggregate to A&A and its Subsidiaries taken as a
whole. Except as so reflected, reserved, or disclosed, A&A and its Subsidiaries
have no commitments which are materially adverse either individually or in the
aggregate to A&A and its Subsidiaries taken as a whole. Contingent liabilities
arising from the Share Purchase Agreement dated as of October 9, 1987 between
Sphere Drake Acquisition (U.K.) Limited and Alexander Stenhouse & Partners Ltd.,
other than (a) such liabilities arising out of sections 10.4, 10.5, or 10.6(b)
of said Agreement or (b) such liabilities as to which recourse under said
Agreement is directly or indirectly limited to a purchase price adjustment, are
not material relative to the total amount of contingent liabilities arising from
said Agreement.
w. No Material Adverse Change. Since the latest date as of which
information is given in the SEC Documents filed prior to June 5, 1994, (A) A&A
and the Subsidiaries have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any material oral or written
agreement or other transaction, that is not in the ordinary course of business
or that could reasonably be expected to result in a Material Adverse Effect; (B)
A&A and the Subsidiaries have not sustained any loss or interference with its
business or properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance) that has had or that could reasonably be
expected to have a Material Adverse Effect; (C) there has been no material
change in the indebtedness of A&A and the Subsidiaries, no change in the stock
of A&A except for the issuance of shares of Common Stock pursuant to options or
conversion rights in existence at the date of this Agreement, and no dividend or
distribution of any kind declared, paid or made by A&A on any class of its
stock, except for regular quarterly dividends of not more than $0.90625 per
share of $3.625 Series A Convertible Preferred Stock and of not more than $0.025
per share of Common Stock, Class A Common Stock and Class C Common Stock (or the
equivalent in foreign currency); and (D) there has been no event causing a
Material Adverse Effect, nor any development that could, singly or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
x. Investment Company. A&A is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
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y. Exemption from Registration; Restrictions on Offer and Sale of Same
or Similar Securities. Assuming the representations and warranties of the
Purchasers set forth in Section 5.c hereof are true and correct in all material
respects, the offer and sale of the Shares made pursuant to this Agreement will
be exempt from the registration requirements of the Act. Neither A&A nor any
person acting on its behalf has, in connection with the offering of the Shares,
engaged in (A) any form of general solicitation or general advertising (as those
terms are used within the meaning of Rule 502(c) under the Act), (B) any action
involving a public offering within the meaning of Section 4(2) of the Act, or
(C) any action which would require the registration of the offering and sale of
the Shares pursuant to this Agreement under the Act or which would violate
applicable state securities or "blue sky" laws. A&A has not made and will not
make, directly or indirectly, any offer or sale of Shares or of securities of
the same or a similar class as the Shares if as a result the offer and sale of
Shares contemplated hereby could fail to be entitled to exemption from the
registration requirements of the Act. As used herein, the terms "offer" and
"sale" have the meanings specified in Section 2(3) of the Act.
z. Use of Proceeds. The net proceeds of the sale of the Shares will be
used by A&A and its Subsidiaries for general corporate purposes. A&A intends
that such net proceeds will be used for investment in the continuing businesses
of A&A and the Subsidiaries and to fund the insurance or reinsurance arrangement
referred to in Section 3.a.8.
5. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to A&A that:
a. Organization, Good Standing, Power, Authority, Etc. Such Purchaser
has the full power and authority to execute and deliver this Agreement and the
Registration Rights Agreement (to the extent that it is a party thereto), and to
perform its obligations under this Agreement and the Registration Rights
Agreement. Such Purchaser has taken all action required by law, its charter, its
by-laws or otherwise required to be taken by it to authorize the execution and
delivery of this Agreement and the Registration Rights Agreement (to the extent
that it is a party thereto) and the consummation of the transactions
contemplated to be performed by it hereby and thereby. Each of this Agreement
and the Registration Rights Agreement (to the extent that it is a party thereto)
is a valid and binding agreement of such Purchaser, enforceable in accordance
with their respective terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and general principles of
equity and except to the extent that rights to indemnity and contribution may be
limited by federal or state securities laws or policies underlying such laws.
b. No Conflicts; No Consents. Neither the execution and delivery of this
Agreement and the Registration Rights Agreement (to the extent that it is a
party thereto) nor the consummation by such Purchaser of the purchase
contemplated hereby will (i) conflict with, or result in a breach of, any
provision of its charter or by-laws or (ii) violate any statute or law or any
judgment, order, writ, injunction, decree, rule or regulation applicable to the
Purchaser and/or any of its subsidiaries. No consent, authorization or approval
of, or declaration, filing or registration with, or exemption by, any
governmental or regulatory authority is required in connection with the
execution and delivery of, and the performance by such Purchaser of its
obligations under, this Agreement or the Registration Rights Agreement or the
consummation by such Purchaser of the transactions to be performed by it as
contemplated hereby and thereby.
c. Investment Intent, Etc. Such Purchaser (i) has such knowledge,
sophistication and experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Shares, (ii)
fully understands the nature, scope and duration of the limitations on transfer
contained in this Agreement, (iii) can bear the economic risk of an investment
in the Shares and can afford a complete loss of such investment, and (iv) is
purchasing the Shares for investment and not with a view to, or for a sale in
connection with, any public distribution in violation of the Act. Such Purchaser
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acknowledges (x) receipt of the SEC Documents filed with the SEC prior to the
date of this Agreement and (y) that such Purchaser has been afforded the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of A&A concerning the merits and risks of
investing in the Shares, and to obtain such additional information that A&A
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy and completeness of the information contained
in such SEC Documents.
6. COVENANTS OF THE PARTIES.
a. Restrictive Legends. Each Purchaser represents and warrants to and
agrees with A&A that such Purchaser will not dispose of any of such Purchaser's
shares of Series B Stock, Conversion Shares or Exchange Shares (unless, with
respect to such Conversion Shares or Exchange Shares, such Conversion Shares or
Exchange Shares were previously issued pursuant to an effective registration
statement under the Act) except pursuant to (i) an effective registration
statement under the Act or (ii) an applicable exemption from registration under
the Act. In connection with any sale by a Purchaser pursuant to clause (ii) of
the preceding sentence, such Purchaser shall furnish to A&A an opinion of
counsel reasonably satisfactory to A&A to the effect that such exemption from
registration is available in connection with such sale.
b. Certificates for Shares and Conversion Shares To Bear Legends. (A) So
long as the Series B Stock is Registrable Securities, they shall be subject to a
stop-transfer order and the certificate or certificates therefor shall bear the
following legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SECURITIES
ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO ALEXANDER & ALEXANDER SERVICES INC. TO THE
EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION
WITH SUCH SALE. IN ADDITION, THE VOTING, SALE, ASSIGNMENT, TRANSFER,
PLEDGE OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
FURTHER SUBJECT TO RESTRICTIONS WHICH ARE CONTAINED IN THE CHARTER, AS
AMENDED, OF ALEXANDER & ALEXANDER SERVICES INC., IN THE ARTICLES
SUPPLEMENTARY GOVERNING THESE SHARES AND IN A STOCK PURCHASE AND SALE
AGREEMENT DATED AS OF JUNE 6, 1994, A COPY OF EACH OF WHICH IS ON FILE
WITH ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE FURNISHED BY THE
CORPORATION TO THE STOCKHOLDER ON REQUEST AND WITHOUT CHARGE."
(B) So long as the Conversion Shares are Registrable Securities, they
shall, unless previously issued pursuant to an effective registration statement
under the Act, be subject to a stop-transfer order and the certificate or
certificates representing any such Conversion Shares shall bear the following
legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES OR
OTHER SECURITIES ISSUABLE UPON EXCHANGE HEREOF MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN
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OPINION OF COUNSEL REASONABLY SATISFACTORY TO ALEXANDER &
ALEXANDER SERVICES INC. TO THE EFFECT THAT SUCH EXEMPTION FROM
REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE. IN ADDITION, THE
VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE OR HYPOTHECATION OF THE
SHARES REPRESENTED BY THIS CERTIFICATE IS FURTHER SUBJECT TO
RESTRICTIONS WHICH ARE CONTAINED IN THE CHARTER, AS AMENDED, OF
ALEXANDER & ALEXANDER SERVICES INC. AND IN A STOCK PURCHASE AND SALE
AGREEMENT DATED AS OF JUNE 6, 1994, A COPY OF EACH OF WHICH IS ON FILE
WITH ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE FURNISHED BY THE
CORPORATION TO THE STOCKHOLDER ON REQUEST AND WITHOUT CHARGE."
(C) So long as the Exchange Shares are Registrable Securities, they
shall, unless previously issued pursuant to an effective registration statement
under the Act, be subject to a stop-transfer order and the certificate or
certificates representing any such Exchange Shares shall bear the following
legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO ALEXANDER & ALEXANDER SERVICES INC. TO THE
EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION
WITH SUCH SALE. IN ADDITION, THE VOTING, SALE, ASSIGNMENT, TRANSFER,
PLEDGE OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
FURTHER SUBJECT TO RESTRICTIONS WHICH ARE CONTAINED IN A STOCK PURCHASE
AND SALE AGREEMENT DATED AS OF JUNE 6, 1994, A COPY OF EACH OF WHICH IS
ON FILE WITH ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE FURNISHED
BY THE CORPORATION TO THE STOCKHOLDER ON REQUEST AND WITHOUT CHARGE."
c. Removal of Legends. After termination of the requirement that all or
part of such legend be placed upon a certificate, A&A shall, upon receipt by A&A
of evidence reasonably satisfactory to it that such requirement has terminated
and upon the written request of the holders of Series B Stock, Conversion Shares
or Exchange Shares, issue certificates for the Shares, Conversion Shares or
Exchange Shares, as the case may be, that do not bear such legend.
d. Pre-Closing Activities. From and after the date of this Agreement
until the Closing, each of A&A and AIG shall act with good faith towards, and
shall use its best efforts to consummate, the transactions contemplated by this
Agreement, and neither A&A nor AIG will take any action that would prohibit or
impair its ability to consummate the transactions contemplated by this
Agreement.
e. Information. So long as any of the Series B Stock, the Exchange
Shares or the Conversion Shares are outstanding, A&A shall file with the SEC the
annual reports and quarterly reports and the information, documents and other
reports that are required to be filed with the SEC pursuant to Sections 13 and
15 of the Exchange Act, whether or not A&A has or is required to have a class of
securities registered under the Exchange Act and whether or not A&A is then
subject to the reporting requirements of the Exchange Act, at the time A&A is or
would be required to file the same with the SEC and, promptly after A&A is or
would be required to file such reports, information or documents with the SEC,
to mail copies of such reports, information and documents to the holders of the
Series B Stock, the Exchange Shares and the Conversion Shares at their addresses
set forth in the register of Shares and Conversion Shares maintained by the
transfer agent therefor.
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f. Restriction on Issuance of Stock. So long as any shares of Series B
Stock or any Conversion Shares are outstanding, A&A shall not issue, except upon
conversion of Series B Stock or in connection with a stock split, stock
combination or dividend with respect to Class D Common Stock, shares of Class D
Common Stock.
g. Restriction on Amendments to By-Laws. A&A shall not amend its by-laws
so as to affect the exemption contained therein from Subtitle 7 of Title 3 of
the Maryland General Corporation Law.
h. Stockholders Meeting. A&A shall, as promptly as practical, call a
meeting of the holders of its voting stock, shall recommend, and shall use its
best efforts (including the preparation and circulation of the Proxy Statement)
to obtain, the approval of such holders for the transactions contemplated by
this Agreement. The Proxy Statement shall not be filed, and no amendment or
supplement to the Proxy Statement shall be made, without consultation with AIG.
A&A shall notify AIG promptly of the receipt by it of any comments from the SEC
or its staff and of any request by the SEC for amendments or supplements to the
Proxy Statement and shall supply AIG with copies of all correspondence between
it and its representatives, on the one hand, and the SEC or the members of its
staff, on the other hand, with respect to the Proxy Statement.
i. Hart-Scott-Rodino. To the extent applicable, A&A and AIG shall make
all filings and furnish all information required with respect to the
transactions contemplated by this Agreement by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and shall use their best efforts to obtain the early
termination of the waiting period thereunder, provided that neither A&A nor AIG
shall be required to agree to dispose of or hold separate any portion of its
business or assets.
j. Acquisition Proposals. Prior to the Closing, A&A agrees that neither
A&A nor any of the Subsidiaries nor any of the respective officers and directors
of A&A or any of the Subsidiaries shall, and A&A shall direct and use its best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by A&A or any
of the Subsidiaries) not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to stockholders of A&A) with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any substantial portion of the assets or any equity securities of, A&A or
any of the Subsidiaries (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate directly
or indirectly any effort or attempt to make or implement an Acquisition
Proposal. Notwithstanding the foregoing, A&A shall be entitled to sell or
otherwise dispose of assets to the extent previously disclosed to the Purchaser
in writing. A&A will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. A&A will take the necessary steps to
inform the individuals or entities referred to in the first sentence hereof of
the obligations undertaken in this subsection j. A&A will notify AIG immediately
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with AIG. Nothing contained in this Agreement shall
prohibit A&A and its directors from making to the stockholders any
recommendation and related filing with the SEC, as required by Rules 14e-2 and
14d-9 under the Exchange Act, with respect to any tender offer, or from
informing the stockholders of A&A in the proxy materials with respect to the
meeting of stockholders called to consider the transactions contemplated by this
Agreement of information that is material to the vote with respect to such
transactions, or from changing or withdrawing the recommendation of the
directors with respect to such transactions if the directors conclude that such
change or withdrawal is required by their fiduciary duties (as determined in
good faith by the Board of Directors of A&A upon the advice of counsel).
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k. Access. Upon reasonable notice, A&A shall (and shall cause each of
the Subsidiaries to) afford AIG's officers, employees, counsel, accountants and
other authorized representatives ("Representatives") reasonable access during
normal business hours before the Closing to its properties, books, contracts and
records and personnel and advisers (who will be instructed by A&A to cooperate)
and A&A shall (and shall cause each of the Subsidiaries to) furnish promptly to
AIG all information concerning its business, properties and personnel as AIG or
its Representatives may reasonably request, provided that any review will be
conducted in a way that will not interfere unreasonably with the conduct of
A&A's business, and provided, further, that no review pursuant to this
Subsection k shall affect or be deemed to modify any representation or warranty
made by A&A. AIG will keep all information and documents obtained pursuant to
this Subsection k on a confidential basis subject to the confidentiality
provisions contained in paragraphs 1, 2, 3, 4 and 9 of the Confidentiality
Agreement dated May 6, 1994 between A&A and AIG.
l. Publicity. A&A and the Purchaser will consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by obligations pursuant to any listing agreement with
any securities exchange.
m. Certain Special Events. Notwithstanding anything in the Articles
Supplementary to the contrary, so long as any Series B Stock is outstanding
neither A&A nor any of its Subsidiaries shall declare, pay or make any dividend
or distribution or commence a tender or exchange offer for A&A securities that
are subordinate to or pari passu with the Series B Stock as to liquidation
preference or dividends or be a party to any transaction (including without
limitation any recapitalization or reclassification of stock), any consolidation
of A&A or any such Subsidiary with, or merger of A&A or any such Subsidiary
into, or share exchange with, any other person, any merger of any other person
into A&A or any such Subsidiary or any sale or transfer of assets which, in any
such case, would constitute a Special Event (as such term is defined in the
Articles Supplementary) unless after giving effect thereto A&A would have the
ability and the right (and the Board of Directors of A&A, including a majority
of the Directors of A&A who are not officers or employees of A&A or any of its
subsidiaries, shall have adopted a resolution confirming such ability and right)
to purchase at the then applicable price specified in Section 7 of the Articles
Supplementary all of the then issued and outstanding Series B Stock, assuming
all such stock is tendered to it for purchase pursuant to such Section 7.
n. Reservation of Shares. A&A shall at all times reserve and keep
available, out of its authorized and unissued stock, solely for the purpose of
effecting the exchange of Class D Common Stock or conversion of Series B Stock,
such number of shares of its Common Stock or Class D Common Stock, as the case
may be, free of preemptive rights as shall from time to time be sufficient to
effect the exchange of all shares of Class D Common Stock or conversion of
Series B Stock from time to time.
o. Adjustment Payments. (i) If, at any time or from time to time, there
is a Tax Amount, then A&A shall pay, as an adjustment to the purchase price, to
AIG in cash in immediately available funds an amount equal to AIG's Pro Rata
Share of such Tax Amount.
"Tax Amount" shall mean the excess, if any, of (x) all reserves,
accruals or payments by or on behalf of A&A or any of its Subsidiaries (without
duplication) on account of liabilities, expenses, penalties, fines or interest
with respect to any income or other tax (foreign, federal, state or local) with
respect to any period ending on or prior to March 31, 1994 over (y) the stated
amount of A&A's tax reserve as specifically set forth on its consolidated
balance sheet at March 31, 1994 set forth in its Quarterly Report on Form 10-Q
for the three months ended March 31, 1994 filed by A&A with the Securities and
Exchange Commission in May, 1994 (the "March 31, 1994 Balance Sheet").
"AIG Pro Rata Share" shall mean, as of any date of determination, a
fraction equal to the number of shares of Common Stock then owned, on a fully
diluted basis, as of such date, by the AIG Group over
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the outstanding number of shares of Common Stock as of such date, giving effect
to the conversion or exchange of all securities held by the AIG Group into
Common Stock.
(ii) A&A shall within 90 days after the end of its fiscal year December
31, 1994 furnish to AIG a certification (the "AIG Certification") signed by each
of its chief executive officer, chief financial officer and principal accounting
officer certifying (A) whether there were any liabilities as of March 31, 1994
(1) which were not set forth on the March 31, 1994 Balance Sheet or, (2) which
are in an amount in excess of the amount stated therefor on the March 31, 1994
Balance Sheet or (3) as to which the full amount of such liability is not then
determinable (specifying, in each case, as to type, determinability and amount);
and (B) whether there were any assets set forth on the March 31, 1994 Balance
Sheet the ultimate realizable value of which is less than the of the carrying
value of such assets at such date (specifying, in each case, as to type and
amount.)
A&A shall cause to be delivered with the AIG Certification a report of
its certified public accountants as to A&A's compliance with the immediately
preceding paragraph.
A liability shall be deemed to be in an amount in excess of the amount
set forth in the March 31, 1994 Balance Sheet or an asset shall be deemed to
have a carrying value below the amount set forth in such Balance Sheet based
upon all facts or circumstances in existence on or prior to March 31, 1994,
whether or not then known by A&A or any of its Subsidiaries and whether or not,
under generally accepted accounting principles, such liabilities or assets were,
as of March 31, 1994 or as of the date of such AIG Certification, correctly
stated or a reserve would have been required. Assets shall be carried at the
lower of stated book value or realizable value, and liabilities shall be stated
without discount.
If an adjustment is made to any balance sheet subsequent to the March
31, 1994 Balance Sheet based upon any of the matters referred to in the AIG
Certification or if a liability set forth in the AIG Certification is paid
("Other Adjustments"), then A&A shall within five business days of the making of
each such Other Adjustment pay to AIG, as an adjustment to the purchase price,
an amount in cash in immediately available funds equal to AIG's Pro Rata Share
of each such Other Adjustment.
This section (ii) shall not apply (x) to the matters covered by clause
(i) and (y) to the matters set forth in a single letter agreement between us
identified as relating to this provision:
(iii) A&A shall not be required to make duplicate payments to the extent
that a payment is made as a result of a reserve, accrual or balance sheet
adjustment and the related liability is latter paid, or with respect to the same
Tax Amount.
AIG's rights under this Section 6.o. are not assignable and shall not
limit in any way any of AIG's other rights or remedies under this Agreement or
otherwise.
As long as any member of the AIG Group owns any shares of Common Stock,
on a fully diluted basis, then within 30 days of the end of each fiscal quarter
(other than the final fiscal quarters of each year), and within 90 days of the
final fiscal quarter of each fiscal year and with respect to the period from
March 31, 1994 to December 31, 1994 (the "First Period"), A&A shall deliver to
AIG a certificate signed by its chief financial officer and principal accounting
officer as to any Tax Amounts and Other Adjustments in such fiscal quarter (or
the First Period).
7. STANDSTILL.
a. AIG hereby agrees that during the Standstill Period (hereinafter
defined) it will not, nor will it permit any of its Affiliates (AIG together
with its Affiliates being hereinafter referred to as the "AIG Group") to,
directly or indirectly, unless in any such case specifically requested in
advance to do so by the Board of Directors of A&A:
(i) acquire, offer to acquire, or agree to acquire by purchase,
by joining a partnership, limited partnership, syndicate or other
"group" (as such term is used in Section 13(d)(3) of the Exchange Act,
hereinafter referred to as "13D Group"), any securities of A&A entitled
to vote generally in
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the election of directors, or securities convertible into or
exercisable or exchangeable for such securities (collectively,
"Restricted Securities") or any material portion of the assets or
businesses of A&A and its Subsidiaries; provided, however, that nothing
contained herein shall prohibit any member of the AIG Group from
acquiring any Restricted Securities (w) upon conversion of convertible
securities of A&A currently owned by the AIG Group or acquired pursuant
to this Agreement or upon the exchange of Conversion Shares for Common
Stock of A&A as contemplated and permitted by the Charter and Articles
Supplementary, (x) as a result of a stock split, stock dividend or
similar recapitalization by A&A, (y) upon the execution of unsolicited
buy orders by any member of the AIG Group which is a registered
broker-dealer for the bona fide accounts of its brokerage customers
unaffiliated and not acting in concert with any member of the AIG Group,
or (z) pursuant to the exercise of any warrant, option or other right to
acquire Restricted Securities ("Rights"), which it receives directly
from A&A pursuant to a distribution to stockholders or from acquiring
such Rights directly from A&A; and provided, further, that if during the
Standstill Period, as a result of a business combination transaction
between A&A or an affiliate of A&A and any other entity which is not an
affiliate of any member of the AIG Group (an "Other Entity"), any one or
more members of the AIG Group shall acquire beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of Restricted Securities
in such business combination, such members may continue to own
beneficially such Restricted Securities so acquired by such members and
such Restricted Securities shall continue to be subject to the
provisions of this Section;
(ii) participate in, or encourage, the formation of any 13D
Group which owns or seeks to acquire beneficial ownership of, or
otherwise acts in respect of, Restricted Securities;
(iii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined
or used in Regulation 14A under the Exchange Act) or become a
"participant" in any "election contest" (as such terms are defined or
used in Rule 14a-11 under the Exchange Act) with respect to A&A, or
initiate, propose or otherwise solicit stockholders for the approval of
one or more stockholder proposals with respect to A&A or induce or
attempt to induce any other person to initiate any stockholder proposal,
provided, however, that the limitation contained in this clause (iii)
shall not apply to any matter to be voted on by A&A's stockholders that
is not initiated or proposed by any member of the AIG Group or any
affiliate thereof;
(iv) call or seek to have called any meeting of the stockholders
of A&A; or
(v) otherwise act, directly or indirectly, alone or in concert
with others, to seek to control the management, Board of Directors,
policies or affairs of A&A, or solicit, propose, seek to effect or
negotiate with A&A or any other person with respect to any form of
business combination transaction with A&A or any affiliate thereof
(other than an Other Entity with respect to which any member of the AIG
Group or any affiliate thereof shall have filed a Schedule 13D with the
SEC with respect to any class of equity securities of such Other Entity
prior to the public announcement of A&A's intent to consummate a
business transaction with such Other Entity), or any restructuring,
recapitalization or similar transaction with respect to A&A or any
affiliate thereof (except as aforesaid), or solicit, make or propose or
encourage or negotiate with any other person with respect to, or
announce an intent to make, any tender offer or exchange offer for any
Restricted Securities (other than an exchange of Conversion Shares for
Common Stock of A&A as contemplated by the Charter and Articles
Supplementary) or disclose an intent, purpose, plan or proposal with
respect to A&A or any Restricted Securities inconsistent with the
provisions of this Section, including an intent, purpose, plan or
proposal that is conditioned on or would require A&A to waive the
benefit of, or amend, any provisions of this Section, or assist,
participate in, facilitate, encourage or solicit any effort or attempt
by any person to do or seek to do any of the foregoing.
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b. Nothing in this Section 7 shall preclude members of the AIG Group,
(i) from exercising the voting and other rights granted to the Purchasers
pursuant to this Agreement, the Registration Rights Agreement, the Rights
Agreement, the Charter and the Articles Supplementary or (ii) in the case of any
proposed merger, sale of assets or similar transaction which under the Charter
and Articles Supplementary requires a vote of the holders of Restricted
Securities and has been approved or recommended by the Board of Directors of
A&A, or in the case of a tender or exchange offer made without encouragement by
or the participation of AIG or any of its affiliates (if the Board of Directors
of A&A shall have (A) recommended approval of such tender or exchange offer, (B)
not recommended, within 10 business days after the commencement of such tender
or exchange offer, that shareholders reject such tender or exchange offer, or
(C) amended the Rights Agreement or otherwise acted to permit or in any way
facilitate acquisition of shares under such tender or exchange offer), from
making an offer to the Board of Directors of A&A, in respect of such
transaction, upon terms more favorable to A&A or its stockholders than those of
the other transaction, as proposed.
c. As used herein, the term "Standstill Period" shall mean the period
from the date of this Agreement until the earlier to occur of:
(i) the date which is the eighth anniversary of the Closing
Date; or
(ii) the designation of any date as the termination date of the
Standstill Period by a majority of the directors of A&A at a duly
convened meeting thereof or by all of the directors of A&A by written
consent; or
(iii) A&A's material breach of any of its obligations contained
in the Registration Rights Agreement; or
(iv) default in the payment of principal or interest after the
expiration of any grace periods applicable thereto with respect to
indebtedness of A&A and its Subsidiaries for money borrowed in the
aggregate amount of $15,000,000 or more; or
(v) A&A or any of its Subsidiaries shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"), which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse Effect; or an involuntary case is
commenced against A&A or any of its Subsidiaries and the petition not
controverted within 10 days, or is not dismissed within 60 days after
commencement of the case, which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse Effect; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of A&A or any of its Subsidiaries,
which, in the case of a Subsidiary of A&A, has had or would have a
Material Adverse Effect; or A&A or any of its Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, rehabilitation, dissolution, insolvency or
liquidation or similar law of any jurisdiction, whether now or hereafter
in effect, relating to A&A or such Subsidiary, or there is commenced
against A&A or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 days, which, in the case of a Subsidiary
of A&A, has had or would have a Material Adverse Effect; or A&A or any
of its Subsidiaries is adjudicated insolvent or bankrupt, which, in the
case of a Subsidiary of A&A, has had or would have a Material Adverse
Effect; or any order of relief or other order approving any such case or
proceeding is entered, which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse Effect; or A&A or any of the
Subsidiaries suffers any appointment of any custodian or the like for it
or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days, which, in the case of a Subsidiary of
A&A, has had or would have a Material Adverse Effect; or A&A or any of
its Subsidiaries makes a general assignment for the benefit of
creditors, which, in the case of a Subsidiary of A&A, has had or would
have a Material Adverse Effect; or A&A shall fail to pay, or shall state
that it is unable to pay, or shall be unable to pay, its debts,
generally as they become due, which, in the case of a Subsidiary of A&A,
has had or
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would have a Material Adverse Effect; or A&A or any of its
Subsidiaries shall call a meeting of its creditors with a view to
arranging a composition or adjustment of its debts, which, in the case
of a Subsidiary of A&A, has had or would have a Material Adverse Effect;
or A&A or any of its Subsidiaries shall by any act or failure to act
indicate its consent to, approval of or acquiescence in any of the
foregoing, which, in the case of a Subsidiary of A&A, has had or would
have a Material Adverse Effect; or any corporate action is taken by A&A
or any of its Subsidiaries for the purpose of effecting any of the
foregoing, which, in the case of a Subsidiary of A&A, has had or would
have a Material Adverse Effect; or
(vi) without encouragement by or the participation of AIG or any
of its Affiliates, the acquisition by any person or 13D Group (other
than members of the AIG Group or Affiliates thereof) of, the
commencement of a tender offer by such person or 13D Group for, or the
public announcement of an intention to acquire, Restricted Securities
which, if added to the Restricted Securities (if any) already owned by
such person or 13D Group, would represent thirty-five percent (35%) or
more of the total voting power (including rights to acquire voting
power) of A&A's Restricted Securities, or the receipt by such person or
13D Group of A&A's agreement or consent to make such acquisition;
provided that such a public announcement or commencement of a tender
offer shall end the Standstill Period only if such person or 13D Group
shall have received A&A's agreement or consent to make such intended
acquisition, and such a tender offer shall terminate the Standstill
Period only if and when the Board of Directors of A&A shall have (A)
recommended approval of such tender offer, (B) not recommended, within
10 business days after the commencement of such tender offer, that
shareholders reject such tender offer, or (C) amended the Rights
Agreement to permit acquisition of shares under such tender offer; or
(vii) the date this Agreement is terminated in accordance with
Section 8 hereof.
8. Termination. Except for the obligations in Section 12.b, this
Agreement and the transactions contemplated hereby shall terminate without any
action by the parties hereto if the Closing shall not have occurred on or before
October 31, 1994 and may be terminated at any time prior to the Closing (i) by a
written instrument executed and delivered by A&A and AIG; (ii) by AIG upon any
material breach or default by A&A under this Agreement; or (iii) by A&A upon any
material breach or default by AIG under this Agreement.
9. Survival of Representations and Warranties. All representations and
warranties contained in this Agreement shall survive the execution and delivery
of this Agreement and the delivery of the Shares for a period of three years
from the date of such delivery and any examination or investigation made by any
party to this Agreement or any of their successors and assigns.
10. Performance; Waiver. The provisions of this Agreement (including
this Section 10) may be modified or amended, and waivers and consents to the
performance and observance of the terms hereof may be given by written
instrument executed and delivered by A&A and(1) prior to the Closing, by AIG and
(2) after the Closing by the holder or holders of a majority of the Conversion
Shares, with the holders of the Series B Stock for this purpose being deemed to
be the holders of that number of Conversion Shares into which the Series B Stock
of each holder are convertible. The failure at any time to require performance
of any provision hereof shall in no way affect the full right to require such
performance at any time thereafter (unless performance thereof has been waived
in accordance with the terms hereof for all purposes and at all times by the
parties to whom the benefit of such performance is to be rendered). The waiver
by any party to this Agreement of a breach of any provision hereof shall not be
taken or held to be a waiver of any succeeding breach of such provision or any
other provision or as a waiver of the provision itself.
11. Successors and Assigns. All covenants and agreements contained in
this Agreement by or on behalf of the parties hereto shall bind, and inure the
benefit of, the respective successors and assigns of the parties hereto;
provided, however, that the rights granted to the parties hereto may not be
assigned
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(except to wholly-owned subsidiaries of such parties) without the prior written
consent of the other parties. AIG may assign to one or more of its wholly-owned
subsidiaries its obligations as Purchaser hereunder in whole or in part, but
shall not be relieved of such obligations.
12. Miscellaneous.
a. Notices. All notices or other communications given or made hereunder
shall be validly given or made if in writing and delivered by facsimile
transmission or in person at, or mailed by registered or certified mail, return
receipt requested, postage prepaid, to, the following addresses (and shall be
deemed effective at the time of receipt thereof).
If to A&A:
Alexander & Alexander Services Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: Ronald J. Roessler, Esq.
Senior Vice President and
General Counsel
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Meredith M. Brown, Esq.
If to AIG or any other Purchaser in care of AIG:
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attention: Wayland M. Mead, Esq.
Acting General Counsel
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Immanuel Kohn, Esq.
or to such other address as the party to whom notice is to be given may have
previously furnished notice in writing to the other in the manner set forth
above.
b. Expenses. Whether or not the Shares are sold or this Agreement is
terminated, A&A agrees to pay all reasonable expenses (including reasonable
attorneys fees and expenses) incurred by the Purchasers in connection with the
transactions contemplated by this Agreement.
c. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE STATE AND FEDERAL COURTS IN THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
d. Severability; Interpretation. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, each of A&A and AIG directs that such court
interpret and apply the remainder of this Agreement in the manner which it
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60
determines most closely effectuates their intent in entering into this
Agreement, and in doing so particularly take into account the relative
importance of the term, provision, covenant or restriction being held invalid,
void or unenforceable.
e. Headings. The index and section headings herein are for convenience
only and shall not affect the construction hereof.
f. Entire Agreement. This Agreement embodies the entire agreement
between the parties relating to the subject matter hereof and any and all prior
oral or written agreements, representations or warranties, contracts,
understandings, correspondence, conversations, and memoranda, whether written or
oral, between A&A and AIG, or between or among any agents, representatives,
parents, subsidiaries, affiliates, predecessors in interest or successors in
interest, with respect to the subject matter hereof (including without
limitation the Confidentiality Agreement between A&A and AIG dated May 6, 1994),
are merged herein and replaced hereby, except that paragraphs 1, 2, 3, 4, 8 and
9 of such Confidentiality Agreement shall survive to the extent provided in
Section 6.k hereof and paragraph 5 of such Confidentiality Agreement shall
survive until the Closing Date.
g. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/ ROBERT E. BONI
------------------------------
Name: Robert E. Boni
Title: Chairman
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ EDWARD E. MATTHEWS
------------------------------
Name: Edward E. Matthews
Title: Vice Chairman--Finance
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61
EXHIBIT 1 TO
STOCK PURCHASE
AND SALE AGREEMENT
[See Appendix II to Proxy Statement]
62
EXHIBIT 2 TO
STOCK PURCHASE
AND SALE AGREEMENT
[See Appendix III to Proxy Statement]
63
EXHIBIT 3 TO
STOCK PURCHASE
AND SALE AGREEMENT
-----------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
-----------------------------------------------------------------
DATED AS OF , 1994
BY AND AMONG
ALEXANDER & ALEXANDER SERVICES INC.
AND
THE PURCHASERS WHO ARE SIGNATORIES HERETO
64
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS.................................................................................... 1
SECTION 2. REGISTRATION RIGHTS............................................................................ 3
2.1 Demand Registration Rights.......................................................... 3
2.2 Incidental Registration............................................................. 4
2.3 Supplements and Amendments.......................................................... 5
2.4 Restrictions on Public Sale by the Company and Others............................... 5
2.5 Underwritten Registrations.......................................................... 6
2.6 Registration Procedures............................................................. 6
2.7 Registration Expenses............................................................... 11
2.8 Rule 144............................................................................ 12
SECTION 3.
INDEMNIFICATION................................................................................ 12
3.1 Indemnification by the Company...................................................... 12
3.2 Indemnification by Holder of Registrable Securities................................. 13
3.3 Conduct of Indemnification Proceeding............................................... 13
3.4 Contribution........................................................................ 13
3.5 Other Indemnities................................................................... 14
SECTION 4.
MISCELLANEOUS.................................................................................. 14
4.1 Remedies............................................................................ 14
4.2 No Inconsistent Agreements.......................................................... 14
4.3 Amendments and Waivers.............................................................. 14
4.4 Notices............................................................................. 15
4.5 Successors and Assigns.............................................................. 15
4.6 Counterparts........................................................................ 15
4.7 Headings............................................................................ 15
4.8 Governing Law....................................................................... 15
4.9 Severability........................................................................ 15
4.10 Entire Agreement.................................................................... 16
4.11 Attorneys' Fees..................................................................... 16
4.12 Securities Held by the Company or Its Subsidiaries.................................. 16
Signature Pages.................................................................................................. S-1
i
65
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of ,
1994, by and among ALEXANDER & ALEXANDER SERVICES INC., a Maryland corporation
(or any successor, the "Company"), and the purchasers whose signatures appear
on the execution pages of this Agreement (each a "Purchaser" and collectively,
the "Purchasers").
This Agreement is entered into in connection with the Stock Purchase and
Sale Agreement, dated as of June 6, 1994, among the Company and American
International Group, Inc. (the "Purchase Agreement"), relating to the issuance
and sale by the Company of an aggregate of 4,000,000 shares of the Company's 8%
Series B Cumulative Convertible Preferred Stock, par value $1.00 per share
(together with additional shares of such Preferred Stock issued as dividends
thereon, the "Preferred Stock"). In order to induce the purchaser party thereto
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement for the equal benefit of each of
the Purchasers and their direct and indirect transferees. The execution and
delivery of this Agreement is a condition to each Purchaser's obligation to
purchase the Preferred Stock under the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" has the meaning set forth in the last paragraph of
Section 2.6.
"Affiliate" means, when used with reference to any Person, any
other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the referent Person or such
other Person, as the case may be, or any Person who beneficially owns,
directly or indirectly, 5% or more of the equity interests of such
Person or warrants, options or other rights to acquire or hold more than
5% of any class of equity interests of such Person. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct or cause the direction of management or
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"affiliated", "controlling" and "controlled" have meanings correlative
to the foregoing.
"Agreement" has the meaning set forth in the first paragraph of
this Agreement.
"Articles Supplementary" means the Articles Supplementary of the
Company classifying the Preferred Stock filed by the Company with the
State Department of Assessments and Taxation of the State of Maryland on
, 1994, which Articles Supplementary is substantially in the
form of Exhibit 2 to the Purchase Agreement.
"Charter" means the Articles of Restatement of the Company as
filed with the State Department of Assessments and Taxation of the State
of Maryland as amended through the date hereof.
"Class D Common Stock" means the Class D Common Stock, par value
$1.00 per share, of the Company.
"Company" has the meaning set forth in the first paragraph of
this Agreement.
"Conversion Shares" means the shares of Class D Common Stock
issuable or issued upon conversion of the Preferred Stock pursuant to
the terms of the Purchase Agreement and the Articles Supplementary.
66
"DTC" has the meaning set forth in Section 2.6(i) of this
Agreement.
"Effectiveness Date" has the meaning set forth in Section 2.1(a)
of this Agreement.
"Effectiveness Period" has the meaning set forth in Section
2.1(a) of this Agreement.
"Exchange Act" has the meaning set forth in Section 2.6(a) of
this Agreement.
"Exchange Shares" means the shares of Common Stock, par value
$1.00 per share, of the Company issuable or issued (x) in exchange for
the Class D Common Stock pursuant to the terms of the Purchase Agreement
and the Charter or (y) upon conversion of the Preferred Stock pursuant
to the terms of the Purchase Agreement and the Articles Supplementary.
"Filing Date" has the meaning set forth in Section 2.1(a) of
this Agreement.
"Holder" means any holder of a Registrable Security.
"Incidental Registration" has the meaning set forth in Section
2.2(a) of this Agreement.
"Inspectors" has the meaning set forth in Section 2.6(n) of this
Agreement.
"NASD" has the meaning set forth in Section 2.7 of this
Agreement.
"Person" means any individual, trustee, corporation,
partnership, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
"Preferred Stock" has the meaning set forth in the second
paragraph of this Agreement.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning set forth in the second
paragraph of this Agreement.
"Purchaser" has the meaning set forth in the first paragraph of
this Agreement.
"Purchasers" has the meaning set forth in the first paragraph of
this Agreement.
"Registrable Securities" means the Preferred Stock, the Exchange
Shares and any other securities issued or issuable with respect to the
Preferred Stock or the Exchange Shares by way of a stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization;
provided, however, that a security ceases to be a Registrable Security
when it is no longer a Transfer Restricted Security. In determining the
number of Registrable Securities outstanding at any time or whether the
holders of the requisite number of Registrable Securities have taken any
action hereunder and in calculating the number of Registrable Securities
for all other purposes under this Agreement, each share of Preferred
Stock shall be deemed to be equal to the number of Exchange Shares then
deliverable upon (i) the conversion of such share of Preferred Stock
into Conversion Shares in accordance with the Articles Supplementary and
(ii) the exchange of such Conversion Shares in accordance with the
Charter.
"Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the
provisions of Section 2.1 of this Agreement, including
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the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"Rule 144" means Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers
and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of an issuer of
such securities being free of the registration and prospectus delivery
requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Transfer Restricted Security" means a share of Preferred Stock
or an Exchange Share until such share of Preferred Stock or Exchange
Share, as the case may be, (i) has been effectively registered under the
Securities Act and disposed of in accordance with a registration
statement filed under the Securities Act covering it or (ii) is
distributed to the public pursuant to Rule 144.
"underwritten registration" or "underwritten offering" means a
registration in which securities of the Company (including Registrable
Securities) are sold to an underwriter for reoffering to the public.
SECTION 2. REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION RIGHTS.
(a) The Company covenants and agrees with each Holder of
Registrable Securities that if on or after , 1995, the
Company receives a written request from Holders of not less than 33 1/3%
of the then outstanding Registrable Securities, then within thirty (30)
days after receipt of such notice (the 30th day after such notice, the
"Filing Date") the Company shall use its best efforts to file a
Registration Statement and cause such Registration Statement to become
effective under the Securities Act at the earliest possible date after
such notice (such date, the "Effectiveness Date") with respect to the
offering and sale or other disposition of such Registrable Securities as
such Holders desire to have covered by such Registration Statement;
provided, however, that the Company shall not be obligated to file any
other Registration Statement or cause any such other Registration
Statement to become effective, pursuant to this Section 2.1(a), (i) for
a period of 360 days following the Filing Date of a Registration
Statement filed pursuant to this Section 2.1(a), (ii) for a period of
180 days following the effective date of a registration statement
covering not less than 25% of the then outstanding Registrable
Securities, which Registrable Securities have been included in such
registration pursuant to Section 2.2 hereof, (iii) for a period of 90
days following the filing of a public offering of common stock by the
Company, (iv) for a period of up to 90 days if such filing would require
disclosure of bona fide confidential information relating to an
acquisition or disposition of material assets then in progress or (v)
which would cover less than 1,000,000 Registrable Securities (or if the
number of Registrable Securities then outstanding is less than
1,000,000, which would cover less than the aggregate amount of
Registrable Securities then outstanding). The Company shall use its best
efforts to continuously maintain the effectiveness of such Registration
Statement until the earlier of (i) 270 days after the effective date of
the Registration Statement or (ii) the consummation of the distribution
by the Holders of all of the Registrable Securities covered by such
Registration Statement (the "Effectiveness Period"). The Company shall
not include any securities other than the Registrable Securities in any
such Registration Statement pursuant to any "piggyback" or similar
registration rights granted by the
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Company without the consent of the Holders of a majority of the
Registrable Securities to be covered by such Registration Statement,
other than "piggyback" registration rights provided for in the
Registration Rights Agreement between the Company and the Selling
Shareholders as defined therein dated November 30, 1993 (the "1993
Registration Rights Agreement") as in effect on June 5, 1994.
Notwithstanding anything in this Agreement to the contrary, the Company
shall not be required to comply with more than three requests for
registration pursuant to this Section 2.1. Each notice to the Company
requesting registration to be effected shall set forth (1) the number of
shares of Preferred Stock and the number of Exchange Shares to be
included; (2) the name of the Holders of the Registrable Securities and
the amount to be sold; and (3) the proposed manner of sale. Within 10
(ten) days after receipt of such notice, the Company shall notify each
Holder of Registrable Securities who is not a party to the written
notice served on the Company (or the transferee(s) of such Holder) and
offer to them the opportunity to include their Registrable Securities in
such registration. A Registration Statement will not count as complying
with the terms hereof unless it is declared effective by the SEC and
remains continuously effective for the Effectiveness Period, provided
that a registration statement which does not become effective after the
Company has filed it solely by reason of the refusal to proceed of the
Holders of Registrable Securities requesting the registration shall not
be deemed to have been effected by the Company at the request of such
Holders but the Holders of Registrable Securities covered by such
Registration Statement shall reimburse the Company for 50% of the
out-of-pocket costs paid by the Company in the performance of its
obligations hereunder in respect of such registration statement.
(b) Each Holder of Registrable Securities agrees, if requested
by the managing underwriter or underwriters in an underwritten offering,
not to effect any public sale or distribution of Registrable Securities
or of securities of the Company of the same class as any securities
included in such Registration Statement, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 180-day
period beginning on, the closing date of each underwritten offering made
pursuant to such Registration Statement, to the extent timely notified
in writing by the Company or the managing underwriter or underwriters.
(c) The foregoing provisions of Section 2.1(b) shall not apply
to any Holder of Registrable Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
provided, however, that any such Holder shall undertake, in its request
to participate in any such underwritten offering, not to effect any
public sale or distribution of any applicable class of Registrable
Securities commencing on the date of sale of such applicable class of
Registrable Securities unless it has provided 45 days prior written
notice of such sale or distribution to the underwriter or underwriters.
2.2 INCIDENTAL REGISTRATION.
(a) If the Company at any time before the third anniversary of
this Agreement proposes to register any of its securities, under the Act
(other than a registration on Form S-4 or S-8 or any successor form
thereto), whether or not for sale for its own account, and the
registration form to be used therefor may be used for the registration
of Registrable Securities, it will each such time give prompt written
notice to all Holders of Registrable Securities of the Company's
intention to do so and, upon the written request of any such holder to
the Company made within 10 days after the receipt of any such notice
(which request shall specify the Registrable Securities intended to be
disposed of by such Holder and the intended method of disposition
thereof), the Company will use its best efforts to effect the
registration (an "Incidental Registration") under the Act of all
Registrable Securities which the Company has been so requested to
register by the Holders thereof; provided, however, that at any time
prior to the first anniversary of this Agreement the Company will not be
obligated under this Section 2.2(a) to include Registrable Securities in
any registration
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of securities of the Company which is solely on behalf of the
holders of such securities and which is being conducted pursuant to
registration rights agreements with such holders in existence on the
date of the Purchase Agreement.
(b) Subject to Section 2.2(c), if an Incidental Registration is
an underwritten registration, and the managing underwriters thereof
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting
the marketability of the offering, the Company will include in such
registration (i) first, the securities the Company proposes to sell for
its own account in such registration, (ii) second, the Registrable
Securities requested to be included in such registration and the
securities entitled to participate in such registration pursuant to the
terms of the 1993 Registration Rights Agreement as in effect on June 5,
1994, pro rata among the Holders of such Registrable Securities and the
beneficiaries of the "piggyback" registration rights contained in the
1993 Registration Rights Agreement as in effect on June 5, 1994 on the
basis of the number of shares owned by each such Holder and such
beneficiaries and (iii) third, other securities requested to be included
in such registration.
(c) Notwithstanding Section 2.2(b), if an Incidental
Registration is an underwritten secondary registration solely on behalf
of holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting
the marketability of the offering, the Company will include in such
registration (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration,
pro rata among the Holders of such Registrable Securities on the basis
of the number of shares owned by each such Holder, and (iii) third,
other securities requested to be included in such registration.
2.3 SUPPLEMENTS AND AMENDMENTS. If a Registration Statement ceases to be
effective for any reason at any time during the period for which it is required
to be effective under this Agreement, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the effectiveness thereof
and shall in connection therewith promptly supplement and amend any such
Registration Statement in a manner reasonably and in good faith expected to
obtain the withdrawal of the order suspending the effectiveness thereof, and the
Company shall use its best efforts to cause any such Registration Statement to
be declared effective as soon as practicable after such amendment or supplement
and to keep such Registration Statement continuously effective for a period
equal to the period for which it is required to be effective under this
Agreement less the aggregate number of days during which any predecessor
Registration Statement was previously effective.
The Company shall supplement and amend a Registration Statement if
required by the rules, regulations or instructions applicable to the applicable
registration form for such Registration Statement, if required by the Securities
Act or the SEC, or if reasonably requested by the Holders of a majority of the
Registrable Securities covered by such Registration Statement or by any
underwriter of the Registrable Securities.
2.4 RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS. The Company
agrees (i) that it shall not, and that it shall not cause or permit any of its
subsidiaries to, effect any public sale or distribution of any securities of the
same class as any of the Registrable Securities or any securities convertible
into or exchangeable or exercisable for such securities (or any option or other
right for such securities) (except for any securities that may be issued to the
holders of the Preferred Stock pursuant to the Articles Supplementary, the
holders of Class D Common Stock pursuant to the Charter and the holders of the
Company's Series A Preferred Stock, and except for securities issued to
officers, directors and/or employees of the Company or its subsidiaries pursuant
to options or agreements entered into with such
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officers, directors and/or employees in connection with their employment or
pursuant to the Company's stock option, stock bonus and other stock plans and
arrangements for officers, directors and employees) during the 15-day period
prior to, and during the 180-day period beginning on, the commencement of any
underwritten offering of Registrable Securities which has been scheduled prior
to the Company or any of its subsidiaries publicly announcing its intention to
effect any such public sale or distribution; (ii) that any agreement entered
into after the date of this Agreement pursuant to which the Company (or, if
applicable, any subsidiary of the Company) issues or agrees to issue any
securities which have registration rights shall contain (x) a provision under
which the holders of such securities agree, in the event of an underwritten
offering of Registrable Securities, not to effect any public sale or
distribution of any securities of the same class as any of the Registrable
Securities (or any securities convertible into or exchangeable or exercisable
for any such securities), or any option or other right for such securities,
during the periods described in clause (i) of this Section 2.4, in each case
including a sale pursuant to Rule 144 under the Securities Act (or any similar
provision then in effect) and (y) a provision that effects, upon notice given
pursuant to Section 2.1 hereof to the Company that an underwritten offering of
Registrable Securities is to be undertaken, the lapse of any demand
registration rights with respect to any securities of the Company (or, if
applicable, of any subsidiary of the Company) until the expiration of 180 days
after the date of the completion of any such underwritten offering; (iii) that
the Company (and, if applicable, each subsidiary of the Company) will not after
the date hereof enter into any agreement or contract wherein the holders of any
securities of the Company or of any subsidiary of the Company issued or to be
issued are granted any "piggyback" registration rights with respect to any
registration effected pursuant to Section 2.1 hereof, and (iv) that the Company
(and, if applicable, each subsidiary of the Company) will not after the date
hereof enter into any agreement or contract wherein the exercise by any Holder
of its right to an Incidental Registration hereunder would result in a breach
thereof or a default thereunder or would otherwise conflict with any provision
thereof.
2.5 UNDERWRITTEN REGISTRATIONS. If any of the Registrable Securities
covered by a Registration Statement filed pursuant to Section 2.1 are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will manage the offering will be selected by the
Holders of not less than a majority of the Registrable Securities covered by
such Registration Statement and will be reasonably acceptable to the Company. If
the managing underwriter or underwriters advise the Company and the Holders in
writing that in the opinion of such underwriter or underwriters the amount of
Registrable Securities proposed to be sold in such offering exceeds the amount
of securities that can be sold in such offering, there shall be included in such
underwritten offering the amount of Registrable Securities which in the opinion
of such underwriter or underwriters can be sold, and such amount shall be
allocated pro rata among the Holders of Registrable Securities on the basis of
the number of Registrable Securities requested to be included by each such
Holder and all Holders. The Holders of Registrable Securities sold in any such
offering shall pay all underwriting discounts and commissions of the underwriter
or underwriters pro rata; provided, however, that this Section 2.5 shall not
relieve the Company of its obligations under Section 2.7 hereof.
No Holder of Registrable Securities may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any underwriting arrangements
approved by the Holders of not less than a majority of the Registrable
Securities and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
2.6 REGISTRATION PROCEDURES. In connection with any Registration
Statement, the Company shall effect such registrations to permit the offering
and sale of the Registrable Securities in accordance with the intended method or
methods of disposition thereof, and pursuant thereto the Company shall as
expeditiously as possible:
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(a) Prepare and file with the SEC as soon as practicable each
such Registration Statement and cause such Registration Statement to
become effective and remain effective as provided herein; provided,
however, that before filing any such Registration Statement or any
Prospectus or any amendments or supplements thereto (including documents
that would be incorporated or deemed to be incorporated therein by
reference, including such documents filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that would be incorporated
therein by reference), the Company shall afford promptly to the Holders
of the Registrable Securities covered by such Registration Statement,
their counsel and the managing underwriter or underwriters, if any, an
opportunity to review copies of all such documents proposed to be filed
a reasonable time prior to the proposed filing thereof and the Company
shall give reasonable consideration in good faith to any comments of
such Holders, counsel and underwriters; provided that the Company may
discontinue any registration of its securities giving rise to
registration rights pursuant to Section 2.2 hereof at any time prior to
the effective date of the registration statement relating thereto. The
Company shall not file any Registration Statement or Prospectus or any
amendments or supplements thereto if the Holders of a majority of the
Registrable Securities covered by such Registration Statement, their
counsel, or the managing underwriter or underwriters, if any, shall
reasonably object in writing.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the time periods prescribed hereby; cause the related Prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and comply with the provisions
of the Securities Act, the Exchange Act and the rules and regulations of
the SEC promulgated thereunder applicable to it with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities, their counsel
and the managing underwriter or underwriters, if any, promptly, and
confirm such notice in writing, (i) when a Prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect
to a Registration Statement or any post-effective amendment, when the
same has become effective (including in such notice a written statement
that any Holder may, upon request, obtain, without charge, one conformed
copy of such Registration Statement or post-effective amendment
including financial statements and schedules and exhibits), (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the initiation or threatening of
any proceedings for that purpose, (iii) if at any time when a prospectus
is required by the Securities Act to be delivered in connection with
sales of the Registrable Securities the representations and warranties
of the Company contained in any agreement (including any underwriting
agreement) contemplated by Section 2.6(m) below, to the knowledge of the
Company, cease to be true and correct in any material respect, (iv) of
the receipt by the Company of any notification with respect to (A) the
suspension of the qualification or exemption from qualification of the
Registration Statement or any of the Registrable Securities covered
thereby for offer or sale in any jurisdiction, or (B) the initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event, the existence of any condition or information becoming known
to the Company that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of
such Registration Statement, it will conform in all material respects
with the requirements of the Securities Act and it will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, not misleading, and that in the case of the Prospectus, it will
conform in all material respects with the requirements of the Securities
Act and it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements
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therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the Company's reasonable determination
that a post-effective amendment to such Registration Statement would be
appropriate.
(d) Use every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of a Prospectus or suspending
the qualification (or exemption from qualification) of any of the
Registrable Securities covered thereby for sale in any jurisdiction,
and, if any such order is issued, to obtain the withdrawal of any such
order at the earliest possible moment.
(e) If requested by the managing underwriter or underwriters, if
any, or the Holders of a majority of the Registrable Securities being
sold in connection with an underwriting offering, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters, if any, or such
Holders reasonably request to be included therein to comply with
applicable law and (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after
the Company has received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment.
(f) Furnish to each Holder of Registrable Securities who so
requests and to counsel for the Holders of Registrable Securities and
each managing underwriter, if any, without charge, upon request, one
conformed copy of the Registration Statement and each post-effective
amendment thereto, including financial statements and schedules, and of
all documents incorporated or deemed to be incorporated therein by
reference and all exhibits (including exhibits incorporated by
reference).
(g) Deliver to each Holder of Registrable Securities, their
counsel and each underwriter, if any, without charge, as many copies of
each Prospectus (including each form of prospectus) and each amendment
or supplement thereto as such persons may reasonably request but only
for so long as the Company is required to keep such registration
statement effective; and, subject to the last paragraph of this Section
2.6, the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the Holders of Registrable
Securities and the underwriter or underwriters or agents, if any, in
connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, to use its
best efforts to register or qualify, and cooperate with the Holders of
Registrable Securities, the underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of,
such Registrable Securities for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as may be
required to permit the resale thereof by the Holders of Registrable
Securities, or as the managing underwriter or underwriters reasonably
request in writing; provided, however, that where Registrable Securities
are offered other than through an underwritten offering, the Company
agrees to cause its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 2.6(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be effective hereunder and do any and all other
acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the securities covered thereby;
provided, however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) become subject to taxation in any jurisdiction where it is not then
so subject.
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(i) Cooperate with the Holders of Registrable Securities and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold, which certificates shall not bear any restrictive
legends whatsoever and shall be in a form eligible for deposit with The
Depository Trust Company ("DTC"); and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably request
at least two business days prior to any sale of Registrable Securities
in a firm commitment underwritten public offering.
(j) Use its best efforts to cause the Registrable Securities
covered by a Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be reasonably
necessary to enable the seller or sellers thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Securities, except as may be required solely as a consequence of the
nature of such selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of the Registration
Statement and the granting of such approvals.
(k) Upon the occurrence of any event contemplated by Section
2.6(c)(v) or 2.6(c)(vi) above, as promptly as practicable prepare a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and, subject to Section
2.6(a) hereof, file such with the SEC so that, as thereafter delivered
to the purchasers of Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading and will otherwise comply with law.
(l) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Preferred Stock and the Exchange Shares or
such other Registrable Securities with printed certificates for such
securities in a form eligible for deposit with DTC and (ii) provide a
CUSIP number for such securities.
(m) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take all such
other actions as are reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the registration or
disposition of such Registrable Securities in any underwritten offering
to be made of the Registrable Securities in accordance with this
Agreement, and in such connection, (i) make such representations and
warranties to the underwriter or underwriters, with respect to the
business of the Company and the subsidiaries of the Company, and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriter or underwriters),
addressed to the underwriter or underwriters covering the matters
customarily covered in opinions requested in underwritten offerings with
respect to secondary distributions and such other matters as may be
reasonably requested by underwriters; (iii) use its best efforts to
obtain "cold comfort" letters and updates thereof (which letters and
updates shall be reasonably satisfactory in form, scope and substance to
the managing underwriter or underwriters) from the independent certified
public accountants of the Company (and, if applicable, the subsidiaries
of the Company) and, to the extent reasonably practicable, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement, addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type
customarily covered in
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"cold comfort" letters in connection with underwritten offerings; and
(iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable
than those set forth in Section 3 hereof (or such other provisions and
procedures acceptable to Holders of a majority of Registrable
Securities covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pursuant to said Section. The above shall be done at
each closing under such underwriting agreement, or as and to the extent
required thereunder.
(n) Make available for inspection by a representative of the
Holders of Registrable Securities being sold, any underwriter
participating in any such disposition of Registrable Securities, if any,
and any attorney or accountant retained by such representative of the
Holders or underwriter (collectively, the "Inspectors"), at the offices
where normally kept, during reasonable business hours, all pertinent
financial and other records, pertinent corporate documents and
properties of the Company and the subsidiaries of the Company, and cause
the officers, directors and employees of the Company and the
subsidiaries of the Company to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information, shall be kept confidential by
such Inspector and not used by such Inspector for any purpose other than
in connection with such Inspector's review of the Registration Statement
for such registration except to the extent (i) disclosure of such
information is required by court or administrative order, (ii)
disclosure of such information, in the written opinion of counsel to
such Inspector (a copy of which is furnished to the Company), is
necessary to avoid or correct a misstatement or omission of a material
fact in the Registration Statement, Prospectus or any supplement or
post-effective amendment thereto or disclosure is otherwise required by
law, (iii) disclosure of such information is in the written opinion of
counsel for any such Inspector (a copy of which is furnished to the
Company), necessary or advisable in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially
involving such Inspector and arising out of, based upon, relating to or
involving this Agreement or any of the transactions contemplated hereby
or arising hereunder, or (iv) such information becomes generally
available to the public other than as a result of a disclosure or
failure to safeguard by such Inspector; without limiting the foregoing,
no such information shall be used by such Inspector as the basis for any
market transactions in securities of the Company or the subsidiaries of
the Company in violation of applicable law. Each selling Holder of such
Registrable Securities agrees that information obtained by it as a
result of such inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the securities of
the Company or of any of its Affiliates unless and until such is made
generally available to the public. Each selling Holder of such
Registrable Securities further agrees that it will, upon learning that
disclosure of such information is sought in a court of competent
jurisdiction, give prompt notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of the information deemed confidential.
(o) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than forty-five (45) days after the end of any
12-month period (or ninety (90) days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to an
underwriter or to underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to an underwriter or to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of the
relevant Registration Statement, which statements shall cover said
12-month periods.
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(p) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on each securities
exchange, if any, on which similar securities issued by the Company are
then listed.
Each seller of Registrable Securities as to which any registration is
being effected agrees, as a condition to the registration obligations with
respect to such Holder provided herein, to furnish promptly to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
to comply with the Securities Act and other applicable law. The Company may
exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request. If the identity of a seller of Registrable Securities is
to be disclosed in the Registration Statement, such seller shall be permitted to
include all information regarding such seller as it shall reasonably request.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.6(c)(ii), 2.6(c)(iv),
2.6(c)(v), or 2.6(c)(vi), such Holder will forthwith discontinue disposition of
such Registrable Securities covered by the Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 2.6(k), or until it is advised in writing
(the "Advice") by the Company that the use of the applicable prospectus may be
resumed, and has received copies of any amendments or supplements thereto, and,
if so directed by the Company, such Holder will deliver to the Company all
copies, other than permanent file copies, then in such Holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any such notice, the
period of time for which a Registration Statement is required hereunder to be
effective shall be extended by the number of days during such periods from and
including the date of the giving of such notice to and including the date when
each seller of Registrable Securities covered by such Registration Statement
shall have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 2.6(k) or (y) the Advice.
2.7 REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with the provisions of Section 2 of this Agreement
by the Company shall be borne by the Company whether or not any Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the National Association of
Securities Dealers Inc. (the "NASD") in connection with an underwritten offering
and (B) k fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
underwriter or underwriters in connection with Blue Sky qualifications of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as provided in
Section 2.6(h)), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities in a form eligible for
deposit with DTC and of printing prospectuses if the printing of prospectuses is
requested by the managing underwriter or underwriters, if any, or, in respect of
Registrable Securities, by the Holders of a majority of Registrable Securities
included in any Registration Statement), (iii) reasonable fees and disbursements
of all independent certified public accountants referred to in Section
2.6(m)(iii) (including, without limitation, the reasonable expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Schedule E to the By-laws of the NASD, (v) liability insurance under
the Securities Act, if the Company so desires such insurance, (vi) fees and
expenses of all attorneys, advisors, appraisers and other persons retained by
the Company or any subsidiary of the Company, (vii) internal expenses of the
Company and the subsidiaries of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company and the
subsidiaries of the
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Company performing legal or accounting duties), (viii) the expense of
any annual audit, (ix) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange and (x)
the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
In connection with any Registration Statement hereunder or any amendment
thereto, the Company shall reimburse the Holders of the Registrable Securities
being registered in such registration for the reasonable out-of-pocket expenses
of such Holders incurred in connection therewith including, without limitation,
the reasonable fees and disbursements of not more than one counsel (together
with appropriate local counsel) chosen by the Holders of a majority of the
Registrable Securities to be included in such Registration Statement.
2.8 RULE 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules and regulations adopted by the SEC thereunder in a timely manner and, if
at any time the Company is not required to file such reports, it will, upon the
reasonable request of any Holder of Registrable Securities, make publicly
available other information so long as necessary to permit sales pursuant to
Rule 144 and Rule 144A under the Securities Act. The Company further covenants
that it will take such further action as any Holder of Registrable Securities
may reasonably request, all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
and Rule 144A under the Securities Act, as such Rules may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the SEC.
Upon the request of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has complied with
such information requirements.
SECTION 3. INDEMNIFICATION
3.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and
hold harmless each Holder and each Person, if any, who controls any Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities, joint or several, to which such Holder or controlling Person may
become subject, under the Securities Act or otherwise, caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or any Prospectus or any amendment or supplement thereto
or any preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse each Holder for any
legal or other expenses reasonably incurred by such Holder in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information furnished in writing to the Company by any Holder expressly for
use therein; and provided further, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement or omission or alleged omission is completely corrected
in an amendment or supplement to the Prospectus and the seller of Registrable
Securities thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of Registrable Securities to
the person asserting such loss, claim, damage, or liability after the Company
had furnished such seller with a sufficient number of copies of the same or if
the seller received written notice from the Company of the existence of such
untrue statement or alleged untrue statement or omission or alleged omission and
the seller continued to dispose of Registrable Securities
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prior to the time of the receipt of either (A) an amended or supplemented
Prospectus which completely corrected such untrue statement or omission or (B)
a notice from the Company that the use of the existing Prospectus may be
resumed. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any Holder or any Person controlling such
Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act.
3.2 INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. Each Holder
agrees, severally and not jointly, to indemnify and hold harmless the Company,
the Company's directors, the Company's officers who sign the Registration
Statement and any person controlling the Company to the same extent as the
foregoing indemnity from the Company to each Holder set forth in Section 3.1,
but only with reference to, and in conformity with, information relating to such
Holder furnished in writing by such Holder expressly for use in a Registration
Statement, the Prospectus or any preliminary prospectus, or any amendment or
supplement thereto and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending any such
loss, claim, damage, liability or action as such expenses are incurred. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer or Person
controlling the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and shall survive the transfer
of such securities by such Holder.
3.3 CONDUCT OF INDEMNIFICATION PROCEEDING. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to either Section
3.1 or Section 3.2, such Person (the "indemnified party") shall promptly notify
the Person against whom such indemnity may be sought (the "indemnifying party")
in writing; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party
otherwise than as provided above. In case any such proceeding is instituted
against any indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to retain
counsel satisfactory to such indemnified party to defend against such proceeding
and shall pay the reasonable fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party has not retained counsel to defend such proceeding. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by the Holders of
a majority of the Registrable Securities included in such Registration Statement
in the case of parties indemnified pursuant to Section 3.1 and by the Company in
the case of parties indemnified pursuant to Section 3.2. All fees and expenses
which an indemnified party is entitled to receive from an indemnifying party
under this Section 3 shall be reimbursed as they are incurred. No indemnifying
party shall, without prior written consent of the indemnified party (which shall
not be unreasonably withheld or delayed), effect any settlement of any pending
or threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
3.4 CONTRIBUTION. If the indemnification provided for in Section 3.1 or
Section 3.2 is unavailable as a matter of law to an indemnified party in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under either such Section, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party
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as a result of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative fault of the Company on the
one hand and of the Holders of Registrable Securities covered by the
Registration Statement in question on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company, or by the
Holders of Registrable Securities covered by the Registration Statement in
question and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 3 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph of this Section 3.4 shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 3, no Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities sold by such Holder and
distributed to the public were offered to the public exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
3.5 OTHER INDEMNITIES. The obligations of the Company and of each of the
Holders under this Section 3 shall be in addition to any liability which the
Company or which any of the Holders may otherwise have.
SECTION 4. MISCELLANEOUS
4.1 REMEDIES. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder of Registrable Securities, in
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, will be entitled to specific performance of
its rights under this Agreement. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement.
4.2 NO INCONSISTENT AGREEMENTS. The Company shall not, after the date of
this Agreement, enter into any agreement with respect to any of its securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company will not enter into any agreement with respect to any of its
securities which will grant to any Person "piggyback" rights with respect to any
Registration Statement filed pursuant to Section 2.1 of this Agreement.
4.3 AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
prior written consent of Holders of at least a majority of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that
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does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Registrable Securities may be given by Holders of at least
a majority of the Registrable Securities being sold by such Holders pursuant to
such Registration Statement; provided, however, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. The last sentence of the
definition of Registrable Securities and this Section 4.3 may not be amended,
modified or supplemented, and waivers or consents to departures therefrom may
not be given at any time.
4.4 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
(i) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance with
the provisions of this Section 4.4, which address initially is, with
respect to each Holder, the address set forth on the signature page
attached hereto; and
(ii) if to the Company, 1211 Avenue of the Americas, New York,
New York 10036, Attention: Corporate Secretary, Telecopier No. (212)
444-4696 with a copy to Debevoise & Plimpton, 875 Third Avenue, New
York, New York 10022, Attention: Meredith M. Brown, Esq., Telecopier No.
(212) 909-6836.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; one business day after
being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
4.5 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Registrable Securities.
4.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Agreement.
4.7 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
4.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
4.9 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
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4.10 ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their agreement,
and is intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. This Agreement and the Purchase Agreement supersede all
prior agreements and understandings between the parties with respect to such
subject matter.
4.11 ATTORNEYS' FEES. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to its
costs and expenses and any other available remedy.
4.12 SECURITIES HELD BY THE COMPANY OR ITS SUBSIDIARIES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
by any of its Subsidiaries shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALEXANDER & ALEXANDER SERVICES INC.
By:
------------------------------
Name:
Title:
Address:
1211 Avenue of the Americas
44th Floor
New York, New York 10036
Telecopy No. (212) 444-4696
Attention: Corporate Secretary
Purchaser:
By:
------------------------------
Name:
Title:
Address:
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EXHIBIT 4 TO
STOCK PURCHASE
AND SALE AGREEMENT
AMENDMENT NUMBER 2 TO RIGHTS AGREEMENT
The Rights Agreement dated as of June 11, 1987, between Alexander &
Alexander Services Inc. (the "Company") and First Chicago Trust Company of New
York, as amended and restated as of March 22, 1990, as amended April 21, 1992
(the "Rights Agreement"), is hereby amended, effective as of June 6, 1994, as
follows. All capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Rights Agreement.
A. Notwithstanding anything to the contrary in the Rights
Agreement, none of the following events shall (a) cause any person to
become an Acquiring Person, (b) cause the Distribution Date or the
Shares Acquisition Date to occur, or (c) give rise to a Section
11(a)(ii) Event:
1. The acquisition of 8% Series B Cumulative Convertible
Preferred Stock ("Series B Preferred Stock") pursuant to the
terms of a Stock Purchase and Sale Agreement dated June 6, 1994
between the Company and American International Group, Inc.
("AIG") (the "Purchase Agreement").
2. The acquisition of Class D Common Stock ("Class D
Stock") of the Company upon conversion of the Series B Preferred
Stock in accordance with the terms of the Series B Preferred
Stock.
3. The acquisition of Common Stock in exchange for Class
D Stock in accordance with the terms of the Class D Stock.
4. The acquisition of Common Stock upon conversion of
the Series B Preferred Stock in accordance with the terms of the
Series B Preferred Stock.
5. The acquisition by AIG or its Affiliates of any
securities of the Company and the acquisition of any such
securities by any transferee thereof, to the extent that such
acquisition occurs at or after the time that (i) the Company
shall consent or agree to the acquisition of, or the
commencement of a tender offer for, or the Board of Directors of
the Company shall recommend or, within 10 business days after
the commencement of the tender offer, not recommend that
shareholders reject, a tender offer for, "beneficial ownership"
(as defined in Rule 13d-3 under the Exchange Act) by any
"person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended
("the Exchange Act")), of securities of the Company entitled to
vote generally in the election of directors, or securities
convertible into or exchangeable for such securities
(collectively, "Designated Securities"), representing, when
added to the Designated Securities already owned by such person
or group, thirty-five percent (35%) or more of such Designated
Securities; (ii) the Company shall amend, modify or supplement,
or waive the benefit of, this Agreement, as amended to date, so
as to permit any acquisition of beneficial ownership of
thirty-five percent (35%) or more of the Designated Securities
without causing such person or group to become an Acquiring
Person or without causing the Distribution Date or the Shares
Acquisition Date to occur or without giving rise to a Section
11(a)(ii) Event; (iii) the Company shall take any action under
Section 3-603(c) of the Maryland General Corporation Law to
exempt any transaction between the Company and any of its
subsidiaries, on the one hand, and any such person or group, or
any affiliates of any person or group, on the other hand, who
(A) acquire, own or hold beneficial ownership of Designated
Securities representing thirty-five percent (35%) or more of
such Designated Securities from the provisions of Title 3,
Subtitle 6 of the Maryland General Corporation Law or (B)
acquire, own or hold beneficial ownership of designated
Securities representing ten percent (10%) or more of such
Designated Securities unless such other person or group, or any
affiliate of such person or group, enters
82
into a standstill agreement with the Company limiting the
acquisition of Designated Securities by such other person or
group, or any affiliates of such person or group, to less than
35% of the Designated Securities and such standstill agreement
remains in full force and effect; (iv) the Company shall issue,
sell or transfer, in one or a series of related transactions,
Designated Securities to any person or group if after giving
effect thereto said person or group shall have, or shall have
the then contractual right to acquire through conversion,
exercise of warrants or otherwise, more than thirty-five percent
(35%) of the combined voting power to vote generally in the
election of directors of the Company; or (v) the Company shall
agree to merge or consolidate with or into any person, firm,
corporation or other legal entity or shall agree to sell all or
substantially all its assets to any person, firm, corporation or
other legal entity other than (i) a merger or consolidation of
one subsidiary of the Company into another or the Company, or
(ii) a merger or consolidation in which the securities of the
Company outstanding before the merger or consolidation are not
affected and in which the Company issues equity securities
having an aggregate market value of less than 20% of the total
market value of the Company's equity securities outstanding
prior to such merger or consolidation.
B. Shares of Class D Stock will be treated under the Rights
Agreement as if they were Class C Shares. Without limiting the
generality of the foregoing, Rights shall be issued in respect of all
shares of Class D Stock that are issuable upon conversion of the Series
B Preferred Stock, prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, as contemplated by Section
3 of the Rights Agreement, provided that, at the option of any holder of
Class D Stock, any securities issued upon exercise of such Rights shall
be voting only to the extent that the Class D Stock is voting.
This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. In all respects not inconsistent with the terms and
provisions of this amendment, the Rights Agreement is hereby ratified, adopted,
approved and confirmed.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed and their respective corporate seals to be hereunto affixed and
attested.
ATTEST: ALEXANDER & ALEXANDER SERVICES INC.
By:
------------------------------------
Title:
ATTEST: FIRST CHICAGO TRUST COMPANY OF NEW YORK
By:
------------------------------------
2
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APPENDIX II
ARTICLES OF AMENDMENT
OF THE CHARTER OF
ALEXANDER & ALEXANDER SERVICES INC.
ALEXANDER & ALEXANDER SERVICES INC., a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST, the charter of the Corporation (the "Charter") is hereby amended
as follows:
1. The first paragraph of Article SIXTH of the Charter is hereby
amended to read in its entirety as follows:
SIXTH: The total number of shares of stock which the
Corporation has authority to issue is two hundred ninety-two million
(292,000,000) shares of five classes, consisting of two hundred
million (200,000,000) shares of Common Stock, $1.00 par value per
share; twenty-six million (26,000,000) shares of Class A Common
Stock, $.00001 par value per share; eleven million (11,000,000)
shares of Class C Common Stock, $1.00 par value per share; forty
million (40,000,000) shares of Class D Common Stock, $1.00 par value
per share; and fifteen million (15,000,000) shares of Preferred
Stock, $1.00 par value per share. The aggregate par value of all
shares of all classes of stock which the Corporation has authority
to issue is $266,000,260.
2. Section A.(e) of Article SIXTH of the Charter is hereby
amended to read in its entirety as follows:
(e) redeemable, in whole or in part, at the option of the
Corporation or of the holder or both, in cash, bonds or other
property, at such price or prices, within such period or periods,
and under such conditions as the Board of Directors shall so
provide, including provision for the creation of a sinking fund for
the redemption thereof; and/or
3. A new Section J of Article SIXTH of the Charter is hereby
added to the Charter to read in its entirety as follows:
J. Class D Common Stock. Except as expressly provided by law
or as set forth in this Section J, shares of Class D Common Stock
shall be identical in all respects to the Common Stock, including
with respect to stock splits, stock combinations, the right to
receive dividends, or with respect to distributions upon
liquidation, dissolution, winding up of the Corporation or
otherwise, without preference or distinction, except that if any
dividends in additional shares of Common Stock are declared on the
Common Stock a like dividend in shares of Class D Common Stock
shall be authorized and declared on the Class D Common Stock and if
any such dividend or distribution with respect to the Common Stock
includes securities that vote together with the Common Stock
("Other Securities"), such securities distributed with respect to
shares of Class D Common Stock shall be identical in all respects
to the Other Securities, except they shall not have voting rights.
The holders of shares of Class D Common Stock shall not
have any voting rights except (i) to the extent required by
applicable law; (ii) an amendment to or modification of, the
Charter that would adversely affect the holders of shares of Class D
Common Stock may only be adopted if such amendment or modification
has been approved by the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Class D Common Stock, for
purpose of which vote the holders of 8% Series B Cumulative
Convertible Preferred Stock ("Series B Stock") shall be deemed to be
holders of that number of shares of Class D Common Stock into which
such Series B Stock would then be convertible; and (iii) upon and
after a "change of control" of the Corporation, in which event the
holders of shares of Class D Common Stock shall have the right to
vote on all matters submitted to a vote to the stockholders of the
Corporation as a single class together with the Common Stock, the
Class A
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Common Stock, the Class C Common Stock and the Series B Stock,
provided that with respect to any matter contemplated by
subparagraph (ii) above, such vote shall be a class vote as
specified by such subparagraph.
For purposes of the foregoing provision, "change of control"
means such time as (i) the Corporation shall consent or agree to the
acquisition of, or the commencement of a tender offer for, or the
Board of Directors shall recommend or, within 10 business days after
the commencement of the tender offer, not recommend that
shareholders reject, a tender offer for, "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act) by any "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("the Exchange Act"))
other than American International Group, Inc. ("AIG") and its
affiliates or any transferee thereof, of securities of the
Corporation entitled to vote generally in the election of directors,
or securities convertible into or exchangeable for such securities
(collectively, "Designated Securities"), representing, when added to
the Designated Securities already owned by such person or group,
thirty-five percent (35%) or more of such Designated Securities;
(ii) the Corporation shall amend, modify or supplement, or waive the
benefit of, the Rights Agreement between Alexander & Alexander
Services Inc. and First Chicago Trust Company of New York, dated as
of June 11, 1987, as amended and restated on March 22, 1990, as
amended on August 21, 1992 and June 6, 1994 (the "Rights
Agreement"), so as to permit any acquisition of beneficial ownership
of thirty-five percent (35%) or more of the Designated Securities
without causing a person or group (other than AIG and its affiliates
or any transferee thereof) to become an Acquiring Person (as defined
in the Rights Agreement) or without causing the Distribution Date or
the Shares Acquisition Date (each as defined in the Rights
Agreement) to occur or without giving rise to a Section 11(a)(ii)
Event (as defined in the Rights Agreement); (iii) the Corporation
shall take any action under Section 3-603(c) of the Maryland General
Corporation Law to exempt any transaction between the Corporation
and any of its subsidiaries, on the one hand, and any person or
group (other than AIG and its affiliates or any transferee thereof),
or any affiliates of any such person or group, on the other hand,
who (A) acquire, own or hold beneficial ownership of Designated
Securities representing thirty-five percent (35%) or more of such
Designated Securities from the provisions of Title 3, Subtitle 6 of
the Maryland General Corporation Law or (B) acquire, own or hold
beneficial ownership of Designated Securities representing ten
percent (10%) or more of such Designated Securities unless such
other person or group, or any affiliate of such person or group,
enters into a standstill agreement with the Corporation limiting the
acquisition of Designated Securities by such other person or group,
or any affiliates of such person or group, to less than 35% of the
Designated Securities and such standstill agreement remains in full
force and effect; (iv) the Corporation shall issue, sell or
transfer, in one or a series of related transactions, Designated
Securities to any person or group (other than AIG and its affiliates
or any transferee thereof) if after giving effect thereto said
person or group shall have, or shall have the then contractual right
to acquire through conversion, exercise of warrants or otherwise,
more than thirty-five percent (35%) of the combined voting power to
vote generally in the election of directors of the Corporation; or
(v) the Corporation shall agree to merge or consolidate with or into
any person, firm, corporation or other legal entity (other than AIG
and its affiliates or any transferee thereof) or shall agree to sell
all or substantially all its assets to any such person, firm,
corporation or other legal entity other than (i) a merger or
consolidation of one subsidiary of the Corporation into another or
the Corporation, or (ii) a merger or consolidation in which the
securities of the Corporation outstanding before the merger or
consolidation are not affected and in which the Corporation issues
equity securities having an aggregate market value of less than 20%
of the total market value of the Corporation's equity securities
outstanding prior to such merger or consolidation. "Affiliate"
means, when used with reference to any person, any other person
directly or indirectly controlling, controlled by, or under direct
or indirect common control
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with, the referent person or such other person, as the case may
be, or any person who beneficially owns, directly or indirectly, 10%
or more of the voting equity interests of such person or warrants,
options or other rights to acquire or hold more than 10% of any
class of voting equity interests of such person. For the purposes of
this definition, "control" when used with respect to any specified
person means the power to direct or cause the direction of
management or policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "affiliated," "controlling" and
"controlled" have meanings correlative to the foregoing.
The holders of Class D Common Stock shall have the right to
exchange each share of Class D Common Stock for one share of Common
Stock, at any time, provided that, other than upon and after a
change of control, no person shall be entitled to acquire shares of
Common Stock upon such exchange if after giving effect thereto such
person shall have, or shall have the then contractual right to
acquire through conversion, exercise of warrants, or otherwise, more
than 9.9% of the combined voting power of the Common Stock, Class A
Common Stock and Class C Common Stock then outstanding.
The Corporation shall not be required to register any
transfer of shares of Class D Common Stock, except as follows:
(a) to any person which acquired shares of Class D
Common Stock on the original issuance of Class D Common Stock by
the Corporation (a "Purchaser");
(b) to the ultimate parent corporation of any Purchaser
(an "Approved Parent") or any wholly-owned direct or indirect
subsidiary of any Approved Parent (a "Controlled Subsidiary");
(c) in a transfer (otherwise than to a Purchaser, an
Approved Parent or a Controlled Subsidiary) pursuant to Rule 144
under the Securities Act of 1933, as amended (the "Securities
Act"), or a successor provision;
(d) in a private sale (otherwise than to a Purchaser, an
Approved Parent or a Controlled Subsidiary), provided that,
other than upon and after a change of control, the transferor
shall not knowingly sell to any single person or group of
persons acting in concert a number of shares of Class D Common
Stock which, if exchanged for Common Stock, when added to other
securities owned by such person or group and to securities that
such person or group has the right to acquire by conversion,
exercise of warrants, or otherwise, would cause such person or
group to own or to have the right to acquire more than 9.9% of
the combined voting power of the shares of Common Stock, Class A
Common Stock and Class C Common Stock then outstanding (for
purposes of this clause (d) "not knowingly" shall mean the
absence of actual knowledge and of knowledge that would have
then been available from a review of filings as to the
Corporation under section 13 of the Securities Exchange Act of
1934, as amended, plus the receipt of a representation from the
buyer(s) to the foregoing effect); and
(e) in the event that shares of Series B Stock and/or
Common Stock exchangeable for shares of Class D Common Stock are
to be offered in any bona fide public offering registered under
the Securities Act, the Corporation shall provide: (i) in the
event that shares of Series B Stock are offered publicly, for
the conversion of such shares of Series B Stock into Common
Stock at the election of the holders of shares of Series B
Stock; and (ii) in the event that shares of Common Stock are
offered publicly, for the exchange of the shares of Class D
Common Stock for shares of Common Stock at the election of the
holders of shares of Class D Common Stock; in each case so that
such offerings can be made without restriction.
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In connection with any sale or transfer of shares of Class D
Common Stock in accordance with clauses (c) or (d) above, the
Corporation shall issue one share of Common Stock in exchange for
each share of Class D Common Stock to be so sold or transferred,
provided that in no event, other than upon and after a change of
control, shall the number of shares of Common Stock issued to such
purchaser or transferee cause the combined voting power of the
shares of Common Stock, Class A Common Stock and Class C Common
Stock held by such purchaser or transferee to exceed 9.9% of the
combined voting power of all such shares then outstanding.
Any holder of shares of Class D Common Stock desiring to
exchange such shares for Common Stock shall surrender the
certificate or certificates representing such shares of Class D
Common Stock at the office of the transfer agent for the Class D
Common Stock, which certificate or certificates, if the Corporation
shall so require, shall be duly endorsed to the Corporation or in
blank, or accompanied by proper instruments of transfer to the
Corporation or in blank, accompanied by irrevocable written notice
to the Corporation that the holder elects so to exchange such shares
of Class D Common Stock and specifying the name or names (with
address or addresses) in which a certificate or certificates
representing shares of Common Stock are to be issued.
The Corporation shall, as soon as practicable after such
deposit of certificates representing shares of Class D Common
Stock accompanied by the written notice and compliance with any
other conditions herein contained, deliver at such office of such
transfer agent to the person for whose account such shares of Class
D Common Stock were so surrendered or to the nominee or nominees of
such person, certificates representing the number of full shares of
Common Stock to which such person shall be entitled as aforesaid.
Such exchange shall be deemed to have been made as of the date of
such surrender of the shares of Class D Common Stock to be
exchanged, and the person or persons entitled to receive the shares
of Common Stock deliverable upon exchange of such shares of Class D
Common Stock shall be treated for all purposes as the record holder
or holders of such Common Stock on such date.
The transfer agent for the Class D Common Stock and the
transfer agent and registrar for the Common Stock shall not be
required to accept for registration of transfer a certificate
representing any shares of Class D Common Stock or Common Stock
bearing a restrictive legend affecting transfer, except upon
presentation of satisfactory evidence that the restrictions on
transfer of the Class D Common Stock and Common Stock referred to in
such legend have been complied with, all in accordance with such
reasonable regulations as the Corporation may from time to time
agree with the transfer agent for the Class D Common Stock and the
transfer agent and registrar for the Common Stock.
The Corporation shall at all times reserve and keep
available, out of its authorized and unissued stock, such number
of shares of its Common Stock, free of preemptive rights, as shall
from time to time be sufficient to effect the exchange of all shares
of Class D Common Stock. The Corporation shall from time to time, in
accordance with the laws of the State of Maryland, increase the
number of authorized shares of Common Stock if at any time the
number of authorized and unissued shares of Common Stock shall not
be sufficient to permit the exchange of all the then outstanding
shares of Class D Common Stock.
If any shares of Common Stock required to be reserved for
purposes of exchange of the Class D Common Stock hereunder require
registration with or approval of any governmental authority under
any Federal or State law before such shares may be issued upon
conversion, the Corporation will in good faith and as expeditiously
as possible endeavor to cause such shares to be duly registered or
approved, as the case may be. If the Common Stock is listed on the
New York Stock Exchange or any other national securities exchange,
the Corporation will, if permitted by the rules of such exchange,
list and keep listed on such exchange, upon official
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87
notice of issuance, all shares of Common Stock issuable upon
exchange of the Class D Common Stock.
The Corporation shall pay any and all issue or other taxes
that may be payable in respect of any issue or delivery of
shares of Common Stock on exchange of shares of Class D Common
Stock. The Corporation shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the
issue or delivery of Common Stock (or other securities or assets) in
a name other than that in which the shares of Class D Common Stock
so exchanged were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to
the Corporation the amount of such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
Whenever possible, each provision hereof shall be
interpreted in a manner as to be effective and valid under
applicable law, but if any provision hereof is held to be prohibited
by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or enforceable if a
period of time were extended or shortened or a particular percentage
were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and
valid under applicable law.
4. Section (b) of Article SEVENTH of the Charter is hereby
deleted in its entirety and Sections (c) and (d) thereof are relettered
(b) and (c), respectively.
SECOND, the Board of Directors of the Corporation duly adopted
resolutions which set forth the foregoing amendments of the Charter, declaring
that the said amendments to the Charter as proposed were advisable and directed
that they be submitted for action thereon by the stockholders of the Corporation
at a meeting to be held on , 1994.
THIRD, notice setting forth the said amendments of the Charter and
stating that a purpose of the meeting of the stockholders would be to take
action thereon, was given, as required by law, to all stockholders entitled to
vote thereon. The amendments of the Charter as hereinabove set forth were
approved by the stockholders of the Corporation at said meeting by the
affirmative vote of a majority of all of the votes entitled to be cast thereon.
FOURTH, the information required to be provided under subsection
(b)(2)(i) of Section 2-607 of the Maryland General Corporation Law with respect
to the Common Stock, the Class A Common Stock, the Class C Common Stock and the
Preferred Stock of the Corporation has not, except as to the number of
authorized shares of Common Stock and Preferred Stock (which have been increased
pursuant to Article FIRST of these Articles of Amendment), been changed by these
Articles of Amendment and remains as set forth in Article SIXTH of the Charter,
which Article SIXTH, as amended, is incorporated herein in its entirety.
FIFTH, the total number of shares of stock which the Corporation had
authority to issue immediately prior to this amendment was eighty-eight million
five hundred thousand (88,500,000) shares of four classes, consisting of sixty
million (60,000,000) shares of Common Stock, $1.00 par value per share; thirteen
million (13,000,000) shares of Class A Common Stock, $.00001 par value per
share; five million five hundred thousand (5,500,000) shares of Class C Common
Stock, $1.00 par value per share; and ten million (10,000,000) shares of
Preferred Stock, $1.00 par value per share. The aggregate par value of all
shares of all classes of capital stock which the Corporation had authority to
issue was $75,500,130.
SIXTH, the total number of shares of stock which the Corporation has
authority to issue, pursuant to the Charter of the Corporation as hereby
amended, is two hundred ninety-two million (292,000,000) shares of five classes,
consisting of two hundred million (200,000,000) shares of Common Stock, $1.00
par value per share; twenty-six million (26,000,000) shares of Class A Common
Stock, $.00001 par
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value per share; eleven million (11,000,000) shares of Class C Common Stock,
$1.00 par value per share; forty million (40,000,000) shares of Class D Common
Stock, $1.00 par value per share; and fifteen million (15,000,000) shares of
Preferred Stock, $1.00 par value per share. The aggregate par value of all
shares of all classes of stock which the Corporation has the authority to issue
is $266,000,260.
SEVENTH, the undersigned President of the Corporation acknowledges these
Articles of Amendment to be the corporate act of the Corporation and as to all
matters and facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, ALEXANDER & ALEXANDER SERVICES INC. has caused these
presents to be signed in its name and on its behalf by its President and its
corporate seal to be hereunto affixed and attested by its Secretary on this
day of , 1994.
ALEXANDER & ALEXANDER SERVICES INC.
By:
-------------------------------
President
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APPENDIX III
ARTICLES SUPPLEMENTARY
CLASSIFYING
6,200,000 SHARES OF PREFERRED STOCK
AS
8% SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
ALEXANDER & ALEXANDER SERVICES INC.
(PURSUANT TO SECTION 2-208 OF THE
MARYLAND GENERAL CORPORATION LAW)
------------------------
Alexander & Alexander Services Inc., a corporation organized and
existing under the laws of the State of Maryland (hereinafter called the
"Corporation"), and having its principal office in this State at 10461 Mill Run
Circle, Owings Mills, Maryland 21117, hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in the Board of
Directors of the Corporation (hereinafter called the "Board of Directors" or the
"Board") in accordance with the provisions of Article SIXTH of the Charter of
the Corporation (the "Charter"), the Board of Directors, at a meeting duly
convened and held on June 6, 1994, regarding the sale and issuance by the
Corporation of cumulative convertible preferred stock (the "Securities"),
adopted resolutions (the "Resolutions") classifying 6,200,000 shares of
Preferred Stock of the Corporation into a single series to be designated as "8%
Series B Cumulative Convertible Preferred Stock" and setting the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of such shares
as follows:
8% Series B Cumulative Convertible Preferred Stock
1. Designation and Amount. There shall be a series of Preferred
Stock designated as "8% Series B Cumulative Convertible Preferred Stock"
and the number of shares constituting such series shall be 6,200,000, of
which 4,000,000 shall be issued initially (the date of such issuance,
the "Original Issue Date") and the remainder shall be reserved for
issuance as dividends pursuant to Section 3 below. Such series is
referred to herein as the "Series B Convertible Preferred Stock." The
number of shares designated as shares of Series B Convertible Preferred
Stock may be decreased (but not increased) by the Board of Directors
without a vote of stockholders; provided, however, that such number may
not be decreased below the number of then currently outstanding shares
of Series B Convertible Preferred Stock plus the then maximum number of
such shares which could be issued pursuant to Section 3 below assuming
all dividends payable on or prior to December 15, 1999 are paid in
shares of Series B Convertible Preferred Stock.
2. Defined Terms. All capitalized terms used herein without
definition shall have the respective meanings assigned thereto in the
Charter.
3. Dividends. The holders of shares of Series B Convertible
Preferred Stock shall be entitled to receive, when, as and if authorized
and declared by the Board of Directors out of funds at the time legally
available therefor, dividends at the rate of 8% per annum per share, and
no more, which shall be fully cumulative, shall accrue without interest
and shall be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year, commencing September 15, 1994
(except that if any such date is a Saturday, Sunday or legal holiday,
then such dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday) to holders of record as they appear
upon the stock transfer books of the Corporation on each March 1, June
1, September 1 and December 1 immediately preceding the payment dates,
or such other
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dates as shall be fixed at the time of the authorization and
declaration by the Board of Directors (or, to the extent permitted by
applicable law, a duly authorized committee thereof), which date shall
not be less than ten (10) nor more than sixty (60) days preceding the
relevant dividend payment date. For purposes hereof, the term "legal
holiday" shall mean any day on which banking institutions are authorized
to close in New York, New York. Subject to the sixth succeeding
paragraph of this Section 3, dividends on account of arrears for any
past dividend period may be declared and paid at any time, without
reference to any regular dividend payment date; provided, however, that
dividends on account of arrears for any past dividends which were
required to be made in shares of Series B Convertible Preferred Stock
shall be declared and paid in shares of Series B Convertible Preferred
Stock and shall include such number of shares of Series B Convertible
Preferred Stock as any holder would have been entitled to receive had
all such dividends been declared and paid on a timely basis. The amount
of dividends payable per share of Series B Convertible Preferred Stock
for each quarterly dividend period shall be computed by dividing the
annual dividend amount by four and shall include fractional shares. The
amount of dividends payable for the initial dividend period and any
period shorter than a full quarterly period shall be computed on the
basis of a 360-day year of twelve 30-day months and the actual number of
days elapsed in the period in which payable. No interest shall be
payable in respect of any dividend payment on the Series B Convertible
Preferred Stock or any other Parity Dividend Stock (as hereinafter
defined) or any Senior Dividend Stock (as hereinafter defined) which may
be in arrears.
Any dividend payments made on or prior to December 15, 1996
shall be made in additional shares of Series B Convertible Preferred
Stock valued at the liquidation preference of the Series B Convertible
Preferred Stock. Any dividend payments made after December 15, 1996 and
on or prior to December 15, 1999 may be made, in the sole discretion of
the Board of Directors, either in (i) cash or (ii) additional shares of
Series B Convertible Preferred Stock valued at the liquidation
preference of the Series B Convertible Preferred Stock but not in any
combination of cash and additional shares of Series B Convertible
Preferred Stock. On and after the earlier of (i) December 16, 1999 or
(ii) the first date the Corporation pays any dividend in cash, dividends
on the Series B Convertible Preferred Stock shall be made only in cash.
All shares of Series B Convertible Preferred Stock issued as a dividend
with respect to the Series B Convertible Preferred Stock shall thereupon
be duly authorized, validly issued, fully paid and nonassessable.
In the case of shares of Series B Convertible Preferred Stock
issued on the Original Issue Date, dividends shall accrue and be
cumulative from such date. In the case of shares of Series B Convertible
Preferred Stock issued as a dividend on shares of Series B Convertible
Preferred Stock, dividends shall accrue and be cumulative from the
dividend payment date in respect of which such shares were issued as a
dividend.
Each fractional share of Series B Convertible Preferred Stock
outstanding shall be entitled to a ratably proportionate amount of all
dividends accruing with respect to each outstanding share of Series B
Convertible Preferred Stock, and all such dividends with respect to such
outstanding fractional shares shall be cumulative and shall accrue
(whether or not declared), and shall be payable in the same manner and
at such times as provided for above with respect to dividends on each
outstanding share of Series B Convertible Preferred Stock. Each
fractional share of Series B Convertible Preferred Stock outstanding
shall also be entitled to a ratably proportionate amount of any other
distributions made with respect to each outstanding share of Series B
Convertible Preferred Stock, and all such distributions shall be payable
in the same manner and at the same time as distributions on each
outstanding share of Series B Convertible Preferred Stock.
No dividends or other distributions, other than dividends
payable solely in shares of Common Stock, Class A Common Stock, Class C
Common Stock or Class D Common Stock or other stock of the Corporation
ranking junior as to dividends and as to liquidation rights to the
Series B Convertible Preferred Stock, shall be authorized, declared,
paid or set apart for payment on any
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shares of Common Stock, Class A Common Stock, Class C Common Stock or
Class D Common Stock or other stock of the Corporation ranking
junior as to dividends to the Series B Convertible Preferred Stock,
including the Series A Junior Participating Preferred Stock, when and if
issued (collectively, the "Junior Dividend Stock"), unless and until all
accrued and unpaid dividends on the Series B Convertible Preferred Stock
for all dividend payment periods ending on or prior to the date of
payment of such dividends or other distributions on Junior Dividend
Stock shall have been authorized, declared and paid or set apart in
trust for payment and all obligations of the Corporation to purchase
shares of Series B Convertible Preferred Stock tendered to it pursuant
to Section 7 and to make Extra Payments have been fully satisfied.
The Corporation shall not permit Reed Stenhouse Companies
Limited ("RSC") (in respect of RSC Class A Shares) or Alexander &
Alexander Services UK plc ("AAE") (in respect of AAE Dividend Shares) to
authorize, declare, pay or set apart any dividends or other
distributions, other than dividends payable solely in Junior Dividend
Stock, RSC Class A Shares or AAE Dividend Shares or other stock of the
Corporation, RSC or AAE ranking junior as to dividends to the Series B
Convertible Preferred Stock, unless and until all accrued and unpaid
dividends on the Series B Convertible Preferred Stock for all dividend
payment periods ending on or prior to the date of payment of such
dividends or other distributions on RSC Class A Shares or AAE Dividend
Shares shall have been authorized, declared and paid or set apart in
trust for payment and all obligations of the Corporation to purchase
shares of Series B Convertible Preferred Stock tendered to it pursuant
to Section 7 and to make Extra Payments have been fully satisfied.
If at any time any dividend on any stock of the Corporation
hereafter issued ranking senior as to dividends to the Series B
Convertible Preferred Stock (the "Senior Dividend Stock") shall be in
arrears, in whole or in part, then (except to the extent allowed by the
terms of such Senior Dividend Stock) no dividend shall be authorized,
declared, paid or set apart for payment on the Series B Convertible
Preferred Stock (other than dividends payable in additional shares of
Series B Convertible Preferred Stock) unless and until all accrued and
unpaid dividends with respect to the Senior Dividend Stock for all
payment periods ending on or prior to the date of payment of the current
dividend on the Series B Convertible Preferred Stock shall have been
authorized, declared and paid or set apart for payment. No full
dividends shall be authorized, declared, paid or set apart for payment
on any class or series of the Corporation's stock heretofore or
hereafter issued ranking, as to dividends, on a parity with the Series B
Convertible Preferred Stock (including the Series A Convertible
Preferred Stock) (collectively, the "Parity Dividend Stock") for any
period unless full cumulative dividends have been, or contemporaneously
are, authorized, declared and paid or set apart in trust for such
payment on the Series B Convertible Preferred Stock for all dividend
payment periods terminating on or prior to the date of payment of such
full cumulative dividends. No full dividends (other than dividends
payable in additional shares of Series B Convertible Preferred Stock)
shall be authorized, declared, paid or set apart for payment on the
Series B Convertible Preferred Stock for any period unless full
cumulative dividends have been, or contemporaneously are, authorized,
declared and paid or set apart for payment on the Parity Dividend Stock
for all dividend periods terminating on or prior to the date of payment
of such full cumulative dividends. When accrued dividends are not paid
in full on the Series B Convertible Preferred Stock and the Parity
Dividend Stock, all cash dividends authorized, declared and paid or set
apart for payment on the Series B Convertible Preferred Stock and the
Parity Dividend Stock shall be authorized, declared, paid or set apart
for payment pro rata so that the amount of dividends authorized,
declared, paid or set apart for payment per share on the Series B
Convertible Preferred Stock and the Parity Dividend Stock shall in all
cases bear to each other the same ratio that accrued and unpaid
dividends per share on the Series B Convertible Preferred Stock and the
Parity Dividend Stock bear to each other.
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Any reference to "distribution" contained in this Section 3
shall not be deemed to include any distribution made in connection with
any liquidation, dissolution or winding up of the Corporation, RSC or
AAE, whether voluntary or involuntary.
4. Liquidation Preference. Subject to the full payment of the
liquidation preferences of shares of stock of the Corporation hereafter
issued ranking senior as to liquidation rights to the Series B
Convertible Preferred Stock (the "Senior Liquidation Stock"), in the
event of a liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of shares of Series B
Convertible Preferred Stock shall be entitled to receive out of the
assets of the Corporation, whether such assets are stated capital or
surplus of any nature, an amount equal to the dividends accrued and
unpaid on such shares on the date of final distribution to such holders,
whether or not declared, without interest, plus a sum equal to $50.00
per share, and no more, before any payment shall be made or any assets
distributed to the holders of shares of Common Stock, Class A Common
Stock, Class C Common Stock, Class D Common Stock or any other class or
series of the Corporation's stock hereafter issued ranking junior as to
liquidation rights to the Series B Convertible Preferred Stock,
including the Series A Junior Participating Preferred Stock
(collectively, the "Junior Liquidation Stock").
Further, in the event of the liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, (i) the Board
of Directors shall determine (which determination shall be conclusive)
whether (1) there is some likelihood that the holders of Series B
Convertible Preferred Stock will not receive, on such liquidation,
dissolution or winding up of the Corporation, the full amounts to which
they are entitled pursuant to this Section 4, and (2) there is some
likelihood that the holders of RSC Class A Shares will receive out of
the assets of RSC a distribution as the result of any liquidation,
dissolution or winding up, or other action taken or to be taken by RSC
in connection or concurrently with the liquidation, dissolution or
winding up of the Corporation, in an amount greater than the holders of
Common Stock are likely to receive on the liquidation, dissolution or
winding up of the Corporation, and (ii) if the Board determines that
both likelihoods exist, then, provided that paragraph 2 of the Keepwell
Agreement between the Corporation and RSC dated July 31, 1985 does not
apply, the Corporation shall take such action as may be reasonably
necessary to cause the transfer of shares of Common Stock of the
Corporation to the holders of RSC Class A Shares in satisfaction of the
obligations of RSC to the holders of such shares; provided, however,
that no director of RSC shall be required to take any action which would
cause such director to breach any duties under applicable law as advised
by independent counsel.
The entire assets of the Corporation available for distribution
after the liquidation preferences of the Senior Liquidation Stock are
fully met shall be distributed ratably among the holders of the Series A
Convertible Preferred Stock, the Series B Convertible Preferred Stock
and any other class or series of the Corporation's stock hereafter
issued ranking on a parity as to liquidation rights with the Series B
Convertible Preferred Stock in proportion to the respective preferential
amounts to which each is entitled (but only to the extent of such
preferential amounts). After payment in full of the liquidation
preferences of the shares of the Series B Convertible Preferred Stock,
the holders of such shares shall not be entitled to any further
participation in any distribution of assets by the Corporation. Neither
a consolidation or merger of the Corporation with or into another
corporation nor a merger of any other corporation with or into the
Corporation, nor a sale or transfer of all or any part of the
Corporation's assets for cash, securities or other property, will be
considered a liquidation, dissolution or winding up of the Corporation.
5. Limitation on Share Repurchase. If at any time any dividends
on the Series B Convertible Preferred Stock shall be in arrears or the
Corporation shall have failed to make any purchase of shares of Series B
Convertible Preferred Stock tendered to it pursuant to Section 7, the
Corporation shall not, and the Corporation shall not permit RSC, AAE or
any other corporation or legal entity directly or indirectly controlled
by the Corporation (collectively, the "subsidiaries") to,
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repurchase, redeem, retire or otherwise acquire any shares of Junior
Dividend Stock, Junior Liquidation Stock, RSC Class A Shares, AAE
Dividend Shares or any warrants, rights, calls or options exercisable
for or convertible into any shares of Junior Dividend Stock, Junior
Liquidation Stock, RSC Class A Shares or AAE Dividend Shares, except by
conversion into or exchange for shares of Junior Dividend Stock or
Junior Liquidation Stock and other than purchases, redemptions,
retirements or acquisitions made pursuant to and as required by the
terms of any employee incentive or benefit plan of the Corporation or
any subsidiary of the Corporation in effect on June 1, 1994, or for
consideration aggregating not more than $100,000 in any calendar year.
If at any time any dividends on the Series B Convertible
Preferred Stock shall be in arrears or the Corporation shall have failed
to make any purchase of shares of Series B Convertible Preferred Stock
tendered to it pursuant to Section 7, the Corporation shall not, and
shall not permit any subsidiary to, repurchase, redeem, retire or
otherwise acquire any shares of the Corporation's or any such
subsidiary's stock except (i) as permitted by the immediately preceding
paragraph and (ii) any subsidiary which is wholly owned by the
Corporation may repurchase, redeem, retire or otherwise acquire shares
of its stock.
6. Redemption at Option of the Corporation. The Series B
Convertible Preferred Stock may not be redeemed by the Corporation prior
to December 15, 1999. Thereafter, so long as shares of Common Stock
shall have traded on the New York Stock Exchange on each trading day
during a 30 consecutive trading day period (each of which trading days
shall be after December 15, 1999) and had a Closing Price (as
hereinafter defined) on each such day in excess of 150% of the
conversion price then in effect for the Series B Convertible Preferred
Stock for each such trading day, the Series B Convertible Preferred
Stock may thereafter be redeemed by the Corporation, at its option on
any date set by the Board of Directors, in whole or in part at any time,
at a redemption price of $54.00 per share, plus an amount in cash equal
to accrued and unpaid dividends thereon, whether or not authorized or
declared, to but excluding the date fixed for redemption, if redeemed on
or prior to December 14, 2000, and at the following redemption prices
per share, if redeemed during the 12-month period beginning December 15:
YEAR REDEMPTION PRICE
---- ----------------
2000 $ 53.50
2001 53.00
2002 52.50
2003 52.00
2004 51.50
2005 51.00
2006 50.50
and thereafter at $50.00 per share, plus, in each case, an amount in
cash equal to all dividends on the Series B Convertible Preferred Stock
accrued and unpaid thereon, whether or not authorized or declared, to
but excluding the date fixed for redemption, such sum being hereinafter
referred to as the "Redemption Price."
In case of the redemption of less than all of the then
outstanding shares of Series B Convertible Preferred Stock, the
Corporation shall effect such redemption pro rata. Notwithstanding the
foregoing, the Corporation shall not redeem less than all of the shares
of Series B Convertible Preferred Stock at any time outstanding until
all dividends accrued and in arrears upon all shares of Series B
Convertible Preferred Stock then outstanding shall have been paid for
all past dividend periods.
Not more than sixty nor less than forty-five days prior to the
redemption date fixed by the Board of Directors, notice by first class
mail, postage prepaid, shall be given to the holders of record of shares
of the Series B Convertible Preferred Stock to be redeemed, addressed to
such holders at
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their last addresses as shown upon the stock transfer books of
the Corporation. Each such notice of redemption shall specify the date
fixed for redemption, the Redemption Price, the place or places of
payment, that payment will be made upon presentation and surrender of
the shares of Series B Convertible Preferred Stock, that on and after
the redemption date dividends will cease to accrue on such shares, the
then effective conversion price pursuant to Section 8 and that the right
of holders to convert shares of Series B Convertible Preferred Stock
shall terminate at the close of business on the business day prior to
the redemption date (unless the Corporation defaults in the payment of
the Redemption Price).
Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
of shares of Series B Convertible Preferred Stock receives such notice;
and failure to give such notice by mail, or any defect in such notice,
to the holders of any shares designated for redemption shall not affect
the validity of the proceedings for the redemption of any other shares
of Series B Convertible Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares called
for redemption, subject to such holder's right to convert shares of
Series B Convertible Preferred Stock as provided above, shall surrender
the certificate representing such shares to the Corporation at the place
designated in such notice and shall thereupon be entitled to receive
payment of the Redemption Price. If less than all the shares evidenced
by any such surrendered certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares. Notice having been
given as aforesaid, if, on the date fixed for redemption, funds
necessary for the redemption shall be available therefor and shall have
been irrevocably deposited or set aside in trust for the holders of the
shares of Series B Convertible Preferred Stock, then, notwithstanding
that the certificates representing any shares so called for redemption
shall not have been surrendered, dividends with respect to the shares so
called shall cease to accrue after the date fixed for redemption, such
shares shall no longer be deemed outstanding, the holders thereof shall
cease to be stockholders of the Corporation and all rights whatsoever
with respect to the shares so called for redemption (except the right of
the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate. If funds
legally available for such purpose are not sufficient for redemption of
the shares of Series B Convertible Preferred Stock to be redeemed, then
the certificates representing such shares shall be deemed not to be
surrendered, such shares shall remain outstanding and the rights of
holders of shares of Series B Convertible Preferred Stock thereafter
shall continue to be only those of a holder of shares of the Series B
Convertible Preferred Stock.
Except as provided in Section 7, the shares of Series B
Convertible Preferred Stock shall not be subject to the operation of any
mandatory purchase, retirement or sinking fund.
7. Repurchase at Option of the Holder. If one or more Special
Events shall occur at any time or from time to time on or after the
Original Issue Date, each holder of shares of the Series B Convertible
Preferred Stock shall have the right, at such holder's option
exercisable at any time within 120 days after the happening of each such
Special Event, to require the Corporation to purchase all or any part of
the shares of Series B Convertible Preferred Stock then held by such
holder as such holder may elect at $58.82 per share if the Special Event
occurs on or before six months after the Original Issue Date, $66.18 per
share if the Special Event occurs more than six months after the
Original Issue Date and on or before twelve months after the Original
Issue Date and $72.06 per share if the Special Event occurs more than
twelve months after the Original Issue Date plus, in each case, an
amount in cash equal to the accrued and unpaid dividends thereon,
whether or not authorized or declared, to but excluding the date fixed
for redemption. Any shares of Series B Convertible Preferred Stock which
would have accrued but have not been paid on any shares tendered for
purchase shall be deemed to be tendered for purchase. The Corporation
shall, immediately upon becoming aware of any facts or events that could
reasonably be expected to result in the occurrence of a Special Event,
give a written notice thereof by first class mail, postage
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prepaid, to the holders of record of shares of the Series B
Convertible Preferred Stock, addressed to such holders at their last
address as shown upon the stock transfer books of the Corporation.
A "Special Event" shall mean (v) the declaration or payment on
or after the Original Issue Date by the Corporation, RSC or AAE of an
Extraordinary Equity Payment (as hereinafter defined), (w) the sale or
other disposition, directly or indirectly, by the Corporation or any of
its subsidiaries in one or a series of related transactions of assets
representing 35% or more of the then book value of the Corporation's
assets on a consolidated basis or 35% or more of the Corporation's gross
revenues on a consolidated basis in either of the two most recently
ended fiscal years, (x) the merger or consolidation of the Corporation
or any of its Principal Subsidiaries (as hereinafter defined) with or
into any other firm, corporation or other legal entity other than (i) a
merger or consolidation of one subsidiary of the Corporation into
another or the Corporation, or (ii) a merger or consolidation in which
the securities of the Corporation outstanding before the merger or
consolidation are not affected and in which the Corporation issues
equity securities having an aggregate market value of less than 20% of
the total market value of the Corporation's equity securities
outstanding prior to such merger or consolidation, or (y) the occurrence
of a Specified Corporate Action on or after the Original Issue Date.
"Extraordinary Equity Payment" shall mean (a) the declaration or
payment on or after June 1, 1994 by the Corporation, RSC, AAE or any of
their respective subsidiaries of any dividend or distribution (except
for any dividend or distribution from one subsidiary of the Corporation
to another subsidiary of the Corporation or from a subsidiary of the
Corporation to the Corporation, RSC or AAE or any of their respective
wholly owned subsidiaries; provided that all of such dividend paid or
distribution made, net of applicable withholding taxes, is received by
the Corporation, RSC or AAE or such recipient subsidiary) on any class
or series of its stock (other than regularly scheduled quarterly cash
dividends on the Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock in accordance with the terms thereof as in
effect on the Original Issue Date) other than the declaration and
payment by the Corporation, RSC and AAE of dividends on the Common
Stock, the RSC Class A Shares and the AAE Dividend Shares, respectively,
which do not exceed (i) on and after June 1, 1994 and on and prior to
December 31, 1994, more than $0.075 per share, (ii) on and after January
1, 1995 and on and prior to December 31, 1996, in the aggregate more
than 25% of the Corporation's net income available for distribution to
common shareholders (after preferred dividends) through the end of the
last fiscal quarter prior to the date of declaration of such dividend
and (iii) on and after January 1, 1997, in the aggregate more than the
sum of (A) 50% of the Corporation's net income available for
distribution to common shareholders (after preferred dividends) on and
after such date and through the end of the last fiscal quarter prior to
the date of declaration of such dividend and (B) the excess, if any,
of(1) 25% of the Corporation's net income available for distribution to
common shareholders (after preferred dividends) during the period ending
on and after January 1, 1995 through December 31, 1996 over (2) the
aggregate amount of dividends declared during the period from January 1,
1995 through December 31, 1996 and (b) any repurchases, redemptions,
retirements or other acquisitions directly or indirectly by the
Corporation or any of its subsidiaries on or after June 1, 1994 of any
stock of the Corporation or any of its subsidiaries (other than a
wholly-owned subsidiary) (other than redemptions or repurchases of the
Series B Convertible Preferred Stock in accordance with Sections 6 and
7) in excess of net proceeds on or after June 1, 1994 to the Corporation
from sales of stock of the Corporation (less amounts expended on
redemptions or repurchases of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock on or after June 1, 1994). For
purposes of Section 8 below, all amounts treated as an Extraordinary
Equity Payment shall be treated as having been made by the Corporation.
"Specified Corporate Action" shall mean such time as (i) the
Corporation shall consent or agree to the acquisition of, or the
commencement of a tender offer for, or the Board of Directors of the
Corporation shall recommend or, within 10 business days after the
commencement of the
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tender offer, not recommend that shareholders reject, a tender
offer for, "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) by any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
("the Exchange Act")) other than American International Group, Inc.
("AIG") and its affiliates or any transferee thereof, of securities of
the Corporation entitled to vote generally in the election of directors,
or securities convertible into or exchangeable for such securities
(collectively, "Designated Securities"), representing, when added to the
Designated Securities already owned by any such person or group,
thirty-five percent (35%) or more of such Designated Securities; (ii)
the Corporation shall amend, modify or supplement, or waive the benefit
of, the Rights Agreement between Alexander & Alexander Services Inc. and
First Chicago Trust Company of New York, dated as of June 11, 1987, as
amended and restated on March 22, 1990, as amended on August 21, 1992
and June 6, 1994 (the "Rights Agreement"), so as to permit any
acquisition of beneficial ownership of thirty-five percent (35%) or more
of the Designated Securities without causing a person or group (other
than AIG and its affiliates or any transferee thereof) to become an
Acquiring Person (as defined in the Rights Agreement) or without causing
the Distribution Date or the Shares Acquisition Date (each as defined in
the Rights Agreement) to occur or without giving rise to a Section
11(a)(ii) Event (as defined in the Rights Agreement); (iii) the
Corporation shall take any action under Section 3-603(c) of the Maryland
General Corporation Law to exempt any transaction between the
Corporation and any of its subsidiaries, on the one hand, and any person
or group (other than AIG and its affiliates or any transferee thereof),
or any affiliates of any such person or group, on the other hand, who
(A) acquire, own or hold beneficial ownership of Designated Securities
representing thirty-five percent (35%) or more of such Designated
Securities from the provisions of Title 3, Subtitle 6 of the Maryland
General Corporation Law or (B) acquire, own or hold beneficial ownership
of Designated Securities representing ten percent (10%) or more of such
Designated Securities unless such other person or group, or any
affiliate of such person or group, enters into a standstill agreement
with the Corporation limiting the acquisition of Designated Securities
by such other person or group, or any affiliates of such person or
group, to less than 35% of the Designated Securities and such standstill
agreement remains in full force and effect; (iv) the Corporation shall
issue, sell or transfer, in one or a series of related transactions,
Designated Securities to any person or group (other than AIG and its
affiliates or any transferee thereof) if after giving effect thereto
said person or group shall have, or shall have the then contractual
right to acquire through conversion, exercise of warrants or otherwise,
more than thirty-five percent (35%) of the combined voting power to vote
generally in the election of directors of the Corporation; or (v) the
Corporation shall agree to merge or consolidate with or into any person,
firm, corporation or other legal entity (other than AIG and its
affiliates or any transferee thereof) or shall agree to sell all or
substantially all its assets to any such person, firm, corporation or
other legal entity other than (i) a merger or consolidation of one
subsidiary of the Corporation into another or the Corporation, or (ii) a
merger or consolidation in which the securities of the Corporation
outstanding before the merger or consolidation are not affected and in
which the Corporation issues equity securities having an aggregate
market value of less than 20% of the total market value of the
Corporation's equity securities outstanding prior to such merger or
consolidation.
"Principal Subsidiary" means a subsidiary, including its
subsidiaries, which meets any of the following conditions:
(i) The Corporation's and its other subsidiaries'
investments in and advances to the subsidiary exceed ten percent
(10%) of the total assets of the Corporation and its subsidiaries
consolidated as of the end of the most recently completed fiscal
year of the Corporation; or
(ii) The Corporation's and its other subsidiaries'
proportionate share of the total assets (after intercompany
eliminations) of the subsidiary exceed ten percent (10%) of the
total assets of the Corporation and its subsidiaries consolidated as
of the end of the most recently completed fiscal year of the
Corporation; or
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(iii) The Corporation's and its other subsidiaries' equity in
the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in accounting
principles of the subsidiary exceeds ten percent (10%) of such
income of the Corporation and its subsidiaries consolidated for the
most recently completed fiscal year of the Corporation.
"Affiliate" means, when used with reference to any person, any
other person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, the referent person or such
other person, as the case may be, or any person who beneficially owns,
directly or indirectly, 10% or more of the voting equity interests of
such person or warrants, options or other rights to acquire or hold more
than 10% of any class of voting equity interests of such person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct or cause the direction of
management or policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
The date fixed for each such repurchase shall be the 121st day
following the occurrence of the Special Event giving rise thereto. The
place of payment shall be at an office or agency in the City of New
York, New York fixed therefor by the Corporation or, if not fixed, at
the principal executive office of the Corporation.
The Corporation shall, within 20 days of the occurrence of a
Special Event, give a written notice thereof by first class mail,
postage prepaid, to the holders of record of shares of the Series B
Convertible Preferred Stock, addressed to such holders at their last
addresses as shown upon the stock transfer books of the Corporation.
Each such notice shall specify the Special Event which has occurred and
the date of such occurrence, the place or places of payment, the then
effective conversion price pursuant to Section 8, the then effective
repurchase price and the date the right of such holder to require such
repurchase shall terminate. Any notice that is mailed as herein provided
shall be conclusively presumed to have been duly given, whether or not
the holder of shares of Series B Convertible Preferred Stock receives
such notice; and failure to give such notice by mail, or any defect in
such notice, to the holders of any shares shall not affect the validity
of the proceedings for the repurchase of any other shares of Series B
Convertible Preferred Stock.
On the date fixed for any such repurchase, each holder of shares
of Series B Convertible Preferred Stock who elects to have shares of
Series B Convertible Preferred Stock held by it purchased shall
surrender the certificate representing such shares to the Corporation at
the place designated in such notice together with an election to have
such purchase made and shall thereupon be entitled to receive payment
therefor provided in this Section 7. If less than all the shares
represented by any such surrendered certificate are repurchased, a new
certificate shall be issued representing the unpurchased shares.
Dividends with respect to the shares of Series B Convertible Preferred
Stock so purchased shall cease to accrue after the date so purchased,
such shares shall no longer be deemed outstanding and the holders
thereof shall cease to be stockholders of the Corporation and all rights
whatsoever with respect to the shares so purchased shall terminate. If
the funds legally available for such purchase are not sufficient to
purchase all the shares of Series B Convertible Preferred Stock tendered
to the Corporation for purchase, the Corporation shall purchase the
greatest number of whole shares for which such funds are so available on
a pro rata basis among all tendering holders based on the ratio of the
number of shares tendered by each of them to the aggregate amount of all
shares so tendered, and the certificates representing the unpurchased
shares shall be deemed not to be surrendered for repurchase, such
unpurchased shares shall remain outstanding and the rights of the
holders of shares of Series B Convertible Preferred Stock thereafter
shall continue to be those of a holder of shares of the Series B
Convertible Preferred Stock; provided, however, the Corporation shall
thereafter be required to repurchase all such remaining shares at the
first date it has sufficient funds legally available for such purpose at
the price it would have paid at the date such shares were actually
tendered and the Corporation shall give notice as aforesaid to each
holder whose shares were not repurchased for such reason and such holder
shall thereafter have the right to elect to have such shares
repurchased, such election to be made within 30 days of receipt of such
notice.
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8. Conversion.
(a) Right of Conversion. Each share of Series B Convertible
Preferred Stock shall be convertible at the option of the holder
thereof, at any time prior to the close of business on the business day
prior to the date fixed for redemption of such share as herein provided,
into fully paid and nonassessable shares of Class D Common Stock and
such other securities and property as hereinafter provided, at the rate
of that number of shares of Class D Common Stock for each full share of
Series B Convertible Preferred Stock that is equal to $50.00 divided by
the conversion price applicable per share of Class D Common Stock. For
purposes of this resolution, the "conversion price" applicable per share
of Class D Common Stock shall initially be equal to $17.00, and shall be
adjusted from time to time in accordance with the provisions of this
Section 8.
For the purpose of this Section 8, the term "Common Stock" shall
mean the class designated as Common Stock, par value $1.00 per share, of
the Corporation as of June 1, 1994 and any other shares into which such
shares may hereafter be changed from time to time. For purposes of this
Section 8, the term "Class D Common Stock" shall mean the class
designated as Class D Common Stock, par value $1.00 per share, of the
Corporation as of the Original Issue Date and any other shares into
which such shares may hereafter be changed from time to time.
(b) Conversion Procedures. Any holder of shares of Series B
Convertible Preferred Stock desiring to convert such shares into Class D
Common Stock shall surrender the certificate or certificates
representing such shares of Series B Convertible Preferred Stock at the
office of the transfer agent for the Series B Convertible Preferred
Stock, which certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in blank, or
accompanied by proper instruments of transfer to the Corporation or in
blank, accompanied by irrevocable written notice to the Corporation that
the holder elects so to convert such shares of Series B Convertible
Preferred Stock and specifying the name or names (with address or
addresses) in which a certificate or certificates evidencing shares of
Class D Common Stock are to be issued.
Subject to Section 8(1) hereof, no payments or adjustments in
respect of dividends on shares of Series B Convertible Preferred Stock
surrendered for conversion or on account of any dividend on the Class D
Common Stock issued upon conversion shall be made upon the conversion of
any shares of Series B Convertible Preferred Stock.
The Corporation shall, as soon as practicable after such deposit
of certificates representing shares of Series B Convertible Preferred
Stock accompanied by the written notice and compliance with any other
conditions herein contained, deliver at such office of the transfer
agent to the person for whose account such shares of Series B
Convertible Preferred Stock were so surrendered or to the nominee or
nominees of such person certificates representing the number of full
shares of Class D Common Stock to which such person shall be entitled as
aforesaid, together with a cash adjustment in respect of any fraction of
a share of Class D Common Stock as hereinafter provided. Subject to the
following provisions of this paragraph, such conversion shall be deemed
to have been made as of the date of such surrender of the shares of
Series B Convertible Preferred Stock to be converted, and the person or
persons entitled to receive the Class D Common Stock deliverable upon
conversion of such Series B Convertible Preferred Stock shall be treated
for all purposes as the record holder or holders of such Class D Common
Stock on such date.
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(c) Adjustment of Conversion Price. The conversion price at
which a share of Series B Convertible Preferred Stock is convertible
into Class D Common Stock shall be subject to adjustment from time to
time as follows:
(i) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock exclusively in Common Stock
or shall pay or make a dividend or other distribution on any other
class of stock of the Corporation which dividend or distribution
includes Common Stock or shall exchange outstanding Rights (as
defined in Section 8(k) hereof) for shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution or to
exchange such Rights shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the
date fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution or exchange, such
reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination.
In case the Corporation shall issue or otherwise sell or
distribute shares of Common Stock for a consideration per share in
cash or property less than the conversion price in effect at the
time of such issuance, the conversion price then in effect shall be
reduced by multiplying such conversion price by a fraction of which
the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance, sale or distribution
plus the number of shares of Common Stock which the aggregate
consideration received by the Corporation for such issuance, sale or
distribution (such consideration, if other than cash, as determined
by the Board of Directors including a majority of the Directors who
are not officers or employees of the Corporation or any of its
subsidiaries, whose determination shall be conclusive and described
in a resolution of the Board of Directors) would purchase at the
conversion price per share and the denominator shall be the number
of shares of Common Stock outstanding immediately after giving
effecting to such issuance, sale or distribution.
(ii) In case the Corporation shall pay or make a dividend or
other distribution on its Common Stock consisting exclusively of, or
shall otherwise issue to all or substantially all holders of its
Common Stock, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per
share less than the then current market price per share (determined
as provided in subparagraph (vii) of this Section 8(c)) of the
Common Stock on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion price in
effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such
conversion price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering price of
the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current market price
and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered
for subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following the
date fixed for such determination. In case any rights or warrants
referred to in this subparagraph (ii) in respect of which an
adjustment shall have been made shall expire unexercised, the
conversion price shall be readjusted at the time of such expiration
to the conversion price that would have been in effect if no
adjustment had been made on account of the distribution or issuance
of such
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expired rights or warrants. For the purposes of this Section
8(c)(ii), if both a Distribution Date and a Section 11(a)(ii) Event
(as such terms are defined in the Rights Agreement) shall have
occurred, then the later to occur of such events shall be deemed to
constitute an issuance of rights to purchase shares of Common Stock.
(iii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective
shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall each be combined into a
smaller number of shares of Common Stock, the conversion price in
effect at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to become
effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
(iv) Subject to the last sentence of this subparagraph (iv),
in case the Corporation shall, by dividend or otherwise,
distribute to all or substantially all holders of its Common Stock
evidences of its indebtedness, shares of any class of stock, cash or
assets (including securities, but excluding any rights or warrants
referred to in subparagraph (ii) of this Section 8(c), excluding any
dividend or distribution paid exclusively in cash (other than an
Extraordinary Equity Payment) and excluding any dividend or
distribution referred to in subparagraph (i) of this Section 8(c))
(for the purposes of this subparagraph (iv), such evidence of
indebtedness, shares of stock, cash and assets are herein called
"Securities"), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the conversion
price in effect immediately following the close of business on the
Determination Date (as defined in Section 8(i)) by a fraction of
which the numerator shall be the current market price per share
(determined as provided in subparagraph (vii) of this Section 8(c))
of the Common Stock on the Determination Date less the fair market
value (as determined by the Board of Directors including a majority
of the Directors who are not officers or employees of the
Corporation or any of its subsidiaries, whose determination shall be
conclusive and described in a resolution of the Board of Directors),
on the date of such effectiveness, of the portion of the Securities
so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the
Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following the Determination
Date. If the Board of Directors so determines as aforesaid the fair
market value of any distribution for purposes of this subparagraph
(iv) by reference to the actual or when issued trading market for
any Securities comprising such distribution, it must in doing so
consider the prices in such market over the same period used in
computing the current market price per share of Common Stock
pursuant to subparagraph (vii) of this Section 8(c). Notwithstanding
the foregoing, if the holders of the Series B Convertible Preferred
Stock elect to cause the Corporation to reserve the Securities to be
distributed for distribution to the holders of the Series B
Convertible Preferred Stock upon the conversion of the shares of
Series B Convertible Preferred Stock so that any such holder
converting shares of Series B Convertible Preferred Stock will
receive upon such conversion, in addition to the shares of the Class
D Common Stock to which such holder is entitled, the amount and kind
of such Securities which such holder would have received if such
holder had, immediately prior to the Determination Date for such
distribution of Securities, converted its shares of Series B
Convertible Preferred Stock into Class D Common Stock, the fair
market value of the Securities shall, for purposes of this
subparagraph (iv), be deemed to be zero.
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For purposes of this subparagraph (iv), any dividend or
distribution that includes shares of Common Stock, rights or
warrants to subscribe for or purchase shares of Common Stock or
other securities convertible into or exchangeable for shares of
Common Stock shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, cash, assets or
shares of stock other than such shares of Common Stock, such rights
or warrants or such other convertible or exchangeable securities
(making any conversion price reduction required by this subparagraph
(iv)) immediately followed by (2) in the case of such shares of
Common Stock or such rights or warrants, a dividend or distribution
thereof (making any further conversion price reduction required by
subparagraph (i) or (ii) of this Section 8(c), except (A) the
Determination Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution or to
exchange such Rights" and "the date fixed for such determination"
within the meaning of subparagraphs (i) and (ii) of this Section
8(c) and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 8(c)) or (3) in the case
of such other convertible or exchangeable securities, a dividend or
distribution of such number of shares of Common Stock as would then
be issuable upon the conversion or exchange thereof, whether or not
the conversion or exchange of such securities is subject to any
conditions (making any further conversion price reduction required
by subparagraph (i) of this Section 8(c), except (A) the
Determination Date of such dividend or distribution shall be
substituted as "the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution or to
exchange such Rights" and "the date fixed for such determination"
and (B) the shares deemed to constitute such dividend or
distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination," each within the
meaning of subparagraph (i) of this Section 8(c)).
(v) Subject to the last sentence of this subparagraph (v), in
case the Corporation shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (excluding (1)
any cash that is distributed as part of a distribution referred to
in subparagraph (iv) of this Section 8(c) and constitutes an
Extraordinary Equity Payment and (2) any cash representing an amount
per share of Common Stock of any quarterly cash dividend on the
Common Stock to the extent such cash does not constitute an
Extraordinary Equity Payment), the conversion price shall be reduced
so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of
the conversion price reduction contemplated by this subparagraph (v)
by a fraction of which the numerator shall be the current market
price per share (determined as provided in subparagraph (vii) of
this Section 8(c)) of the Common Stock on the Determination Date
less the amount of cash so distributed and not excluded as above
provided applicable to one share of Common Stock and the denominator
shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening
of business on the day following the Determination Date.
Notwithstanding the foregoing, if the Corporation elects to reserve
the cash to be distributed for distribution to the holders of the
Series B Convertible Preferred Stock upon the conversion of the
shares of Series B Convertible Preferred Stock so that any such
holder converting shares of Series B Convertible Preferred Stock
will receive upon such conversion, in addition to the shares of the
Class D Common Stock to which such holder is entitled, the amount of
cash which such holder would have received if such holder had,
immediately prior to the Determination Date for such distribution of
cash, converted its shares of Series B Convertible Preferred Stock
into Class D Common Stock, then the conversion price shall not be so
reduced.
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(vi) In case a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or any
portion of the Corporation's Common Stock shall expire and such
tender or exchange offer shall involve the payment by the
Corporation or such subsidiary of consideration per share of Common
Stock having a fair market value (as determined by the Board of
Directors, including a majority of the Directors who are not
officers or employees of the Corporation or any of its subsidiaries,
whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended) that
exceeds the current market price per share (determined as provided
in subparagraph (vii) of this Section 8(c)) of the Common Stock on
the Trading Day next succeeding the Expiration Time, the conversion
price shall be reduced so that the same shall equal the price
determined by multiplying the conversion price in effect immediately
prior to the Expiration Time by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied
by the current market price per share (determined as provided in
subparagraph (vii) of this Section 8(c)) of the Common Stock on the
Trading Day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of
the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the current market price per share (determined
as provided in subparagraph (vii) of this Section 8(c)) of the
Common Stock on the Trading Day next succeeding the Expiration Time,
such reduction to become effective immediately prior to the opening
of business on the day following the Expiration Time.
(vii) For the purpose of any computation under this
subparagraph and subparagraphs (ii), (iv) and (v) of this
Section 8(c), the current market price per share of Common Stock on
any date shall be deemed to be the average of the daily Closing
Prices (as defined in Section 8(i)) on the five consecutive Trading
Days prior to and including the date in question; provided, however,
that (1) if the "ex" date (as hereinafter defined) for any event
(other than the issuance or distribution requiring such computation)
that requires an adjustment to the conversion price pursuant to
subparagraph (i), (ii), (iii), (iv), (v) or (vi) above occurs on or
after the twentieth Trading Day prior to the day in question and
prior to the "ex" date for the issuance or distribution requiring
such computation, the Closing Price for each Trading Day prior to
the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the same fraction by which the conversion
price is so required to be adjusted as a result of such other event,
(2) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment
to the conversion price pursuant to subparagraph (i), (ii), (iii),
(iv), (v) or (vi) above occurs on or after the "ex" date for the
issuance or distribution requiring such computation and on or prior
to the day in question, the Closing Price for each Trading Day on
and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the conversion price is so required to be adjusted as a result
of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is on or prior to the date
in question, after taking into account any adjustment required
pursuant to clause (2) of this proviso, the Closing Price for each
Trading Day on or after such "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value
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on the day in question (as determined by the Board of Directors,
including a majority of the Directors who are not officers or
employees of the Corporation, in a manner consistent with any
determination of such value for purposes of paragraph (iv) or (v) of
this Section 8(c), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of stock or assets being
distributed applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any
computation under subparagraph (vi) of this Section 8(c), the
current market price per share of Common Stock on any date shall be
deemed to be the average of the daily Closing Prices for such day
and the next two succeeding Trading Days; provided that, if the "ex"
date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the
conversion price pursuant to subparagraph (i), (ii), (iii), (iv),
(v) or (vi) above occurs on or after the Expiration Time for the
tender or exchange offer requiring such computation and on or prior
to the day in question, the Closing Price for each Trading Day on
and after the "ex" date or such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the conversion price is so required to be adjusted as a result
of such other event. For purposes of this subparagraph (vii), the
term "ex" date, (1) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades
regular way on the relevant exchange or in the relevant market from
which the Closing Price was obtained without the right to receive
such issuance or distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision
or combination becomes effective, and (3) when used with respect to
any tender or exchange offer, means the first date on which the
Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.
(viii) The Corporation may make such reductions in the
conversion price, in addition to those required by subparagraphs
(i), (ii), (iii), (iv), (v) and (vi) of this Section 8(c), as it
considers to be advisable to avoid or diminish any income tax to
holders of Class D Common Stock or rights to purchase Class D Common
Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for
income tax purposes. The Corporation from time to time may reduce
the conversion price by any amount for any period of time if the
period is at least thirty days, the reduction is irrevocable during
the period and the Board of Directors shall have made a
determination that such reduction would be in the best interest of
the Corporation, which determination shall be conclusive. Whenever
the conversion price is reduced pursuant to the preceding sentence,
the Corporation shall mail to holders of record of the Series B
Convertible Preferred Stock a notice of the reduction at least
fifteen days prior to the date the reduced conversion price takes
effect, and such notice shall state the reduced conversion price and
the period it will be in effect.
(ix) No adjustment in the conversion price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in the conversion price; provided, however, that any
adjustments which by reason of this subparagraph (ix) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment.
(x) Notwithstanding any other provision of this Section 8 and
without implication that the contrary would otherwise be true, no
issuance, dividend or distribution requiring adjustment of the
conversion price pursuant to Section 8(c) hereof shall be deemed to
have occurred in the event that, upon, following or in connection
with the redemption or expiration of the Rights or the termination
of the Rights Agreement or otherwise, the Corporation enters into a
new agreement that is comparable in purpose and effect to the
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Rights Agreement (as determined by the Board of Directors, whose
determination shall be conclusive) and distributes to the holders of
Common Stock and Class D Common Stock Preferred Stock, Common Stock
or other similar stock purchase rights under such agreement that are
attached to the Common Stock.
(xi) Whenever the conversion price is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted
conversion price and shall prepare a certificate signed by the
Treasurer of the Corporation setting forth the adjusted
conversion price and showing in reasonable detail the acts upon
which such adjustment is based, and such certificate shall
forthwith be filed with the transfer agent for the Series B
Convertible Preferred Stock; and
(2) a notice stating the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be required, and as soon as practicable after it is
required, such notice shall be mailed by the Corporation to all
record holders of shares of Series B Convertible Preferred Stock
at their last addresses as they shall appear upon the stock
transfer books of the Corporation.
(xii) The occurrence of any correlative event with respect to
the Class A Common Stock or the Class C Common Stock shall result in
adjustments to the conversion price congruent with those made with
respect to the Common Stock.
(d) No Fractional Shares. No fractional shares or scrip
representing fractional shares of Class D Common Stock shall be issued
upon conversion of Series B Convertible Preferred Stock. If more than
one certificate representing shares of Series B Convertible Preferred
Stock shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall
be computed on the basis of the aggregate number of shares of Series B
Convertible Preferred Stock so surrendered. Instead of any fractional
share of Class D Common Stock that would otherwise be issuable upon
conversion of any shares of Series B Convertible Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional
interest in an amount equal to the same fraction of the market price per
share of Common Stock (as determined by the Board of Directors or in any
manner prescribed by the Board of Directors, which, so long as the
Common Stock is listed on the New York Stock Exchange, shall be the
reported last sale price regular way on the New York Stock Exchange) at
the close of business on the day of conversion.
(e) Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Corporation shall be a party to any transaction
(including without limitation any recapitalization or reclassification
of the Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), any consolidation of
the Corporation with, or merger of the Corporation into, any other
person, any merger of any other person into the Corporation (other than
a merger which does not result in a reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all of the
assets of the Corporation or any compulsory share exchange pursuant to
which the Common Stock is converted into the right to receive other
securities, cash or other property, then lawful provision shall be made
as part of the terms of such transaction whereby the holder of each
share of Series B Convertible Preferred Stock then outstanding shall
have the right thereafter to convert such share only into (i) in the
case of any such transaction other than a Common Stock Fundamental
Change (as defined in Section 8(i)) and subject to assets being legally
available for such purpose under applicable law at the time of such
conversion, the kind and amount of securities, cash and other property
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receivable upon such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange by a holder of the
number of shares of Common Stock of the Corporation into which such
share of Series B Convertible Preferred Stock might have been converted
immediately prior to such recapitalization, reclassification,
consolidation, merger, sale, transfer or share exchange, after giving
effect, in the case of any Non-Stock Fundamental Change (as defined in
Section 8(i)), to any adjustment in the conversion price required by the
provisions of Section 8(h), and (ii) in the case of a Common Stock
Fundamental Change, into Common Stock of the kind received by holders of
Common Stock as a result of such Common Stock Fundamental Change in an
amount determined pursuant to the provisions of Section 8(h). The
Corporation or the person formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the
Corporation's shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent document
to establish such right. Such certificate or articles of incorporation
or other constituent document shall provide for adjustments which, for
events subsequent to the effective date of such certificate or articles
of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section 8. The above provisions shall similarly apply to successive
recapitalizations, reclassifications, consolidations, mergers, sales,
transfers or share exchanges.
(f) Reservation of Shares; Transfer Taxes; Etc. The Corporation
shall at all times reserve and keep available, out of its authorized and
unissued stock, solely for the purpose of effecting the conversion of
the Series B Convertible Preferred Stock, such number of shares of its
Class D Common Stock or Common Stock free of preemptive rights as shall
from time to time be sufficient to effect the conversion of all shares
of Series B Convertible Preferred Stock from time to time outstanding.
The Corporation shall from time to time, in accordance with the laws of
the State of Maryland, increase the number of authorized shares of Class
D Common Stock if at any time the number of shares of authorized and
unissued Class D Common Stock shall not be sufficient to permit the
conversion of all the then outstanding shares of Series B Convertible
Preferred Stock. The Corporation shall at all times reserve and keep
available, out of its authorized and unissued stock, solely for the
purpose of effecting the exchange of shares of Class D Common Stock or
conversion of Series B Convertible Preferred Stock, such number of
shares of its Common Stock or Class D Common Stock, as the case may be,
free of preemptive rights as shall from time to time be sufficient to
effect the exchange of all shares of Class D Common Stock or conversion
of Series B Convertible Preferred Stock from time to time.
If any shares of Class D Common Stock required to be reserved
for purposes of conversion of the Series B Convertible Preferred Stock
hereunder require registration with or approval of any governmental
authority under any Federal or State law before such shares may be
issued upon conversion, the Corporation will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If the Class D Common Stock
is listed on the New York Stock Exchange or any other national
securities exchange, the Corporation will, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official
notice of issuance, all shares of Class D Common Stock issuable upon
conversion of the shares of Series B Convertible Preferred Stock.
The Corporation shall pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Class D
Common Stock on conversion of the Series B Convertible Preferred Stock.
The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery
of Class D Common Stock (or other securities or assets) in a name other
than that in which the shares of Series B Convertible Preferred Stock so
converted were registered, and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the
Corporation the amount of such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
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(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) authorize and declare any
dividend (or any other distribution) on its Common Stock, other than
(A) a dividend payable in shares of Common Stock or (B) a dividend
payable in cash, other than any regularly scheduled quarterly cash
dividend which does not constitute an Extraordinary Equity Payment,
or (2) declare or authorize a redemption or repurchase of in excess
of 10% of the then outstanding shares of Common Stock; or
(ii) the Corporation shall authorize the granting to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights
or warrants; or
(iii) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which
the Corporation is a party and for which approval of any
stockholders of the Corporation shall be required, or of the sale or
transfer of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Series B Convertible Preferred Stock, and shall cause to
be mailed to the holders of record of the Series B Convertible Preferred
Stock, at their last addresses as they shall appear upon the stock
transfer books of the Corporation, at least fifteen days prior to the
applicable record date hereinafter specified, a notice stating, as the
case may be, (x) the record date (if any) for the purpose of such
dividend, distribution, redemption, repurchase or granting of rights or
warrants or, if no record date is to be set, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution, redemption, rights or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected
that holders of shares of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no
failure to mail such notice or any defect therein or in the mailing
thereof shall affect the validity of the corporate action required to be
specified in such notice).
(h) Adjustments in Case of Fundamental Changes. Notwithstanding
any other provision in this Section 8 to the contrary, if any
Fundamental Change (as defined in Section 8(i)) occurs, then the
conversion price in effect will be adjusted immediately after such
Fundamental Change as described below. In addition, in the event of a
Common Stock Fundamental Change (as defined in Section 8(i)), each share
of Series B Convertible Preferred Stock shall be convertible solely into
shares of common stock of the kind received by holders of Common Stock
as the result of such shares of Common Stock Fundamental Change.
For purposes of calculating any adjustment to be made pursuant
to this Section 8(h) in the event of a Fundamental Change, immediately
after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as
defined in Section 8(i)), the conversion price of the Series B
Convertible Preferred Stock shall become the lower of (A) the
conversion price immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior adjustments
effected pursuant to this Section 8, and
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(B) the result obtained by multiplying the greater of the
Applicable Price (as defined in Section 8(i)) or the then applicable
Reference Market Price (as defined in Section 8(i)) by a fraction
the numerator of which shall be $50.00 and the denominator of which
shall be $54.00 prior to September 15, 1999 and thereafter the then
current Redemption Price per share of Series B Convertible Preferred
Stock plus an amount equal to all dividends accrued and unpaid
thereon, whether or not declared, to but excluding the date of such
Non-Stock Fundamental Change; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price shall be the conversion price in effect immediately
prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to this
Section 8, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined in Section 8(i)) and the
denominator of which is the Applicable Price; provided, however,
that in the event of a Common Stock Fundamental Change in which (A)
100% by value of the consideration received by a holder of Common
Stock is common stock of the successor, acquiror or other third
party (and cash, if any, is paid with respect to any fractional
interests in such common stock resulting from such Common Stock
Fundamental Change) and (B) all of the Common Stock shall have been
exchanged for, converted into or acquired for common stock (and cash
with respect to fractional interests) of the successor, acquiror or
other third party, the conversion price of the shares of Series B
Convertible Preferred Stock immediately following such Common Stock
Fundamental Change shall be the conversion price in effect
immediately prior to such Common Stock Fundamental Change multiplied
by a fraction, the numerator of which is one (1) and the denominator
of which is the number of shares of common stock of the successor,
acquiror or other third party received by a holder of one share of
Common Stock as a result of such Common Stock Fundamental Change.
(i) Definitions. The following definitions shall apply to
terms used in this Section 8:
(1) "Applicable Price" shall mean (i) in the event of a
Non-Stock Fundamental Change in which the holders of shares
of Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii)
in the event of any other Non-Stock Fundamental Change or any
Common Stock Fundamental Change, the average of the last
reported sale price for the Common Stock during the ten
Trading Days immediately prior to the record date for the
determination of the holders of Common Stock entitled to
receive cash, securities, property or other assets in
connection with such Non-Stock Fundamental Change or Common
Stock Fundamental Change, or, if there is no such record
date, the date upon which the holders of the Common Stock
shall have the right to receive such cash, securities,
property or other assets.
(2) "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no such sale
takes place on such day, the average of the reported closing
bid and asked prices regular way, in each case on the New
York Stock Exchange, or, if the Common Stock is not listed or
admitted to trading on such Exchange, on the principal
national securities exchange or quotation system on which the
Common Stock is quoted or listed or admitted to trading, or,
if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, the average
of the closing bid and asked prices of the Common Stock on
the over-the-counter market on the day in question as
reported by the National Quotation Bureau Incorporated, or a
similarly generally accepted reporting service, or if not so
available in such manner, as furnished by any New York Stock
Exchange member firm selected from time to time by the Board
of Directors of the Corporation for that purpose.
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(3) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% by value (as
determined in good faith by the Board of Directors) of the
consideration received by holders of Common Stock consists of
common stock that for the consecutive ten Trading Days
immediately prior to such Fundamental Change has been
admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or
quoted on the National Association of Securities Dealers,
Inc. ("NASDAQ") National Market System; provided, however,
that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Corporation
continues to exist after the occurrence of such Fundamental
Change and the outstanding shares of Series B Convertible
Preferred Stock continue to exist as outstanding shares of
Series B Convertible Preferred Stock, or (ii) not later than
the occurrence of such Fundamental Change, the outstanding
shares of Series B Convertible Preferred Stock are converted
into or exchanged for shares of convertible preferred stock
of a corporation succeeding to the business of the
Corporation, which convertible preferred stock has powers,
preferences and relative, participating, optional or other
rights, and qualifications, limitations and restrictions,
substantially similar to those of the Series B Convertible
Preferred Stock.
(4) "Determination Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which
the holders of Common Stock have the right to receive any
cash, securities or other property or assets or in which the
Common Stock (or other applicable security) is exchanged for
or converted into any combination of cash, securities or
other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or
other property or assets (whether such date is fixed by the
Board of Directors or by statute, contract or otherwise).
(5) "Fundamental Change" shall mean the occurrence of
any transaction or event in connection with a plan pursuant
to which all or substantially all of the shares of Common
Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive cash, securities,
property or other assets (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan
involving more than one such transaction or event, for
purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when
substantially all of the shares of Common Stock of the
Corporation shall be exchanged for, converted into or
acquired for or constitute solely the right to receive cash,
securities, property or other assets, but the adjustment
shall be based upon the consideration which the holders of
Common Stock received in such transaction or event as a
result of which more than 50% of the shares of Common Stock
of the Corporation shall have been exchanged for, converted
into, or acquired for or constitute solely the right to
receive cash, securities, property or other assets; provided,
further, that such term does not include (i) any such
transaction or event in which the Corporation and/or any of
its subsidiaries are the issuers of all the cash, securities,
property or other assets exchanged, acquired or otherwise
issued in such transaction or event, or (ii) any such
transaction or event in which the holders of Common Stock
receive securities of an issuer other than the Corporation
if, immediately following such transaction or event, such
holders hold a majority of the securities having the power to
vote normally in the election of directors of such other
issuer outstanding immediately following such transaction or
other event.
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109
(6) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental
Change.
(7) "Purchaser Stock Price" shall mean, with respect to
any Common Stock Fundamental Change, the average of the last
reported sales price for the common stock, on the principal
national securities exchange or the NASDAQ National Market
System on which such common stock is listed, received in such
Common Stock Fundamental Change during the ten Trading Days
immediately prior to the record date for the determination of
the holders of Common Stock entitled to receive such common
stock or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to
receive such common stock; provided, however, if no such last
reported sales price for the common stock during the last ten
Trading Days prior to the record date exists, then the
Purchaser Stock Price shall be set at a price determined in
good faith by the Board of Directors.
(8) "Reference Market Price" shall initially mean $11.33
and in the event of any adjustment to the conversion price
other than as a result of a Fundamental Change, the Reference
Market Price shall also be adjusted so that the ratio of the
Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the
ratio of $11.33 to the initial conversion price set forth
above.
(9) "Trading Day" shall mean a day on which the national
securities exchange or the NASDAQ National Market System used
to determine the Closing Price is open for the transaction of
business or the reporting of trades.
(j) Dividend or Interest Reinvestment Plans. Notwithstanding
the foregoing provisions, the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of
dividends or interest payable on securities of the Corporation and
the investment of additional optional amounts in shares of Common
Stock under any such plan, and the issuance of any shares of Common
Stock or options or rights to purchase such shares pursuant to any
employee benefit plan or program of the Corporation or pursuant to
any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Series B
Convertible Preferred Stock was first designated (except as
expressly provided in Section 8(c)(i) or 8(c)(ii) with respect to
certain events under the Rights Agreement), and any issuance of
Rights (as hereinafter defined), shall not be deemed to constitute
an issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation or any of its subsidiaries
to which any of the adjustment provisions described above applies.
There shall also be no adjustment of the conversion price in case of
the issuance of any stock (or securities convertible into or
exchangeable for stock) of the Corporation except as specifically
described in this Section 8. If any action would require adjustment
of the conversion price pursuant to more than one of the provisions
described above, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest
absolute value to the holders of Series B Convertible Preferred
Stock.
(k) Preferred Share Purchase Rights. So long as Preferred
Share Purchase Rights, of the kind authorized and declared on
June 11, 1987 and distributed by the Corporation in June 1987 as the
same have been and may hereafter be amended ("Rights"), are attached
to the outstanding shares of Class D Common Stock of the
Corporation, each share of Class D Common Stock issued upon
conversion of the shares of Series B Convertible Preferred Stock
prior to the earliest of any Distribution Date (as defined in the
Rights Agreement), the date of redemption of the Rights or the date
of expiration of the Rights shall be issued with Rights in an amount
equal to the amount of
21
110
Rights then attached to each such outstanding share of Class D
Common Stock, provided that, at the option of any holder of shares
of Class D Common Stock, any securities issued upon exercise of such
Rights shall be voting only to the extent that the Class D Common
Stock is voting.
(l) Certain Additional Rights. In case the Corporation
shall, by dividend or otherwise, authorize, declare or make a
distribution on its Common Stock referred to in Section 8(c)(iv) or
Section 8(c)(v), the holder of each share of Series B Convertible
Preferred Stock, upon the conversion thereof subsequent to the close
of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness
of the conversion price adjustment in respect of such distribution
pursuant to Section 8(c)(iv) or Section 8(c)(v), shall also be
entitled to receive for each share of Class D Common Stock into
which such share of Series B Convertible Preferred Stock is
converted, the portion of the evidences of indebtedness, shares of
stock, cash and assets so distributed applicable to one share of
Class D Common Stock; provided, however, that, at the election of
the Corporation (whose election shall be evidenced by a resolution
of the Board of Directors) with respect to all holders so
converting, the Corporation may, in lieu of distributing to such
holder any portion of such distribution not consisting of cash or
securities of the Corporation, pay such holder an amount in cash
equal to the fair market value thereof (as determined by the Board
of Directors, including a majority of the Directors who are not
officers or employees of the Corporation or any of its subsidiaries,
whose determination shall be conclusive and described in a
resolution of the Board of Directors). If any conversion of a share
of Series B Convertible Preferred Stock described in the immediately
preceding sentence occurs prior to the payment date for a
distribution to holders of Class D Common Stock which the holder of
the share of Series B Convertible Preferred Stock so converted is
entitled to receive in accordance with the immediately preceding
sentence, the Corporation may elect (such election to be evidenced
by a resolution of the Board of Directors) to distribute to such
holder a due bill for the evidences of indebtedness, shares of
stock, cash or assets to which such holder is so entitled; provided
that such due bill (i) meets any applicable requirements of the
principal national securities exchange or other market on which the
Class D Common Stock is then traded and (ii) requires payment or
delivery of such evidences of indebtedness, shares of stock, cash or
assets no later than the date of payment or delivery thereof to
holders of Class D Common Stock receiving such distribution.
(m) Other. Notwithstanding any other provision in this
Section 8 to the contrary, if the Corporation shall, by dividend
or otherwise, authorize, declare or make a distribution on its
Common Stock referred to in Section 8(c)(iv) and such distribution
shall include shares of stock of one or more corporations that
immediately prior to such distribution was or would have been a
subsidiary (a "Spin-Off"), the holder of each share of Series B
Convertible Preferred Stock shall be entitled, if it so elects, in
addition to any other adjustment provided in respect thereof in this
Section 8, to receive share for share convertible preferred stock of
each such corporation which has powers, preferences and relative,
participating, optional and other rights, and qualifications,
limitations and restrictions with respect to such corporation, as
are substantially identical to those of the Series B Convertible
Preferred Stock (the "Additional Preferred Stock" and collectively
with the Series B Preferred Stock, the "Total Preferred Stock"). The
then effective conversion price of the Additional Preferred Stock
shall be such as shall preserve fully the conversion rights of the
Series B Convertible Preferred Stock in such corporation. The shares
of Series B Convertible Stock and the Additional Preferred Stock
shall each thereafter remain outstanding; provided, however, that
any payment, redemption or retirement in respect of either the
Series B Convertible Preferred Stock or the Additional
22
111
Preferred Stock shall operate to reduce the remaining payment,
redemption or retirement rights in respect of both, so that the
holder shall be entitled to receive in the aggregate the full
benefits with respect to payments, redemption and retirement rights
of holding one half of the number of shares of Total Preferred Stock
held by such holder and the full benefits with respect to all other
rights of holding the total number of shares of Total Preferred
Stock held by such holder.
(n) Certain Special Events. Notwithstanding anything in this
Section 8 to the contrary, neither the Corporation nor any of its
subsidiaries shall declare, pay or make any dividend or distribution
or commence a tender or exchange offer for any of the Corporation's
securities that are subordinate to or pari passu with the Series B
Convertible Preferred Stock as to liquidation preference or
dividends or be a party to any transaction (including without
limitation any recapitalization or reclassification of stock), any
consolidation of the Corporation or any such subsidiary with, or
merger of the Corporation or any such subsidiary into, or share
exchange with, any other person, any merger of any other person into
the Corporation or any such subsidiary or any sale or transfer of
assets which, in any such case, would constitute a Special Event
unless after giving effect thereto the Corporation would have the
ability and the right (and the Board of Directors, including a
majority of the Directors who are not officers or employees of the
Corporation or any of its subsidiaries, shall have adopted a
resolution confirming such ability and right) to purchase at the
then applicable price specified in Section 7 all of the then issued
and outstanding shares of Series B Convertible Preferred Stock,
assuming all such stock is tendered to it for purchase pursuant to
Section 7.
9. Voting Rights.
(a) General. The holders of shares of Series B Convertible
Preferred Stock will not have any voting rights except as set forth
below. In connection with such rights to vote pursuant to Sections
9(b) and 9(c), each holder of Series B Convertible Preferred Stock
will have one vote for each share held. Any shares of Series B
Convertible Preferred Stock held by the Corporation or any entity
controlled by the Corporation shall not have voting rights hereunder
and shall not be counted in determining the presence of a quorum.
(b) Default Voting Rights. Whenever dividends on the Series B
Convertible Preferred Stock or any other class or series of Parity
Dividend Stock shall be in arrears in an aggregate amount equal to
at least six quarterly dividends (whether or not consecutive), (i)
the number of members of the Board of Directors shall be increased
by two, effective as of the time of election of such directors as
hereinafter provided and (ii) the holders of the Series B
Convertible Preferred Stock (voting separately as a class with all
other affected classes or series of the Parity Dividend Stock upon
which like voting rights have been conferred and are exercisable)
will have the exclusive right to vote for and elect such two
additional directors of the Corporation at each meeting of
stockholders of the Corporation at which directors are to be elected
held during the period such dividends remain in arrears. The right
of the holders of the Series B Convertible Preferred Stock to vote
for such two additional directors shall terminate when all accrued
and unpaid dividends on the Series B Convertible Preferred Stock
have been authorized, declared, paid or set apart for payment. The
term of office of all directors so elected shall terminate
immediately upon the termination of the right of the holders of the
Series B Convertible Preferred Stock and such Parity Dividend Stock
to vote for such two additional directors, and the number of
directors of the Board of Directors shall immediately thereafter be
reduced by two.
The foregoing right of the holders of the Series B
Convertible Preferred Stock with respect to the election of two
directors may be exercised at each annual meeting of stockholders or
at any special meeting of stockholders held for such purpose. If the
right to elect
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112
directors shall have accrued to the holders of the Series B
Convertible Preferred Stock more than ninety days preceding the date
established for the next annual meeting of stockholders, the
President of the Corporation shall, within twenty days after the
delivery to the Corporation at its principal office of a written
request for a special meeting signed by the holders of at least 10%
of all outstanding shares of the Series B Convertible Preferred
Stock, call a special meeting of the holders of the Series B
Convertible Preferred Stock to be held within sixty days after the
delivery of such request for the purpose of electing such additional
directors.
The holders of the Series B Convertible Preferred Stock and
any Parity Dividend Stock referred to above voting as a class
shall have the right to remove with or without cause at any time and
replace any directors such holders shall have elected pursuant to
this Section 9 and the holders of each other class of stock of the
Corporation shall not have the right to remove any such directors.
(c) Class Voting Rights. So long as any shares of the
Series B Convertible Preferred Stock is outstanding, the
Corporation shall not, directly or indirectly, without the
affirmative vote or consent of the holders of at least 66 2/3%
(unless a higher percentage shall then be required by applicable law
or the Corporation's charter) of all outstanding shares of the
Series B Convertible Preferred Stock voting separately as a class
(i) amend, alter or repeal any provision of the charter or by the
bylaws of the Corporation, if such amendment, alteration or repeal
would alter the contract rights, as expressly set forth herein, of
the Series B Convertible Preferred Stock so as to adversely affect
the rights of the holders thereof or the holders of the Class D
Common Stock or the Common Stock or (ii) create, authorize or issue,
or reclassify shares of any authorized stock of the Corporation
into, or increase the authorized amount of, any Senior Dividend
Stock or Senior Liquidation Stock, or any security convertible into
such Senior Dividend Stock or Senior Liquidation Stock. A class vote
on the part of the Series B Convertible Preferred Stock shall,
without limitation, specifically not be deemed to be required
(except as otherwise required by law or resolution of the Board of
Directors) in connection with (a) the authorization, issuance or
increase in the authorized amount of any shares of any other class
or series of stock which ranks junior to, or on a parity with, the
Series B Convertible Preferred Stock in respect of the payment of
dividends and distributions upon liquidation, dissolution or winding
up of the Corporation or (b) the authorization, issuance or increase
in the amount of any bonds, mortgages, debentures or other
obligations of the Corporation.
(d) Voting Rights after Occurrence of a Specified Corporate
Action. Following the occurrence of a Specified Corporate Action,
the holders of shares of Series B Convertible Preferred Stock shall
have the right to vote as a class with the holders of Common Stock
and Class D Common Stock on all matters as to which the holders of
Common Stock are entitled to vote, whether by law or otherwise. In
connection with such rights to vote, each holder of Series B
Convertible Preferred Stock shall have the number of votes for each
share held equal to the number of shares of Common Stock then
exchangeable for the shares of Class D Common Stock into which such
share is then convertible.
10. Outstanding Shares. For purposes of these Articles
Supplementary, all shares of Series B Convertible Preferred Stock issued
by the Corporation shall be deemed outstanding except (i) from the date
fixed for redemption pursuant to Section 6 hereof, all shares of Series
B Convertible Preferred Stock that have been so called for redemption
under Section 6, to the extent provided thereunder; (ii) from the date
of surrender of certificates representing shares of Series B Convertible
Preferred Stock, all shares of Series B Convertible Preferred Stock
converted into Class D Common Stock or repurchased pursuant to Section 7
hereof; and (iii) from the date of registration of transfer, all shares
of Series B Convertible Preferred Stock held of record by the
Corporation or any majority-owned subsidiary of the Corporation.
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113
11. Transfer Restrictions.
(a) Legends on Series B Convertible Preferred Stock and
Common Stock. The certificates representing shares of Series B
Convertible Preferred Stock shall, unless otherwise agreed by the
Corporation and the holders of any such certificates, bear a legend
substantially to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY
SECURITIES ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR (ii)
AN APPLICABLE EXEMPTION FROM REGISTRATION THEREUNDER. ANY SALE
PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE
ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ALEXANDER & ALEXANDER SERVICES INC. TO THE EFFECT THAT SUCH
EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH
SALE. IN ADDITION, THE VOTING, SALE, ASSIGNMENT, TRANSFER,
PLEDGE OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS FURTHER SUBJECT TO RESTRICTIONS WHICH ARE
CONTAINED IN THE CHARTER OF ALEXANDER & ALEXANDER SERVICES INC.,
IN THE ARTICLES SUPPLEMENTARY GOVERNING THESE SHARES AND IN A
STOCK PURCHASE AND SALE AGREEMENT DATED AS OF JUNE 6, 1994, A
COPY OF EACH OF WHICH IS ON FILE WITH ALEXANDER & ALEXANDER
SERVICES INC. AND WILL BE FURNISHED BY THE CORPORATION TO THE
STOCKHOLDER ON REQUEST AND WITHOUT CHARGE."
(b) Transfer Agent Requirements. The transfer agent for the
Series B Convertible Preferred Stock shall not be required to accept
for registration of transfer any shares of Series B Convertible
Preferred Stock bearing the legend contained in paragraph (a) above,
except upon presentation of satisfactory evidence that the
restrictions on transfer of shares of the Series B Convertible
Preferred Stock referred to in the legend in paragraph (a) have been
complied with, all in accordance with such reasonable regulations as
the Corporation may from time to time agree with the transfer agent
for shares of the Series B Convertible Preferred Stock.
12. Status of Acquired Shares. Shares of Series B Convertible
Preferred Stock redeemed or repurchased by the Corporation, received
upon conversion pursuant to Section 8 or otherwise acquired by the
Corporation will be restored to the status of authorized but unissued
shares of Preferred Stock, without designation as to class, and may
thereafter be issued, but not as shares of Series B Convertible
Preferred Stock.
13. Special Covenants. The Corporation shall not on or after
June 1, 1994 issue or sell any shares of any Senior Dividend Stock or
Senior Liquidation Stock.
14. Permissible Distributions. In determining whether a
distribution (other than upon voluntary or involuntary liquidation), by
dividend, redemption or other acquisition of shares or otherwise, is
permitted under the Maryland General Corporation Law, amounts that would
be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
holders of Series B Convertible Preferred Stock whose preferential
rights upon dissolution are superior to those receiving the distribution
shall not be added to the Corporation's total liabilities.
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114
15. Preemptive Rights. Holders of shares of Series B Convertible
Preferred Stock are not entitled to any preemptive or subscription
rights in respect of any securities of the Corporation.
16. Severability of Provisions. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective and
valid under applicable law, but if any provision hereof is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine
that a provision hereof would be valid or enforceable if a period of
time were extended or shortened or a particular percentage were
increased or decreased, then such court may make such change as shall be
necessary to render the provision in question effective and valid under
applicable law.
SECOND: The Series B Convertible Preferred Stock has been classified by
the Board of Directors under a power contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
FOURTH: The undersigned acknowledges these Articles Supplementary to be
the act of the Corporation and states as to all matters and facts required to be
verified under oath that, to the best of his knowledge, information and belief,
these matters and facts are true in all material respects and such statement is
made under penalties for perjury.
IN WITNESS WHEREOF, these Articles Supplementary are executed on behalf
of the Corporation by its President and attested by its Secretary this
day of , 1994.
ALEXANDER & ALEXANDER SERVICES INC.
BY:
---------------------------------
Name:
Title:
ATTEST:
---------------------------------
Name:
Title:
26
115
APPENDIX IV
CS FIRST BOSTON CORPORATION
55 EAST 52ND STREET
PARK AVENUE PLAZA
NEW YORK, NY 10055
June 10, 1994
Board of Directors
ALEXANDER & ALEXANDER SERVICES INC.
1211 Avenue of the Americas
New York, NY 10036
Gentlemen:
This will confirm the oral opinion we rendered on June 7, 1994 with
respect to the fairness to Alexander & Alexander Services Inc. ("A&A" or "you")
from a financial point of view of the consideration to be received by A&A
pursuant to the terms of a Stock Purchase and Sale Agreement, dated as of
June 6, 1994 (the "Purchase Agreement"), providing for the sale of preferred
stock of A&A to American International Group, Inc. ("AIG"). As more fully
described in and subject to the terms and conditions of the Purchase Agreement,
it is proposed that AIG acquire an aggregate of 4,000,000 shares of newly
authorized 8% Series B Cumulative Convertible Preferred Stock, $1.00 par value
per share, of A&A for $50.00 per share, representing an aggregate purchase
price of $200 million. The proposed transaction is referred to herein as the
"Financing".
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to A&A. We have also reviewed
certain other information, including financial forecasts for 1994, provided to
us by A&A, and met with A&A's management to discuss the business and prospects
of A&A. We have considered in our analysis certain factors currently affecting
A&A and the potential impact of such factors on A&A as described by management,
including the amount and timing of A&A's need for additional equity capital. We
have also considered certain financial and stock market data for A&A, and we
have compared that data with similar data for other publicly traded companies in
businesses similar to those of A&A. We have also considered the financial terms
of certain other significant equity investments in other publicly traded
companies. We have also considered such other information, financial studies,
analyses, and investigations and financial, economic and market criteria which
we deem relevant.
In connection with our review, we have not independently verified any of
the foregoing information and have relied on its being complete and accurate in
all material respects. With respect to the financial forecast furnished by
management, we have assumed that it has been reasonably prepared on bases
reflecting the best currently available estimates and judgments of A&A's
management as to the future financial performance of A&A. With your consent, we
have assumed that A&A will not be required to make any payments to AIG pursuant
to Section 6.o of the Purchase Agreement. We have further assumed that A&A will
be able to obtain the reinsurance or insurance arrangement required to satisfy
the condition set forth in Section 3.a.8. of the Purchase Agreement on
commercially reasonable terms or that another such commercially reasonable
arrangement will be in place by the closing of the Financing and that fees of
$1.5 million will be paid to AIG.
In addition, we have not made an independent evaluation or appraisal of
the assets or liabilities of A&A, nor have we been furnished with any such
appraisals. In accordance with your instructions, we did not solicit third-party
indications of interest in alternatives to the Financing, including alternative
purchasers of A&A's securities or potential acquirors for all or any part of the
business or assets of A&A. Our opinion is necessarily based solely on
information available to us and financial conditions and other circumstances
existing on the date hereof.
116
ALEXANDER & ALEXANDER SERVICES INC.
June 10, 1994
Page 2
We are acting as financial advisor to A&A in connection with the
Financing and will receive a fee for our services. We will also receive a fee
for rendering this opinion. In the ordinary course of business we actively trade
the debt and equity securities of both A&A and AIG for our own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the consideration to be received by A&A pursuant to the
Financing is fair to A&A from a financial point of view.
Very truly yours,
CS FIRST BOSTON CORPORATION
By: /s/ DAVID A. DENUNZIO
-----------------------
Name: David A. DeNunzio
Title: Managing Director
2
117
ALEXANDER & ALEXANDER SERVICES INC.
Proxy Solicited on Behalf of the Board of Directors
for Special Meeting July 15, 1994
PROXY
The undersigned hereby constitutes and appoints ROBERT E. BONI
and VINCENT R. McLEAN, and each of them, each with full power to
appoint his substitute to vote at the Special Meeting of
Stockholders to be held at The Equitable Center Auditorium, 787
Seventh Avenue (between W. 51st and W. 52nd Streets), New York,
New York at 11:00 A.M. on July 15, 1994 or any adjournment
thereof (1) on the matters listed below and more fully described
in the Proxy Statement accompanying this Form of Proxy and (2) in
their discretion on such other matters as may properly come
before the meeting.
A Vote FOR is recommended by the Board of Directors:
1. Proposal to approve the Stock Purchase and Sale Agreement,
dated as of June 6, 1994, between the Company and American
International Group, Inc. and the performance by the Company
of all transactions and acts on the part of the Company
contemplated thereby ("Proposal 1").
2. Proposal to approve certain amendments (together, the
"Charter Amendment") to the Company's charter to (i) increase
the number of authorized shares of stock of the Company,
(ii) establish the terms of the Class D Stock and (iii)
effect other minor amendments ("Proposal 2").
You are encouraged to specify your choice by marking the
appropriate boxes, SEE REVERSE SIDE--but you need not mark any
boxes if you wish to vote in accordance with the Board of
Directors' recommendations. If the boxes are not marked as to a
proposal, this proxy will be voted for the proposal. Your shares
cannot be voted by proxy unless you sign and return this card.
SEE REVERSE SIDE
118
-----------------------------------------------------------------
/X/ Please mark your votes as in this example.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder.
If no direction is made, this proxy will be voted FOR Proposal 1
and FOR Proposal 2.
-----------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2.
-----------------------------------------------------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Proposal 1 / / / / / / 2. Proposal 2 / / / / / /
- -----------------------------------------------------------------------------
Please sign exactly as name appears at left. Joint owners
should each sign. When signing as attorney, administrator,
trustee or guardian, please give full title as such.
----------------------------------------------------------------
----------------------------------------------------------------
SIGNATURE(S) DATE
1
EXHIBIT C
ARTICLES SUPPLEMENTARY
classifying
6,200,000 shares of Preferred Stock
as
8% SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
of
ALEXANDER & ALEXANDER SERVICES INC.
(Pursuant to Section 2-208 of the
Maryland General Corporation Law)
_________________________________
Alexander & Alexander Services Inc., a corporation
organized and existing under the laws of the State of Maryland
(hereinafter called the "Corporation"), and having its
principal office in this State at 10461 Mill Run Circle, Owings
Mills, Maryland 21117, hereby certifies to the State Department
of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and
vested in the Board of Directors of the Corporation
(hereinafter called the "Board of Directors" or the "Board") in
accordance with the provisions of Article SIXTH of the Charter
of the Corporation (the "Charter"), the Board of Directors, at
a meeting duly convened and held on June 6, 1994, regarding the
sale and issuance by the Corporation of cumulative convertible
preferred stock (the "Securities"), adopted resolutions (the
"Resolutions") classifying 6,200,000 shares of Preferred Stock
of the Corporation into a single series to be designated as "8%
Series B Cumulative Convertible Preferred Stock" and setting
the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of such shares as follows:
2
-2-
8% Series B Cumulative Convertible Preferred Stock
1. Designation and Amount. There shall be a series
of Preferred Stock designated as "8% Series B Cumulative
Convertible Preferred Stock" and the number of shares
constituting such series shall be 6,200,000, of which 4,000,000
shall be issued initially (the date of such issuance, the
"Original Issue Date") and the remainder shall be reserved for
issuance as dividends pursuant to Section 3 below. Such series
is referred to herein as the "Series B Convertible Preferred
Stock." The number of shares designated as shares of Series B
Convertible Preferred Stock may be decreased (but not
increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be
decreased below the number of then currently outstanding shares
of Series B Convertible Preferred Stock plus the then maximum
number of such shares which could be issued pursuant to
Section 3 below assuming all dividends payable on or prior to
December 15, 1999 are paid in shares of Series B Convertible
Preferred Stock.
2. Defined Terms. All capitalized terms used
herein without definition shall have the respective meanings
assigned thereto in the Charter.
3. Dividends. The holders of shares of Series B
Convertible Preferred Stock shall be entitled to receive, when,
as and if authorized and declared by the Board of Directors out
of funds at the time legally available therefor, dividends at
the rate of 8% per annum per share, and no more, which shall be
fully cumulative, shall accrue without interest and shall be
payable quarterly in arrears on March 15, June 15, September 15
and December 15 of each year, commencing September 15, 1994
(except that if any such date is a Saturday, Sunday or legal
holiday, then such dividend shall be payable on the next day
that is not a Saturday, Sunday or legal holiday) to holders of
record as they appear upon the stock transfer books of the
Corporation on each March 1, June 1, September 1 and December 1
immediately preceding the payment dates, or such other dates as
shall be fixed at the time of the authorization and declaration
by the Board of Directors (or, to the extent permitted by
applicable law, a duly authorized committee thereof), which
date shall not be less than ten (10) nor more than sixty (60)
days preceding the relevant dividend payment date. For
purposes hereof, the term "legal holiday" shall mean any day on
which banking institutions are authorized to close in New York,
New York. Subject to the sixth succeeding paragraph of this
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Section 3, dividends on account of arrears for any past
dividend period may be declared and paid at any time, without
reference to any regular dividend payment date; provided,
however, that dividends on account of arrears for any past
dividends which were required to be made in shares of Series B
Convertible Preferred Stock shall be declared and paid in
shares of Series B Convertible Preferred Stock and shall
include such number of shares of Series B Convertible Preferred
Stock as any holder would have been entitled to receive had all
such dividends been declared and paid on a timely basis. The
amount of dividends payable per share of Series B Convertible
Preferred Stock for each quarterly dividend period shall be
computed by dividing the annual dividend amount by four and
shall include fractional shares. The amount of dividends
payable for the initial dividend period and any period shorter
than a full quarterly period shall be computed on the basis of
a 360-day year of twelve 30-day months and the actual number of
days elapsed in the period in which payable. No interest shall
be payable in respect of any dividend payment on the Series B
Convertible Preferred Stock or any other Parity Dividend Stock
(as hereinafter defined) or any Senior Dividend Stock (as
hereinafter defined) which may be in arrears.
Any dividend payments made on or prior to
December 15, 1996 shall be made in additional shares of
Series B Convertible Preferred Stock valued at the liquidation
preference of the Series B Convertible Preferred Stock. Any
dividend payments made after December 15, 1996 and on or prior
to December 15, 1999 may be made, in the sole discretion of the
Board of Directors, either in (i) cash or (ii) additional
shares of Series B Convertible Preferred Stock valued at the
liquidation preference of the Series B Convertible Preferred
Stock but not in any combination of cash and additional shares
of Series B Convertible Preferred Stock. On and after the
earlier of (i) December 16, 1999 or (ii) the first date the
Corporation pays any dividend in cash, dividends on the
Series B Convertible Preferred Stock shall be made only in
cash. All shares of Series B Convertible Preferred Stock
issued as a dividend with respect to the Series B Convertible
Preferred Stock shall thereupon be duly authorized, validly
issued, fully paid and nonassessable.
In the case of shares of Series B Convertible
Preferred Stock issued on the Original Issue Date, dividends
shall accrue and be cumulative from such date. In the case of
shares of Series B Convertible Preferred Stock issued as a
dividend on shares of Series B Convertible Preferred Stock,
dividends shall
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accrue and be cumulative from the dividend payment date in
respect of which such shares were issued as a dividend.
Each fractional share of Series B Convertible
Preferred Stock outstanding shall be entitled to a ratably
proportionate amount of all dividends accruing with respect to
each outstanding share of Series B Convertible Preferred Stock,
and all such dividends with respect to such outstanding
fractional shares shall be cumulative and shall accrue (whether
or not declared), and shall be payable in the same manner and
at such times as provided for above with respect to dividends
on each outstanding share of Series B Convertible Preferred
Stock. Each fractional share of Series B Convertible Preferred
Stock outstanding shall also be entitled to a ratably
proportionate amount of any other distributions made with
respect to each outstanding share of Series B Convertible
Preferred Stock, and all such distributions shall be payable in
the same manner and at the same time as distributions on each
outstanding share of Series B Convertible Preferred Stock.
No dividends or other distributions, other than
dividends payable solely in shares of Common Stock, Class A
Common Stock, Class C Common Stock or Class D Common Stock or
other stock of the Corporation ranking junior as to dividends
and as to liquidation rights to the Series B Convertible
Preferred Stock, shall be authorized, declared, paid or set
apart for payment on any shares of Common Stock, Class A Common
Stock, Class C Common Stock or Class D Common Stock or other
stock of the Corporation ranking junior as to dividends to the
Series B Convertible Preferred Stock, including the Series A
Junior Participating Preferred Stock, when and if issued
(collectively, the "Junior Dividend Stock"), unless and until
all accrued and unpaid dividends on the Series B Convertible
Preferred Stock for all dividend payment periods ending on or
prior to the date of payment of such dividends or other
distributions on Junior Dividend Stock shall have been
authorized, declared and paid or set apart in trust for payment
and all obligations of the Corporation to purchase shares of
Series B Convertible Preferred Stock tendered to it pursuant to
Section 7 and to make Extra Payments have been fully satisfied.
The Corporation shall not permit Reed Stenhouse
Companies Limited ("RSC") (in respect of RSC Class A Shares) or
Alexander & Alexander Services UK plc ("AAE") (in respect of
AAE Dividend Shares) to authorize, declare, pay or set apart
any dividends or other distributions, other than dividends
payable solely in Junior Dividend Stock, RSC Class A Shares or
AAE
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Dividend Shares or other stock of the Corporation, RSC or
AAE ranking junior as to dividends to the Series B Convertible
Preferred Stock, unless and until all accrued and unpaid
dividends on the Series B Convertible Preferred Stock for all
dividend payment periods ending on or prior to the date of
payment of such dividends or other distributions on RSC Class A
Shares or AAE Dividend Shares shall have been authorized,
declared and paid or set apart in trust for payment and all
obligations of the Corporation to purchase shares of Series B
Convertible Preferred Stock tendered to it pursuant to
Section 7 and to make Extra Payments have been fully satisfied.
If at any time any dividend on any stock of the
Corporation hereafter issued ranking senior as to dividends to
the Series B Convertible Preferred Stock (the "Senior Dividend
Stock") shall be in arrears, in whole or in part, then (except
to the extent allowed by the terms of such Senior Dividend
Stock) no dividend shall be authorized, declared, paid or set
apart for payment on the Series B Convertible Preferred Stock
(other than dividends payable in additional shares of Series B
Convertible Preferred Stock) unless and until all accrued and
unpaid dividends with respect to the Senior Dividend Stock for
all payment periods ending on or prior to the date of payment
of the current dividend on the Series B Convertible Preferred
Stock shall have been authorized, declared and paid or set
apart for payment. No full dividends shall be authorized,
declared, paid or set apart for payment on any class or series
of the Corporation's stock heretofore or hereafter issued
ranking, as to dividends, on a parity with the Series B
Convertible Preferred Stock (including the Series A Convertible
Preferred Stock) (collectively, the "Parity Dividend Stock")
for any period unless full cumulative dividends have been, or
contemporaneously are, authorized, declared and paid or set
apart in trust for such payment on the Series B Convertible
Preferred Stock for all dividend payment periods terminating on
or prior to the date of payment of such full cumulative
dividends. No full dividends (other than dividends payable in
additional shares of Series B Convertible Preferred Stock)
shall be authorized, declared, paid or set apart for payment on
the Series B Convertible Preferred Stock for any period unless
full cumulative dividends have been, or contemporaneously are,
authorized, declared and paid or set apart for payment on the
Parity Dividend Stock for all dividend periods terminating on
or prior to the date of payment of such full cumulative
dividends. When accrued dividends are not paid in full on the
Series B Convertible Preferred Stock and the Parity Dividend
Stock, all cash dividends authorized, declared and paid or set
apart for
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payment on the Series B Convertible Preferred Stock
and the Parity Dividend Stock shall be authorized, declared,
paid or set apart for payment pro rata so that the amount of
dividends authorized, declared, paid or set apart for payment
per share on the Series B Convertible Preferred Stock and the
Parity Dividend Stock shall in all cases bear to each other the
same ratio that accrued and unpaid dividends per share on the
Series B Convertible Preferred Stock and the Parity Dividend
Stock bear to each other.
Any reference to "distribution" contained in this
Section 3 shall not be deemed to include any distribution made
in connection with any liquidation, dissolution or winding up
of the Corporation, RSC or AAE, whether voluntary or
involuntary.
4. Liquidation Preference. Subject to the full
payment of the liquidation preferences of shares of stock of
the Corporation hereafter issued ranking senior as to
liquidation rights to the Series B Convertible Preferred Stock
(the "Senior Liquidation Stock"), in the event of a
liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of shares of
Series B Convertible Preferred Stock shall be entitled to
receive out of the assets of the Corporation, whether such
assets are stated capital or surplus of any nature, an amount
equal to the dividends accrued and unpaid on such shares on the
date of final distribution to such holders, whether or not
declared, without interest, plus a sum equal to $50.00 per
share, and no more, before any payment shall be made or any
assets distributed to the holders of shares of Common Stock,
Class A Common Stock, Class C Common Stock, Class D Common
Stock or any other class or series of the Corporation's stock
hereafter issued ranking junior as to liquidation rights to the
Series B Convertible Preferred Stock, including the Series A
Junior Participating Preferred Stock (collectively, the "Junior
Liquidation Stock").
Further, in the event of the liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, (i) the Board of Directors shall determine (which
determination shall be conclusive) whether (1) there is some
likelihood that the holders of Series B Convertible Preferred
Stock will not receive, on such liquidation, dissolution or
winding up of the Corporation, the full amounts to which they
are entitled pursuant to this Section 4, and (2) there is some
likelihood that the holders of RSC Class A Shares will receive
out of the assets of RSC a distribution as the result of any
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liquidation, dissolution or winding up, or other action taken
or to be taken by RSC in connection or concurrently with the
liquidation, dissolution or winding up of the Corporation, in
an amount greater than the holders of Common Stock are likely
to receive on the liquidation, dissolution or winding up of the
Corporation, and (ii) if the Board determines that both
likelihoods exist, then, provided that paragraph 2 of the
Keepwell Agreement between the Corporation and RSC dated
July 31, 1985 does not apply, the Corporation shall take such
action as may be reasonably necessary to cause the transfer of
shares of Common Stock of the Corporation to the holders of RSC
Class A Shares in satisfaction of the obligations of RSC to the
holders of such shares; provided, however, that no director of
RSC shall be required to take any action which would cause such
director to breach any duties under applicable law as advised
by independent counsel.
The entire assets of the Corporation available for
distribution after the liquidation preferences of the Senior
Liquidation Stock are fully met shall be distributed ratably
among the holders of the Series A Convertible Preferred Stock,
the Series B Convertible Preferred Stock and any other class or
series of the Corporation's stock hereafter issued ranking on a
parity as to liquidation rights with the Series B Convertible
Preferred Stock in proportion to the respective preferential
amounts to which each is entitled (but only to the extent of
such preferential amounts). After payment in full of the
liquidation preferences of the shares of the Series B
Convertible Preferred Stock, the holders of such shares shall
not be entitled to any further participation in any
distribution of assets by the Corporation. Neither a
consolidation or merger of the Corporation with or into another
corporation nor a merger of any other corporation with or into
the Corporation, nor a sale or transfer of all or any part of
the Corporation's assets for cash, securities or other
property, will be considered a liquidation, dissolution or
winding up of the Corporation.
5. Limitation on Share Repurchase. If at any time
any dividends on the Series B Convertible Preferred Stock shall
be in arrears or the Corporation shall have failed to make any
purchase of shares of Series B Convertible Preferred Stock
tendered to it pursuant to Section 7, the Corporation shall
not, and the Corporation shall not permit RSC, AAE or any other
corporation or legal entity directly or indirectly controlled
by the Corporation (collectively, the "subsidiaries") to,
repurchase, redeem, retire or otherwise acquire any shares of Junior
8
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Dividend Stock, Junior Liquidation Stock, RSC Class A
Shares, AAE Dividend Shares or any warrants, rights, calls or
options exercisable for or convertible into any shares of
Junior Dividend Stock, Junior Liquidation Stock, RSC Class A
Shares or AAE Dividend Shares, except by conversion into or
exchange for shares of Junior Dividend Stock or Junior
Liquidation Stock and other than purchases, redemptions,
retirements or acquisitions made pursuant to and as required by
the terms of any employee incentive or benefit plan of the
Corporation or any subsidiary of the Corporation in effect on
June 1, 1994, or for consideration aggregating not more than
$100,000 in any calendar year.
If at any time any dividends on the Series B
Convertible Preferred Stock shall be in arrears or the
Corporation shall have failed to make any purchase of shares of
Series B Convertible Preferred Stock tendered to it pursuant to
Section 7, the Corporation shall not, and shall not permit any
subsidiary to, repurchase, redeem, retire or otherwise acquire
any shares of the Corporation's or any such subsidiary's stock
except (i) as permitted by the immediately preceding paragraph
and (ii) any subsidiary which is wholly owned by the
Corporation may repurchase, redeem, retire or otherwise acquire
shares of its stock.
6. Redemption at Option of the Corporation. The
Series B Convertible Preferred Stock may not be redeemed by the
Corporation prior to December 15, 1999. Thereafter, so long as
shares of Common Stock shall have traded on the New York Stock
Exchange on each trading day during a 30 consecutive trading
day period (each of which trading days shall be after
December 15, 1999) and had a Closing Price (as hereinafter
defined) on each such day in excess of 150% of the conversion
price then in effect for the Series B Convertible Preferred
Stock for each such trading day, the Series B Convertible
Preferred Stock may thereafter be redeemed by the Corporation,
at its option on any date set by the Board of Directors, in
whole or in part at any time, at a redemption price of $54.00
per share, plus an amount in cash equal to accrued and unpaid
dividends thereon, whether or not authorized or declared, to
but excluding the date fixed for redemption, if redeemed on or
prior to December 14, 2000, and at the following redemption
prices per share, if redeemed during the 12-month period
beginning December 15:
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Year Redemption Price
---- ----------------
2000 $53.50
2001 53.00
2002 52.50
2003 52.00
2004 51.50
2005 51.00
2006 50.50
and thereafter at $50.00 per share, plus, in each case, an
amount in cash equal to all dividends on the Series B
Convertible Preferred Stock accrued and unpaid thereon, whether
or not authorized or declared, to but excluding the date fixed
for redemption, such sum being hereinafter referred to as the
"Redemption Price."
In case of the redemption of less than all of the
then outstanding shares of Series B Convertible Preferred
Stock, the Corporation shall effect such redemption pro rata.
Notwithstanding the foregoing, the Corporation shall not redeem
less than all of the shares of Series B Convertible Preferred
Stock at any time outstanding until all dividends accrued and
in arrears upon all shares of Series B Convertible Preferred
Stock then outstanding shall have been paid for all past
dividend periods.
Not more than sixty nor less than forty-five days
prior to the redemption date fixed by the Board of Directors,
notice by first class mail, postage prepaid, shall be given to
the holders of record of shares of the Series B Convertible
Preferred Stock to be redeemed, addressed to such holders at
their last addresses as shown upon the stock transfer books of
the Corporation. Each such notice of redemption shall specify
the date fixed for redemption, the Redemption Price, the place
or places of payment, that payment will be made upon
presentation and surrender of the shares of Series B
Convertible Preferred Stock, that on and after the redemption
date dividends will cease to accrue on such shares, the then
effective conversion price pursuant to Section 8 and that the
right of holders to convert shares of Series B Convertible
Preferred Stock shall terminate at the close of business on the
business day prior to the redemption date (unless the
Corporation defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not
10
-10-
the holder of shares of Series B Convertible Preferred Stock
receives such notice; and failure to give such notice by mail,
or any defect in such notice, to the holders of any shares
designated for redemption shall not affect the validity of the
proceedings for the redemption of any other shares of Series B
Convertible Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares
called for redemption, subject to such holder's right to
convert shares of Series B Convertible Preferred Stock as
provided above, shall surrender the certificate representing
such shares to the Corporation at the place designated in such
notice and shall thereupon be entitled to receive payment of
the Redemption Price. If less than all the shares evidenced by
any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
Notice having been given as aforesaid, if, on the date fixed
for redemption, funds necessary for the redemption shall be
available therefor and shall have been irrevocably deposited or
set aside in trust for the holders of the shares of Series B
Convertible Preferred Stock, then, notwithstanding that the
certificates representing any shares so called for redemption
shall not have been surrendered, dividends with respect to the
shares so called shall cease to accrue after the date fixed for
redemption, such shares shall no longer be deemed outstanding,
the holders thereof shall cease to be stockholders of the
Corporation and all rights whatsoever with respect to the
shares so called for redemption (except the right of the
holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate. If
funds legally available for such purpose are not sufficient for
redemption of the shares of Series B Convertible Preferred
Stock to be redeemed, then the certificates representing such
shares shall be deemed not to be surrendered, such shares shall
remain outstanding and the rights of holders of shares of
Series B Convertible Preferred Stock thereafter shall continue
to be only those of a holder of shares of the Series B
Convertible Preferred Stock.
Except as provided in Section 7, the shares of Series
B Convertible Preferred Stock shall not be subject to the
operation of any mandatory purchase, retirement or sinking
fund.
7. Repurchase at Option of the Holder. If one or
more Special Events shall occur at any time or from time to
time on or after the Original Issue Date, each holder of shares
of the Series B Convertible Preferred Stock shall have the
right, at such holder's option exercisable at any time within
120 days after the happening of each such Special Event, to
11
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require the Corporation to purchase all or any part of the
shares of Series B Convertible Preferred Stock then held by
such holder as such holder may elect at $58.82 per share if the
Special Event occurs on or before six months after the Original
Issue Date, $66.18 per share if the Special Event occurs more
than six months after the Original Issue Date and on or before
twelve months after the Original Issue Date and $72.06 per
share if the Special Event occurs more than twelve months after
the Original Issue Date plus, in each case, an amount in cash
equal to the accrued and unpaid dividends thereon, whether or
not authorized or declared, to but excluding the date fixed for
redemption. Any shares of Series B Convertible Preferred Stock
which would have accrued but have not been paid on any shares
tendered for purchase shall be deemed to be tendered for
purchase. The Corporation shall, immediately upon becoming
aware of any facts or events that could reasonably be expected
to result in the occurrence of a Special Event, give a written
notice thereof by first class mail, postage prepaid, to the
holders of record of shares of the Series B Convertible
Preferred Stock, addressed to such holders at their last
address as shown upon the stock transfer books of the
Corporation.
A "Special Event" shall mean (v) the declaration or
payment on or after the Original Issue Date by the Corporation,
RSC or AAE of an Extraordinary Equity Payment (as hereinafter
defined), (w) the sale or other disposition, directly or
indirectly, by the Corporation or any of its subsidiaries in
one or a series of related transactions of assets representing
35% or more of the then book value of the Corporation's assets
on a consolidated basis or 35% or more of the Corporation's
gross revenues on a consolidated basis in either of the two
most recently ended fiscal years, (x) the merger or
consolidation of the Corporation or any of its Principal
Subsidiaries (as hereinafter defined) with or into any other
firm, corporation or other legal entity other than (i) a merger
or consolidation of one subsidiary of the Corporation into
another or the Corporation, or (ii) a merger or consolidation
in which the securities of the Corporation outstanding before
the merger or consolidation are not affected and in which the
Corporation issues equity securities having an aggregate market
value of less than 20% of the total market value of the
Corporation's equity securities outstanding prior to such
merger or consolidation, or (y) the occurrence of a Specified
Corporate Action on or after the Original Issue Date.
"Extraordinary Equity Payment" shall mean (a) the
declaration or payment on or after June 1, 1994 by the
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Corporation, RSC, AAE or any of their respective subsidiaries
of any dividend or distribution (except for any dividend or
distribution from one subsidiary of the Corporation to another
subsidiary of the Corporation or from a subsidiary of the
Corporation to the Corporation, RSC or AAE or any of their
respective wholly owned subsidiaries; provided that all of such
dividend paid or distribution made, net of applicable
withholding taxes, is received by the Corporation, RSC or AAE
or such recipient subsidiary) on any class or series of its
stock (other than regularly scheduled quarterly cash dividends
on the Series A Convertible Preferred Stock and Series B
Convertible Preferred Stock in accordance with the terms
thereof as in effect on the Original Issue Date) other than the
declaration and payment by the Corporation, RSC and AAE of
dividends on the Common Stock, the RSC Class A Shares and the
AAE Dividend Shares, respectively, which do not exceed (i) on
and after June 1, 1994 and on and prior to December 31, 1994,
more than $.075 per share, (ii) on and after January 1, 1995
and on and prior to December 31, 1996, in the aggregate more
than 25% of the Corporation's net income available for
distribution to common shareholders (after preferred dividends)
through the end of the last fiscal quarter prior to the date of
declaration of such dividend and (iii) on and after January 1,
1997, in the aggregate more than the sum of (A) 50% of the
Corporation's net income available for distribution to common
shareholders (after preferred dividends) on and after such date
and through the end of the last fiscal quarter prior to the
date of declaration of such dividend and (B) the excess, if
any, of (1) 25% of the Corporation's net income available for
distribution to common shareholders (after preferred dividends)
during the period ending on and after January 1, 1995 through
December 31, 1996 over (2) the aggregate amount of dividends
declared during the period from January 1, 1995 through
December 31, 1996 and (b) any repurchases, redemptions,
retirements or other acquisitions directly or indirectly by the
Corporation or any of its subsidiaries on or after June 1, 1994
of any stock of the Corporation or any of its subsidiaries
(other than a wholly-owned subsidiary) (other than redemptions
or repurchases of the Series B Convertible Preferred Stock in
accordance with Sections 6 and 7) in excess of net proceeds on
or after June 1, 1994 to the Corporation from sales of stock of
the Corporation (less amounts expended on redemptions or
repurchases of Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock on or after June 1, 1994).
For purposes of Section 8 below, all amounts treated as an
Extraordinary Equity Payment shall be treated as having been
made by the Corporation.
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"Specified Corporate Action" shall mean such time as
(i) the Corporation shall consent or agree to the acquisition
of, or the commencement of a tender offer for, or the Board of
Directors of the Corporation shall recommend or, within 10
business days after the commencement of the tender offer, not
recommend that shareholders reject, a tender offer for,
"beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) by any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended ("the Exchange Act")) other than American
International Group, Inc. ("AIG") and its affiliates or any
transferee thereof, of securities of the Corporation entitled
to vote generally in the election of directors, or securities
convertible into or exchangeable for such securities
(collectively, "Designated Securities"), representing, when
added to the Designated Securities already owned by such person
or group, thirty-five percent (35%) or more of such Designated
Securities; (ii) the Corporation shall amend, modify or
supplement, or waive the benefit of, the Rights Agreement
between Alexander & Alexander Services Inc. and First Chicago
Trust Company of New York, dated as of June 11, 1987, as
amended and restated on March 22, 1990, as amended on
August 21, 1992 and June 6, 1994 (the "Rights Agreement"), so
as to permit any acquisition of beneficial ownership of thirty-
five percent (35%) or more of the Designated Securities without
causing a person or group (other than AIG and its affiliates or
any transferee thereof) to become an Acquiring Person (as
defined in the Rights Agreement) or without causing the
Distribution Date or the Shares Acquisition Date (each as
defined in the Rights Agreement) to occur or without giving
rise to a Section 11(a)(ii) Event (as defined in the Rights
Agreement); (iii) the Corporation shall take any action under
Section 3-603(c) of the Maryland General Corporation Law to
exempt any transaction between the Corporation and any of its
subsidiaries, on the one hand, and any person or group (other
than AIG and its affiliates or any transferee thereof), or any
affiliates of any such person or group, on the other hand, who
(A) acquire, own or hold beneficial ownership of Designated
Securities representing thirty-five percent (35%) or more of
such Designated Securities from the provisions of Title 3,
Subtitle 6 of the Maryland General Corporation Law or
(B) acquire, own or hold beneficial ownership of Designated
Securities representing ten percent (10%) or more of such
Designated Securities unless such other person or group, or any
affiliate of such person or group, enters into a standstill
agreement with the Corporation limiting the acquisition of
Designated Securities by such other person or group, or any
14
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affiliates of such person or group, to less than 35% of the
Designated Securities and such standstill agreement remains in
full force and effect; (iv) the Corporation shall issue, sell
or transfer, in one or a series of related transactions,
Designated Securities to any person or group (other than AIG
and its affiliates or any transferee thereof) if after giving
effect thereto said person or group shall have, or shall have
the then contractual right to acquire through conversion,
exercise of warrants or otherwise, more than thirty-five
percent (35%) of the combined voting power to vote generally in
the election of directors of the Corporation; or (v) the
Corporation shall agree to merge or consolidate with or into
any person, firm, corporation or other legal entity (other than
AIG and its affiliates or any transferee thereof) or shall
agree to sell all or substantially all its assets to any such
person, firm, corporation or other legal entity other than (i)
a merger or consolidation of one subsidiary of the Corporation
into another or the Corporation, or (ii) a merger or
consolidation in which the securities of the Corporation
outstanding before the merger or consolidation are not affected
and in which the Corporation issues equity securities having an
aggregate market value of less than 20% of the total market
value of the Corporation's equity securities outstanding prior
to such merger or consolidation.
"Principal Subsidiary" means a subsidiary, including
its subsidiaries, which meets any of the following conditions:
(i) The Corporation's and its other subsidiaries'
investments in and advances to the subsidiary exceed ten
percent (10%) of the total assets of the Corporation and
its subsidiaries consolidated as of the end of the most
recently completed fiscal year of the Corporation; or
(ii) The Corporation's and its other subsidiaries'
proportionate share of the total assets (after
intercompany eliminations) of the subsidiary exceed ten
percent (10%) of the total assets of the Corporation and
its subsidiaries consolidated as of the end of the most
recently completed fiscal year of the Corporation; or
(iii) The Corporation's and its other subsidiaries'
equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of
a change in accounting principles of the subsidiary
exceeds ten percent (10%) of such income of the
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Corporation and its subsidiaries consolidated for the most
recently completed fiscal year of the Corporation.
"Affiliate" means, when used with reference to any
person, any other person directly or indirectly controlling,
controlled by, or under direct or indirect common control with,
the referent person or such other person, as the case may be,
or any person who beneficially owns, directly or indirectly,
10% or more of the voting equity interests of such person or
warrants, options or other rights to acquire or hold more than
10% of any class of voting equity interests of such person.
For the purposes of this definition, "control" when used with
respect to any specified person means the power to direct or
cause the direction of management or policies of such person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
The date fixed for each such repurchase shall be the
121st day following the occurrence of the Special Event giving
rise thereto. The place of payment shall be at an office or
agency in the City of New York, New York fixed therefor by the
Corporation or, if not fixed, at the principal executive office
of the Corporation.
The Corporation shall, within 20 days of the
occurrence of a Special Event, give a written notice thereof by
first class mail, postage prepaid, to the holders of record of
shares of the Series B Convertible Preferred Stock, addressed
to such holders at their last addresses as shown upon the stock
transfer books of the Corporation. Each such notice shall
specify the Special Event which has occurred and the date of
such occurrence, the place or places of payment, the then
effective conversion price pursuant to Section 8, the then
effective repurchase price and the date the right of such
holder to require such repurchase shall terminate. Any notice
that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of
shares of Series B Convertible Preferred Stock receives such
notice; and failure to give such notice by mail, or any defect
in such notice, to the holders of any shares shall not affect
the validity of the proceedings for the repurchase of any other
shares of Series B Convertible Preferred Stock.
On the date fixed for any such repurchase, each
holder of shares of Series B Convertible Preferred Stock who
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elects to have shares of Series B Convertible Preferred Stock
held by it purchased shall surrender the certificate
representing such shares to the Corporation at the place
designated in such notice together with an election to have
such purchase made and shall thereupon be entitled to receive
payment therefor provided in this Section 7. If less than all
the shares represented by any such surrendered certificate are
repurchased, a new certificate shall be issued representing the
unpurchased shares. Dividends with respect to the shares of
Series B Convertible Preferred Stock so purchased shall cease
to accrue after the date so purchased, such shares shall no
longer be deemed outstanding and the holders thereof shall
cease to be stockholders of the Corporation and all rights
whatsoever with respect to the shares so purchased shall
terminate. If the funds legally available for such purchase
are not sufficient to purchase all the shares of Series B
Convertible Preferred Stock tendered to the Corporation for
purchase, the Corporation shall purchase the greatest number of
whole shares for which such funds are so available on a pro
rata basis among all tendering holders based on the ratio of
the number of shares tendered by each of them to the aggregate
amount of all shares so tendered, and the certificates
representing the unpurchased shares shall be deemed not to be
surrendered for repurchase, such unpurchased shares shall
remain outstanding and the rights of the holders of shares of
Series B Convertible Preferred Stock thereafter shall continue
to be those of a holder of shares of the Series B Convertible
Preferred Stock; provided, however, the Corporation shall
thereafter be required to repurchase all such remaining shares
at the first date it has sufficient funds legally available for
such purpose at the price it would have paid at the date such
shares were actually tendered and the Corporation shall give
notice as aforesaid to each holder whose shares were not
repurchased for such reason and such holder shall thereafter
have the right to elect to have such shares repurchased, such
election to be made within 30 days of receipt of such notice.
8. Conversion.
(a) Right of Conversion. Each share of Series B
Convertible Preferred Stock shall be convertible at the option
of the holder thereof, at any time prior to the close of
business on the business day prior to the date fixed for
redemption of such share as herein provided, into fully paid
and nonassessable shares of Class D Common Stock and such other
securities and property as hereinafter provided, at the rate of
that number of shares of Class D Common Stock for each full
share of
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Series B Convertible Preferred Stock that is equal to
$50.00 divided by the conversion price applicable per share of
Class D Common Stock. For purposes of this resolution, the
"conversion price" applicable per share of Class D Common Stock
shall initially be equal to $17.00, and shall be adjusted from
time to time in accordance with the provisions of this Section
8.
For the purpose of this Section 8, the term "Common
Stock" shall mean the class designated as Common Stock, par
value $1.00 per share, of the Corporation as of June 1, 1994
and any other shares into which such shares may hereafter be
changed from time to time. For purposes of this Section 8, the
term "Class D Common Stock" shall mean the class designated as
Class D Common Stock, par value $1.00 per share, of the
Corporation as of the Original Issue Date and any other shares
into which such shares may hereafter be changed from time to
time.
(b) Conversion Procedures. Any holder of shares of
Series B Convertible Preferred Stock desiring to convert such
shares into Class D Common Stock shall surrender the
certificate or certificates representing such shares of Series
B Convertible Preferred Stock at the office of the transfer
agent for the Series B Convertible Preferred Stock, which
certificate or certificates, if the Corporation shall so
require, shall be duly endorsed to the Corporation or in blank,
or accompanied by proper instruments of transfer to the
Corporation or in blank, accompanied by irrevocable written
notice to the Corporation that the holder elects so to convert
such shares of Series B Convertible Preferred Stock and
specifying the name or names (with address or addresses) in
which a certificate or certificates evidencing shares of Class
D Common Stock are to be issued.
Subject to Section 8(1) hereof, no payments or
adjustments in respect of dividends on shares of Series B
Convertible Preferred Stock surrendered for conversion or on
account of any dividend on the Class D Common Stock issued upon
conversion shall be made upon the conversion of any shares of
Series B Convertible Preferred Stock.
The Corporation shall, as soon as practicable after
such deposit of certificates representing shares of Series B
Convertible Preferred Stock accompanied by the written notice
and compliance with any other conditions herein contained,
deliver at such office of the transfer agent to the person for
whose account such shares of Series B Convertible Preferred
Stock were so surrendered or to the nominee or nominees of such
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person certificates representing the number of full shares of
Class D Common Stock to which such person shall be entitled as
aforesaid, together with a cash adjustment in respect of any
fraction of a share of Class D Common Stock as hereinafter
provided. Subject to the following provisions of this para-
graph, such conversion shall be deemed to have been made as of
the date of such surrender of the shares of Series B Conver-
tible Preferred Stock to be converted, and the person or
persons entitled to receive the Class D Common Stock deliver-
able upon conversion of such Series B Convertible Preferred
Stock shall be treated for all purposes as the record holder or
holders of such Class D Common Stock on such date.
(c) Adjustment of Conversion Price. The conversion
price at which a share of Series B Convertible Preferred Stock
is convertible into Class D Common Stock shall be subject to
adjustment from time to time as follows:
(i) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock exclusively
in Common Stock or shall pay or make a dividend or other
distribution on any other class of stock of the Corporation
which dividend or distribution includes Common Stock or shall
exchange outstanding Rights (as defined in Section 8(k) hereof)
for shares of Common Stock, the conversion price in effect at
the opening of business on the day following the date fixed for
the determination of stockholders entitled to receive such
dividend or other distribution or to exchange such Rights shall
be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of
such number of shares and the total number of shares
constituting such dividend or other distribution or exchange,
such reduction to become effective immediately after the
opening of business on the day following the date fixed for
such determination.
In case the Corporation shall issue or otherwise sell
or distribute shares of Common Stock for a consideration per
share in cash or property less than the conversion price in
effect at the time of such issuance, the conversion price then
in effect shall be reduced by multiplying such conversion price
by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior to such
issuance, sale or distribution plus the number of shares of
Common Stock which the aggregate consideration received by the
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Corporation for such issuance, sale or distribution (such
consideration, if other than cash, as determined by the Board
of Directors including a majority of the Directors who are not
officers or employees of the Corporation or any of its
subsidiaries, whose determination shall be conclusive and
described in a resolution of the Board of Directors) would
purchase at the conversion price per share and the denominator
shall be the number of shares of Common Stock outstanding
immediately after giving effect to such issuance, sale or
distribution.
(ii) In case the Corporation shall pay or make a
dividend or other distribution on its Common Stock consisting
exclusively of, or shall otherwise issue to all or
substantially all holders of its Common Stock, rights or
warrants entitling the holders thereof to subscribe for or
purchase shares of Common Stock at a price per share less than
the then current market price per share (determined as provided
in subparagraph (vii) of this Section 8(c)) of the Common Stock
on the date fixed for the determination of stockholders
entitled to receive such rights or warrants, the conversion
price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which
the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase
would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective
immediately after the opening of business on the day following
the date fixed for such determination. In case any rights or
warrants referred to in this subparagraph (ii) in respect of
which an adjustment shall have been made shall expire
unexercised, the conversion price shall be readjusted at the
time of such expiration to the conversion price that would have
been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
For the purposes of this Section 8(c)(ii), if both a
Distribution Date and a Section 11(a)(ii) Event (as such terms
are defined in the Rights Agreement) shall have occurred, then
the later to occur of such events shall be deemed to constitute
an issuance of rights to purchase shares of Common Stock.
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(iii) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock,
the conversion price in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and conversely, in
case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the conversion
price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening
of business on the day following the day upon which such
subdivision or combination becomes effective.
(iv) Subject to the last sentence of this subpara-
graph (iv), in case the Corporation shall, by dividend or
otherwise, distribute to all or substantially all holders of
its Common Stock evidences of its indebtedness, shares of any
class of stock, cash or assets (including securities, but
excluding any rights or warrants referred to in subparagraph
(ii) of this Section 8(c), excluding any dividend or
distribution paid exclusively in cash (other than an
Extraordinary Equity Payment) and excluding any dividend or
distribution referred to in subparagraph (i) of this Section
8(c)) (for the purposes of this subparagraph (iv), such
evidence of indebtedness, shares of stock, cash and assets are
herein called "Securities"), the conversion price shall be
reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately
following the close of business on the Determination Date (as
defined in Section 8(i)) by a fraction of which the numerator
shall be the current market price per share (determined as
provided in subparagraph (vii) of this Section 8(c)) of the
Common Stock on the Determination Date less the fair market
value (as determined by the Board of Directors including a
majority of the Directors who are not officers or employees of
the Corporation or any of its subsidiaries, whose determination
shall be conclusive and described in a resolution of the Board
of Directors), on the date of such effectiveness, of the
portion of the Securities so distributed applicable to one
share of Common Stock and the denominator shall be such current
market price per share of the Common Stock, such reduction to
become effective immediately prior to the opening of business
on the day following the Determination Date. If the Board of
Directors so determines as aforesaid the fair market value of
any distribution for purposes of this subparagraph (iv) by
reference to the actual or when issued trading market for any
Securities comprising such
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distribution, it must in doing so consider the prices in such
market over the same period used in computing the current market
price per share of Common Stock pursuant to subparagraph (vii) of
this Section 8(c). Notwithstanding the foregoing, if the holders of
the Series B Convertible Preferred Stock elect to cause the Corporation
to reserve the Securities to be distributed for distribution to
the holders of the Series B Convertible Preferred Stock upon
the conversion of the shares of Series B Convertible Preferred
Stock so that any such holder converting shares of Series B
Convertible Preferred Stock will receive upon such conversion,
in addition to the shares of the Class D Common Stock to which
such holder is entitled, the amount and kind of such Securities
which such holder would have received if such holder had,
immediately prior to the Determination Date for such
distribution of Securities, converted its shares of Series B
Convertible Preferred Stock into Class D Common Stock, the fair
market value of the Securities shall, for purposes of this
subparagraph (iv), be deemed to be zero.
For purposes of this subparagraph (iv), any dividend
or distribution that includes shares of Common Stock, rights or
warrants to subscribe for or purchase shares of Common Stock or
other securities convertible into or exchangeable for shares of
Common Stock shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, cash, assets or
shares of stock other than such shares of Common Stock, such
rights or warrants or such other convertible or exchangeable
securities (making any conversion price reduction required by
this subparagraph (iv)) immediately followed by (2) in the case
of such shares of Common Stock or such rights or warrants, a
dividend or distribution thereof (making any further conversion
price reduction required by subparagraph (i) or (ii) of this
Section 8(c), except (A) the Determination Date of such
dividend or distribution shall be substituted as "the date
fixed for the determination of stockholders entitled to receive
such dividend or other distribution or to exchange such Rights"
and "the date fixed for such determination" within the meaning
of subparagraphs (i) and (ii) of this Section 8(c) and (B) any
shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 8(c)) or (3) in the
case of such other convertible or exchangeable securities, a
dividend or distribution of such number of shares of Common
Stock as would then be issuable upon the conversion or exchange
thereof, whether or not the conversion or exchange of such
securities is subject to any conditions (making any further
conversion price
22
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reduction required by subparagraph (i) of this Section 8(c),
except (A) the Determination Date of such dividend or
distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution or to exchange such Rights"
and "the date fixed for such determination" and (B) the shares
deemed to constitute such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed
for such determination," each within the meaning of
subparagraph (i) of this Section 8(c)).
(v) Subject to the last sentence of this subpara-
graph (v), in case the Corporation shall, by dividend or
otherwise, at any time distribute to all holders of its Common
Stock cash (excluding (1) any cash that is distributed as part
of a distribution referred to in subparagraph (iv) of this
Section 8(c) and constitutes an Extraordinary Equity Payment
and (2) any cash representing an amount per share of Common
Stock of any quarterly cash dividend on the Common Stock to the
extent such cash does not constitute an Extraordinary Equity
Payment), the conversion price shall be reduced so that the
same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effective-
ness of the conversion price reduction contemplated by this
subparagraph (v) by a fraction of which the numerator shall be
the current market price per share (determined as provided in
subparagraph (vii) of this Section 8(c)) of the Common Stock on
the Determination Date less the amount of cash so distributed
and not excluded as above provided applicable to one share of
Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the
day following the Determination Date. Notwithstanding the
foregoing, if the Corporation elects to reserve the cash to be
distributed for distribution to the holders of the Series B
Convertible Preferred Stock upon the conversion of the shares
of Series B Convertible Preferred Stock so that any such holder
converting shares of Series B Convertible Preferred Stock will
receive upon such conversion, in addition to the shares of the
Class D Common Stock to which such holder is entitled, the
amount of cash which such holder would have received if such
holder had, immediately prior to the Determination Date for
such distribution of cash, converted its shares of Series B
Convertible Preferred Stock into Class D Common Stock, then the
conversion price shall not be so reduced.
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(vi) In case a tender or exchange offer made by the
Corporation or any subsidiary of the Corporation for all or any
portion of the Corporation's Common Stock shall expire and such
tender or exchange offer shall involve the payment by the
Corporation or such subsidiary of consideration per share of
Common Stock having a fair market value (as determined by the
Board of Directors, including a majority of the Directors who
are not officers or employees of the Corporation or any of its
subsidiaries, whose determination shall be conclusive and
described in a resolution of the Board of Directors) at the
last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it shall
have been amended) that exceeds the current market price per
share (determined as provided in subparagraph (vii) of this
Section 8(c)) of the Common Stock on the Trading Day next
succeeding the Expiration Time, the conversion price shall be
reduced so that the same shall equal the price determined by
multiplying the conversion price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time
multiplied by the current market price per share (determined as
provided in subparagraph (vii) of this Section 8(c)) of the
Common Stock on the Trading Day next succeeding the Expiration
Time and the denominator shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender or
exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares") and (y) the product of the number of shares
of Common Stock outstanding (less any Purchased Shares) on the
Expiration Time and the current market price per share
(determined as provided in subparagraph (vii) of this Section
8(c)) of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day
following the Expiration Time.
(vii) For the purpose of any computation under this
subparagraph and subparagraphs (ii), (iv) and (v) of this
Section 8(c), the current market price per share of Common
Stock on any date shall be deemed to be the average of the
daily Closing Prices (as defined in Section 8(i)) on the five
consecutive Trading Days prior to and including the date in
question; provided, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
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distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to subparagraph
(i), (ii), (iii), (iv), (v) or (vi) above occurs on or after
the twentieth Trading Day prior to the day in question and
prior to the "ex" date for the issuance or distribution
requiring such computation, the Closing Price for each Trading
Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction
by which the conversion price is so required to be adjusted as
a result of such other event, (2) if the "ex" date for any
event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion
price pursuant to subparagraph (i), (ii), (iii), (iv), (v) or
(vi) above occurs on or after the "ex" date for the issuance or
distribution requiring such computation and on or prior to the
day in question, the Closing Price for each Trading Day on and
after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the
fraction by which the conversion price is so required to be
adjusted as a result of such other event, and (3) if the "ex"
date for the issuance or distribution requiring such
computation is on or prior to the date in question, after
taking into account any adjustment required pursuant to clause
(2) of this proviso, the Closing Price for each Trading Day on
or after such "ex" date shall be adjusted by adding thereto the
amount of any cash and the fair market value on the day in
question (as determined by the Board of Directors, including a
majority of the Directors who are not officers or employees of
the Corporation, in a manner consistent with any determination
of such value for purposes of paragraph (iv) or (v) of this
Section 8(c), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of stock or assets being
distributed applicable to one share of Common Stock as of the
close of business on the day before such "ex" date. For the
purpose of any computation under subparagraph (vi) of this
Section 8(c), the current market price per share of Common
Stock on any date shall be deemed to be the average of the
daily Closing Prices for such day and the next two succeeding
Trading Days; provided that, if the "ex" date for any event
(other than the tender or exchange offer requiring such
computation) that requires an adjustment to the conversion
price pursuant to subparagraph (i), (ii), (iii), (iv), (v) or
(vi) above occurs on or after the Expiration Time for the
tender or exchange offer requiring such computation and on or
prior to the day in question, the Closing Price for each
Trading Day on and after the "ex" date or such other event
shall be adjusted by multiplying such Closing Price by the
reciprocal of
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the fraction by which the conversion price is so required to
be adjusted as a result of such other event. For purposes
of this subparagraph (vii), the term "ex" date, (1) when
used with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the
Closing Price was obtained without the right to receive such
issuance or distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such
subdivision or combination becomes effective, and (3) when used
with respect to any tender or exchange offer, means the first
date on which the Common Stock trades regular way on such
exchange or in such market after the Expiration Time of such
offer.
(viii) The Corporation may make such reductions in the
conversion price, in addition to those required by subpara-
graphs (i), (ii), (iii), (iv), (v) and (vi) of this Section
8(c), as it considers to be advisable to avoid or diminish any
income tax to holders of Class D Common Stock or rights to
purchase Class D Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. The Corporation
from time to time may reduce the conversion price by any amount
for any period of time if the period is at least thirty days,
the reduction is irrevocable during the period and the Board of
Directors shall have made a determination that such reduction
would be in the best interest of the Corporation, which
determination shall be conclusive. Whenever the conversion
price is reduced pursuant to the preceding sentence, the
Corporation shall mail to holders of record of the Series B
Convertible Preferred Stock a notice of the reduction at least
fifteen days prior to the date the reduced conversion price
takes effect, and such notice shall state the reduced
conversion price and the period it will be in effect.
(ix) No adjustment in the conversion price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the conversion price; provided,
however, that any adjustments which by reason of this
subparagraph (ix) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(x) Notwithstanding any other provision of this
Section 8 and without implication that the contrary would
otherwise be true, no issuance, dividend or distribution
requiring
26
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adjustment of the conversion price pursuant to Section 8(c)
hereof shall be deemed to have occurred in the event that,
upon, following or in connection with the redemption or
expiration of the Rights or the termination of the Rights
Agreement or otherwise, the Corporation enters into a new
agreement that is comparable in purpose and effect to the
Rights Agreement (as determined by the Board of Directors,
whose determination shall be conclusive) and distributes to the
holders of Common Stock and Class D Common Stock Preferred
Stock, Common Stock or other similar stock purchase rights
under such agreement that are attached to the Common Stock.
(xi) Whenever the conversion price is adjusted as
herein provided:
(1) the Corporation shall compute the adjusted
conversion price and shall prepare a certificate signed by
the Treasurer of the Corporation setting forth the
adjusted conversion price and showing in reasonable detail
the acts upon which such adjustment is based, and such
certificate shall forthwith be filed with the transfer
agent for the Series B Convertible Preferred Stock; and
(2) a notice stating the conversion price has been
adjusted and setting forth the adjusted conversion price
shall forthwith be required, and as soon as practicable
after it is required, such notice shall be mailed by the
Corporation to all record holders of shares of Series B
Convertible Preferred Stock at their last addresses as
they shall appear upon the stock transfer books of the
Corporation.
(xii) The occurrence of any correlative event with
respect to the Class A Common Stock or the Class C Common Stock
shall result in adjustments to the conversion price congruent
with those made with respect to the Common Stock.
(d) No Fractional Shares. No fractional shares or
scrip representing fractional shares of Class D Common Stock
shall be issued upon conversion of Series B Convertible
Preferred Stock. If more than one certificate representing
shares of Series B Convertible Preferred Stock shall be
surrendered for conversion at one time by the same holder, the
number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares of
Series B Convertible Preferred Stock so surrendered. Instead
of any fractional share of Class D Common Stock that would
otherwise be
27
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issuable upon conversion of any shares of Series B Convertible
Preferred Stock, the Corporation shall pay a cash adjustment
in respect of such fractional interest in an amount equal to
the same fraction of the market price per share of Common
Stock (as determined by the Board of Directors or in any
manner prescribed by the Board of Directors, which, so long as
the Common Stock is listed on the New York Stock Exchange,
shall be the reported last sale price regular way on the New
York Stock Exchange) at the close of business on the day of
conversion.
(e) Reclassification, Consolidation, Merger or Sale
of Assets. In the event that the Corporation shall be a party
to any transaction (including without limitation any
recapitalization or reclassification of the Common Stock (other
than a change in par value, or from par value to no par value,
or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), any
consolidation of the Corporation with, or merger of the
Corporation into, any other person, any merger of any other
person into the Corporation (other than a merger which does not
result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the
Corporation), any sale or transfer of all or substantially all
of the assets of the Corporation or any compulsory share
exchange pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property,
then lawful provision shall be made as part of the terms of
such transaction whereby the holder of each share of Series B
Convertible Preferred Stock then outstanding shall have the
right thereafter to convert such share only into (i) in the
case of any such transaction other than a Common Stock
Fundamental Change (as defined in Section 8(i)) and subject to
assets being legally available for such purpose under
applicable law at the time of such conversion, the kind and
amount of securities, cash and other property receivable upon
such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of
shares of Common Stock of the Corporation into which such share
of Series B Convertible Preferred Stock might have been
converted immediately prior to such recapitalization,
reclassification, consolidation, merger, sale, transfer or
share exchange, after giving effect, in the case of any
Non-Stock Fundamental Change (as defined in Section 8(i)), to
any adjustment in the conversion price required by the
provisions of Section 8(h), and (ii) in the case of a Common
Stock Fundamental Change, into Common Stock of the kind
received by holders of Common Stock as a result of such Common
Stock Fundamental Change in an amount determined pursuant to
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the provisions of Section 8(h). The Corporation or the person
formed by such consolidation or resulting from such merger or
which acquires such assets or which acquires the Corporation's
shares, as the case may be, shall make provisions in its
certificate or articles of incorporation or other constituent
document to establish such right. Such certificate or articles
of incorporation or other constituent document shall provide
for adjustments which, for events subsequent to the effective
date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8.
The above provisions shall similarly apply to successive
recapitalizations, reclassifications, consolidations, mergers,
sales, transfers or share exchanges.
(f) Reservation of Shares; Transfer Taxes; Etc. The
Corporation shall at all times reserve and keep available, out
of its authorized and unissued stock, solely for the purpose of
effecting the conversion of the Series B Convertible Preferred
Stock, such number of shares of its Class D Common Stock or
Common Stock free of preemptive rights as shall from time to
time be sufficient to effect the conversion of all shares of
Series B Convertible Preferred Stock from time to time
outstanding. The Corporation shall from time to time, in
accordance with the laws of the State of Maryland, increase the
number of authorized shares of Class D Common Stock if at any
time the number of shares of authorized and unissued Class D
Common Stock shall not be sufficient to permit the conversion
of all the then outstanding shares of Series B Convertible
Preferred Stock. The Corporation shall at all times reserve
and keep available, out of its authorized and unissued stock,
solely for the purpose of effecting the exchange of shares of
Class D Common Stock or conversion of Series B Convertible
Preferred Stock, such number of shares of its Common Stock or
Class D Common Stock, as the case may be, free of preemptive
rights as shall from time to time be sufficient to effect the
exchange of all shares of Class D Common Stock or conversion of
Series B Convertible Preferred Stock from time to time.
If any shares of Class D Common Stock required to be
reserved for purposes of conversion of the Series B Convertible
Preferred Stock hereunder require registration with or approval
of any governmental authority under any Federal or State law
before such shares may be issued upon conversion, the
Corporation will in good faith and as expeditiously as possible
endeavor to cause such shares to be duly registered or
approved, as the case may be. If the Class D Common Stock is
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listed on the New York Stock Exchange or any other national
securities exchange, the Corporation will, if permitted by the
rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Class D Common
Stock issuable upon conversion of the shares of Series B
Convertible Preferred Stock.
The Corporation shall pay any and all issue or other
taxes that may be payable in respect of any issue or delivery
of shares of Class D Common Stock on conversion of the Series B
Convertible Preferred Stock. The Corporation shall not,
however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of
Class D Common Stock (or other securities or assets) in a name
other than that in which the shares of Series B Convertible
Preferred Stock so converted were registered, and no such issue
or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of
such tax or has established, to the satisfaction of the
Corporation, that such tax has been paid.
(g) Prior Notice of Certain Events. In case:
(i) the Corporation shall (1) authorize and declare
any dividend (or any other distribution) on its Common
Stock, other than (A) a dividend payable in shares of
Common Stock or (B) a dividend payable in cash, other than
any regularly scheduled quarterly cash dividend which does
not constitute an Extraordinary Equity Payment, or
(2) declare or authorize a redemption or repurchase of in
excess of 10% of the then outstanding shares of Common
Stock; or
(ii) the Corporation shall authorize the granting to
all holders of Common Stock of rights or warrants to
subscribe for or purchase any shares of stock of any class
or of any other rights or warrants; or
(iii) of any reclassification of Common Stock (other
than a subdivision or combination of the outstanding
Common Stock, or a change in par value, or from par value
to no par value, or from no par value to par value), or of
any consolidation or merger to which the Corporation is a
party and for which approval of any stockholders of the
Corporation shall be required, or of the sale or transfer
of all or substantially all of the assets of the
Corporation or of any compulsory share exchange whereby the
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Common Stock is converted into other securities, cash
or other property; or
(iv) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer
agent for the Series B Convertible Preferred Stock, and shall
cause to be mailed to the holders of record of the Series B
Convertible Preferred Stock, at their last addresses as they
shall appear upon the stock transfer books of the Corporation,
at least fifteen days prior to the applicable record date
hereinafter specified, a notice stating, as the case may be,
(x) the record date (if any) for the purpose of such dividend,
distribution, redemption, repurchase or granting of rights or
warrants or, if no record date is to be set, the date as of
which the holders of Common Stock of record to be entitled to
such dividend, distribution, redemption, rights or warrants are
to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share
exchange, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of shares of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities or
other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail
such notice or any defect therein or in the mailing thereof
shall affect the validity of the corporate action required to
be specified in such notice).
(h) Adjustments in Case of Fundamental Changes.
Notwithstanding any other provision in this Section 8 to the
contrary, if any Fundamental Change (as defined in
Section 8(i)) occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as
described below. In addition, in the event of a Common Stock
Fundamental Change (as defined in Section 8(i)), each share of
Series B Convertible Preferred Stock shall be convertible
solely into shares of common stock of the kind received by
holders of Common Stock as the result of such shares of Common
Stock Fundamental Change.
For purposes of calculating any adjustment to be made
pursuant to this Section 8(h) in the event of a Fundamental
Change, immediately after such Fundamental Change:
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(i) in the case of a Non-Stock Fundamental Change
(as defined in Section 8(i)), the conversion price of the
Series B Convertible Preferred Stock shall become the
lower of (A) the conversion price immediately prior to
such Non-Stock Fundamental Change, but after giving effect
to any other prior adjustments effected pursuant to this
Section 8, and (B) the result obtained by multiplying the
greater of the Applicable Price (as defined in Section
8(i)) or the then applicable Reference Market Price (as
defined in Section 8(i)) by a fraction the numerator of
which shall be $50.00 and the denominator of which shall
be $54.00 prior to September 15, 1999 and thereafter the
then current Redemption Price per share of Series B
Convertible Preferred Stock plus an amount equal to all
dividends accrued and unpaid thereon, whether or not
declared, to but excluding the date of such Non-Stock
Fundamental Change; and
(ii) in the case of a Common Stock Fundamental
Change, the conversion price shall be the conversion price
in effect immediately prior to such Common Stock
Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to this Section 8,
multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined in Section 8(i)) and the
denominator of which is the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental
Change in which (A) 100% by value of the consideration
received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if
any, is paid with respect to any fractional interests in
such common stock resulting from such Common Stock
Fundamental Change) and (B) all of the Common Stock shall
have been exchanged for, converted into or acquired for
common stock (and cash with respect to fractional
interests) of the successor, acquiror or other third
party, the conversion price of the shares of Series B
Convertible Preferred Stock immediately following such
Common Stock Fundamental Change shall be the conversion
price in effect immediately prior to such Common Stock
Fundamental Change multiplied by a fraction, the numerator
of which is one (1) and the denominator of which is the
number of shares of common stock of the successor,
acquiror or other third party received by a holder of one
share of Common Stock as a result of such Common Stock
Fundamental Change.
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(i) Definitions. The following definitions shall
apply to terms used in this Section 8:
(1) "Applicable Price" shall mean (i) in the
event of a Non-Stock Fundamental Change in which the
holders of shares of Common Stock receive only cash, the
amount of cash received by the holder of one share of
Common Stock and (ii) in the event of any other Non-Stock
Fundamental Change or any Common Stock Fundamental Change,
the average of the last reported sale price for the Common
Stock during the ten Trading Days immediately prior to the
record date for the determination of the holders of Common
Stock entitled to receive cash, securities, property or
other assets in connection with such Non-Stock Fundamental
Change or Common Stock Fundamental Change, or, if there is
no such record date, the date upon which the holders of
the Common Stock shall have the right to receive such
cash, securities, property or other assets.
(2) "Closing Price" on any day shall mean the
closing sale price regular way on such day or, in case no
such sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in each
case on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange or
quotation system on which the Common Stock is quoted or
listed or admitted to trading, or, if not quoted or listed
or admitted to trading on any national securities exchange
or quotation system, the average of the closing bid and
asked prices of the Common Stock on the over-the-counter
market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally
accepted reporting service, or if not so available in such
manner, as furnished by any New York Stock Exchange member
firm selected from time to time by the Board of Directors
of the Corporation for that purpose.
(3) "Common Stock Fundamental Change" shall
mean any Fundamental Change in which more than 50% by
value (as determined in good faith by the Board of
Directors) of the consideration received by holders of
Common Stock consists of common stock that for the
consecutive ten Trading Days immediately prior to such
Fundamental Change has been admitted for listing or
admitted for listing subject to notice of issuance on a
national securities exchange or quoted on the National
Association of
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Securities Dealers, Inc. ("NASDAQ") National Market System;
provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (i) the
Corporation continues to exist after the occurrence of such
Fundamental Change and the outstanding shares of Series B
Convertible Preferred Stock continue to exist as outstanding
shares of Series B Convertible Preferred Stock, or (ii) not
later than the occurrence of such Fundamental Change, the
outstanding shares of Series B Convertible Preferred Stock are
converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the
business of the Corporation, which convertible preferred
stock has powers, preferences and relative, participating,
optional or other rights, and qualifications, limitations
and restrictions, substantially similar to those of the
Series B Convertible Preferred Stock.
(4) "Determination Date" shall mean, with
respect to any dividend, distribution or other transaction
or event in which the holders of Common Stock have the
right to receive any cash, securities or other property or
assets or in which the Common Stock (or other applicable
security) is exchanged for or converted into any
combination of cash, securities or other property, the
date fixed for determination of stockholders entitled to
receive such cash, securities or other property or assets
(whether such date is fixed by the Board of Directors or
by statute, contract or otherwise).
(5) "Fundamental Change" shall mean the
occurrence of any transaction or event in connection with
a plan pursuant to which all or substantially all of the
shares of Common Stock shall be exchanged for, converted
into, acquired for or constitute solely the right to
receive cash, securities, property or other assets
(whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise);
provided, however, in the case of a plan involving more
than one such transaction or event, for purposes of
adjustment of the conversion price, such Fundamental
Change shall be deemed to have occurred when substantially
all of the shares of Common Stock of the Corporation shall
be exchanged for, converted into or acquired for or
constitute solely the right to receive cash, securities,
property or other assets, but the adjustment shall be
based upon the consideration which
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the holders of Common Stock received in such transaction or
event as a result of which more than 50% of the shares of Common
Stock of the Corporation shall have been exchanged for, converted
into, or acquired for or constitute solely the right to receive
cash, securities, property or other assets; provided,
further, that such term does not include (i) any such
transaction or event in which the Corporation and/or any
of its subsidiaries are the issuers of all the cash,
securities, property or other assets exchanged, acquired
or otherwise issued in such transaction or event, or
(ii) any such transaction or event in which the holders of
Common Stock receive securities of an issuer other than
the Corporation if, immediately following such transaction
or event, such holders hold a majority of the securities
having the power to vote normally in the election of
directors of such other issuer outstanding immediately
following such transaction or other event.
(6) "Non-Stock Fundamental Change" shall mean
any Fundamental Change other than a Common Stock
Fundamental Change.
(7) "Purchaser Stock Price" shall mean, with
respect to any Common Stock Fundamental Change, the
average of the last reported sales price for the common
stock, on the principal national securities exchange or
the NASDAQ National Market System on which such common
stock is listed, received in such Common Stock Fundamental
Change during the ten Trading Days immediately prior to
the record date for the determination of the holders of
Common Stock entitled to receive such common stock or, if
there is no such record date, the date upon which the
holders of the Common Stock shall have the right to
receive such common stock; provided, however, if no such
last reported sales price for the common stock during the
last ten Trading Days prior to the record date exists,
then the Purchaser Stock Price shall be set at a price
determined in good faith by the Board of Directors.
(8) "Reference Market Price" shall initially
mean $11.33 and in the event of any adjustment to the
conversion price other than as a result of a Fundamental
Change, the Reference Market Price shall also be adjusted
so that the ratio of the Reference Market Price to the
conversion price after giving effect to any such
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adjustment shall always be the same as the ratio of $11.33
to the initial conversion price set forth above.
(9) "Trading Day" shall mean a day on which the
national securities exchange or the NASDAQ National Market
System used to determine the Closing Price is open for the
transaction of business or the reporting of trades.
(j) Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of
the Corporation and the investment of additional optional
amounts in shares of Common Stock under any such plan, and the
issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any employee benefit plan or
program of the Corporation or pursuant to any option, warrant,
right or exercisable, exchangeable or convertible security
outstanding as of the date the Series B Convertible Preferred
Stock was first designated (except as expressly provided in
Section 8(c)(i) or 8(c)(ii) with respect to certain events
under the Rights Agreement), and any issuance of Rights (as
hereinafter defined), shall not be deemed to constitute an
issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Corporation or any of its
subsidiaries to which any of the adjustment provisions
described above applies. There shall also be no adjustment of
the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the
Corporation except as specifically described in this Section 8.
If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above,
only one adjustment shall be made and such adjustment shall be
the amount of adjustment which has the highest absolute value
to the holders of Series B Convertible Preferred Stock.
(k) Preferred Share Purchase Rights. So long as
Preferred Share Purchase Rights, of the kind authorized and
declared on June 11, 1987 and distributed by the Corporation in
June 1987 as the same have been and may hereafter be amended
("Rights"), are attached to the outstanding shares of Class D
Common Stock of the Corporation, each share of Class D Common
Stock issued upon conversion of the shares of Series B
Convertible Preferred Stock prior to the earliest of any
Distribution Date (as defined in the Rights Agreement), the
date of redemption of the Rights or the date of expiration of
the Rights shall be issued with Rights in an amount equal to
the amount of
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Rights then attached to each such outstanding share of Class
D Common Stock, provided that, at the option of any holder
of shares of Class D Common Stock, any securities issued
upon exercise of such Rights shall be voting only to the
extent that the Class D Common Stock is voting.
(l) Certain Additional Rights. In case the
Corporation shall, by dividend or otherwise, authorize, declare
or make a distribution on its Common Stock referred to in
Section 8(c)(iv) or Section 8(c)(v), the holder of each share
of Series B Convertible Preferred Stock, upon the conversion
thereof subsequent to the close of business on the date fixed
for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion
price adjustment in respect of such distribution pursuant to
Section 8(c)(iv) or Section 8(c)(v), shall also be entitled to
receive for each share of Class D Common Stock into which such
share of Series B Convertible Preferred Stock is converted, the
portion of the evidences of indebtedness, shares of stock, cash
and assets so distributed applicable to one share of Class D
Common Stock; provided, however, that, at the election of the
Corporation (whose election shall be evidenced by a resolution
of the Board of Directors) with respect to all holders so
converting, the Corporation may, in lieu of distributing to
such holder any portion of such distribution not consisting of
cash or securities of the Corporation, pay such holder an
amount in cash equal to the fair market value thereof (as
determined by the Board of Directors, including a majority of
the Directors who are not officers or employees of the
Corporation or any of its subsidiaries, whose determination
shall be conclusive and described in a resolution of the Board
of Directors). If any conversion of a share of Series B
Convertible Preferred Stock described in the immediately
preceding sentence occurs prior to the payment date for a
distribution to holders of Class D Common Stock which the
holder of the share of Series B Convertible Preferred Stock so
converted is entitled to receive in accordance with the
immediately preceding sentence, the Corporation may elect (such
election to be evidenced by a resolution of the Board of
Directors) to distribute to such holder a due bill for the
evidences of indebtedness, shares of stock, cash or assets to
which such holder is so entitled; provided that such due bill
(i) meets any applicable requirements of the principal national
securities exchange or other market on which the Class D Common
Stock is then traded and (ii) requires payment or delivery of
such evidences of indebtedness, shares of stock, cash or assets
no later than the date of payment or delivery
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thereof to holders of Class D Common Stock receiving such distribution.
(m) Other. Notwithstanding any other provision in
this Section 8 to the contrary, if the Corporation shall, by
dividend or otherwise, authorize, declare or make a distribu-
tion on its Common Stock referred to in Section 8(c)(iv) and
such distribution shall include shares of stock of one or more
corporations that immediately prior to such distribution was or
would have been a subsidiary (a "Spin-Off"), the holder of each
share of Series B Convertible Preferred Stock shall be
entitled, if it so elects, in addition to any other adjustment
provided in respect thereof in this Section 8, to receive share
for share convertible preferred stock of each such corporation
which has powers, preferences and relative, participating,
optional and other rights, and qualifications, limitations and
restrictions with respect to such corporation, as are
substantially identical to those of the Series B Convertible
Preferred Stock (the "Additional Preferred Stock" and
collectively with the Series B Preferred Stock, the "Total
Preferred Stock"). The then effective conversion price of the
Additional Preferred Stock shall be such as shall preserve
fully the conversion rights of the Series B Convertible
Preferred Stock in such corporation. The shares of Series B
Convertible Stock and the Additional Preferred Stock shall each
thereafter remain outstanding; provided, however, that any
payment, redemption or retirement in respect of either the
Series B Convertible Preferred Stock or the Additional
Preferred Stock shall operate to reduce the remaining payment,
redemption or retirement rights in respect of both, so that
the holder shall be entitled to receive in the aggregate the
full benefits with respect to payments, redemption and
retirement rights of holding one half of the number of shares
of Total Preferred Stock held by such holder and the full
benefits with respect to all other rights of holding the total
number of shares of Total Preferred Stock held by such holder.
(n) Certain Special Events. Notwithstanding
anything in this Section 8 to the contrary, neither the
Corporation nor any of its subsidiaries shall declare, pay or
make any dividend or distribution or commence a tender or
exchange offer for any of the Corporation's securities that are
subordinate to or pari passu with the Series B Convertible
Preferred Stock as to liquidation preference or dividends or be
a party to any transaction (including without limitation any
recapitalization or reclassification of stock), any
consolidation of the Corporation or any such subsidiary with,
or merger of the
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Corporation or any such subsidiary into, or share exchange with,
any other person, any merger of any other person into the
Corporation or any such subsidiary or any sale or transfer
of assets which, in any such case, would constitute a Special
Event unless after giving effect thereto the Corporation would
have the ability and the right (and the Board of Directors,
including a majority of the Directors who are not officers or
employees of the Corporation or any of its subsidiaries, shall
have adopted a resolution confirming such ability and right)
to purchase at the then applicable price specified in Section 7
all of the then issued and outstanding shares of Series B
Convertible Preferred Stock, assuming all such stock is
tendered to it for purchase pursuant to Section 7.
9. Voting Rights.
(a) General. The holders of shares of Series B
Convertible Preferred Stock will not have any voting rights
except as set forth below. In connection with such rights to
vote pursuant to Sections 9(b) and 9(c), each holder of
Series B Convertible Preferred Stock will have one vote for
each share held. Any shares of Series B Convertible Preferred
Stock held by the Corporation or any entity controlled by the
Corporation shall not have voting rights hereunder and shall
not be counted in determining the presence of a quorum.
(b) Default Voting Rights. Whenever dividends on
the Series B Convertible Preferred Stock or any other class or
series of Parity Dividend Stock shall be in arrears in an
aggregate amount equal to at least six quarterly dividends
(whether or not consecutive), (i) the number of members of the
Board of Directors shall be increased by two, effective as of
the time of election of such directors as hereinafter provided
and (ii) the holders of the Series B Convertible Preferred
Stock (voting separately as a class with all other affected
classes or series of the Parity Dividend Stock upon which like
voting rights have been conferred and are exercisable) will
have the exclusive right to vote for and elect such two
additional directors of the Corporation at each meeting of
stockholders of the Corporation at which directors are to be
elected held during the period such dividends remain in
arrears. The right of the holders of the Series B Convertible
Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Series B
Convertible Preferred Stock have been authorized, declared,
paid or set apart for payment. The term of office of all
directors so elected shall terminate immediately upon the
termination of the
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right of the holders of the Series B Convertible Preferred Stock and
such Parity Dividend Stock to vote for such two additional directors,
and the number of directors of the Board of Directors shall immediately
thereafter be reduced by two.
The foregoing right of the holders of the Series B
Convertible Preferred Stock with respect to the election of two
directors may be exercised at each annual meeting of
stockholders or at any special meeting of stockholders held for
such purpose. If the right to elect directors shall have
accrued to the holders of the Series B Convertible Preferred
Stock more than ninety days preceding the date established for
the next annual meeting of stockholders, the President of the
Corporation shall, within twenty days after the delivery to the
Corporation at its principal office of a written request for a
special meeting signed by the holders of at least 10% of all
outstanding shares of the Series B Convertible Preferred Stock,
call a special meeting of the holders of the Series B
Convertible Preferred Stock to be held within sixty days after
the delivery of such request for the purpose of electing such
additional directors.
The holders of the Series B Convertible Preferred
Stock and any Parity Dividend Stock referred to above voting as
a class shall have the right to remove with or without cause at
any time and replace any directors such holders shall have
elected pursuant to this Section 9 and the holders of each
other class of stock of the Corporation shall not have the
right to remove any such directors.
(c) Class Voting Rights. So long as any shares of
the Series B Convertible Preferred Stock are outstanding, the
Corporation shall not, directly or indirectly, without the
affirmative vote or consent of the holders of at least 66-2/3%
(unless a higher percentage shall then be required by
applicable law or the Corporation's charter) of all outstanding
shares of the Series B Convertible Preferred Stock voting
separately as a class (i) amend, alter or repeal any provision
of the charter or by the bylaws of the Corporation, if such
amendment, alteration or repeal would alter the contract
rights, as expressly set forth herein, of the Series B
Convertible Preferred Stock so as to adversely affect the
rights of the holders thereof or the holders of the Class D
Common Stock or the Common Stock or (ii) create, authorize or
issue, or reclassify shares of any authorized stock of the
Corporation into, or increase the authorized amount of, any
Senior Dividend Stock or Senior Liquidation Stock, or any
security convertible into such
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Senior Dividend Stock or Senior Liquidation Stock. A class vote
on the part of the Series B Convertible Preferred Stock shall, without
limitation, specifically not be deemed to be required (except as
otherwise required by law or resolution of the Board of Directors) in
connection with (a) the authorization, issuance or increase in
the authorized amount of any shares of any other class or
series of stock which ranks junior to, or on a parity with, the
Series B Convertible Preferred Stock in respect of the payment
of dividends and distributions upon liquidation, dissolution or
winding up of the Corporation or (b) the authorization,
issuance or increase in the amount of any bonds, mortgages,
debentures or other obligations of the Corporation.
(d) Voting Rights after Occurrence of a Specified
Corporate Action. Following the occurrence of a Specified
Corporate Action, the holders of shares of Series B Convertible
Preferred Stock shall have the right to vote as a class with
the holders of Common Stock and Class D Common Stock on all
matters as to which the holders of Common Stock are entitled to
vote, whether by law or otherwise. In connection with such
rights to vote, each holder of Series B Convertible Preferred
Stock shall have the number of votes for each share held equal
to the number of shares of Common Stock then exchangeable for
the shares of Class D Common Stock into which such share is
then convertible.
10. Outstanding Shares. For purposes of these
Articles Supplementary, all shares of Series B Convertible
Preferred Stock issued by the Corporation shall be deemed
outstanding except (i) from the date fixed for redemption
pursuant to Section 6 hereof, all shares of Series B
Convertible Preferred Stock that have been so called for
redemption under Section 6, to the extent provided thereunder;
(ii) from the date of surrender of certificates representing
shares of Series B Convertible Preferred Stock, all shares of
Series B Convertible Preferred Stock converted into Class D
Common Stock or repurchased pursuant to Section 7 hereof; and
(iii) from the date of registration of transfer, all shares of
Series B Convertible Preferred Stock held of record by the
Corporation or any majority-owned subsidiary of the
Corporation.
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11. Transfer Restrictions.
(a) Legends on Series B Convertible Preferred Stock
and Common Stock. The certificates representing shares of
Series B Convertible Preferred Stock shall, unless otherwise
agreed by the Corporation and the holders of any such
certificates, bear a legend substantially to the following
effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY
SECURITIES ISSUABLE UPON CONVERSION OR EXCHANGE HEREOF MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
OR (ii) AN APPLICABLE EXEMPTION FROM REGISTRATION
THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF THE
PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO ALEXANDER & ALEXANDER
SERVICES INC. TO THE EFFECT THAT SUCH EXEMPTION FROM
REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
IN ADDITION, THE VOTING, SALE, ASSIGNMENT, TRANSFER,
PLEDGE OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS FURTHER SUBJECT TO RESTRICTIONS WHICH ARE
CONTAINED IN THE CHARTER OF ALEXANDER & ALEXANDER SERVICES
INC., IN THE ARTICLES SUPPLEMENTARY GOVERNING THESE SHARES
AND IN A STOCK PURCHASE AND SALE AGREEMENT DATED AS OF
JUNE 6, 1994, A COPY OF EACH OF WHICH IS ON FILE WITH
ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE FURNISHED
BY THE CORPORATION TO THE STOCKHOLDER ON REQUEST AND
WITHOUT CHARGE."
(b) Transfer Agent Requirements. The transfer agent
for the Series B Convertible Preferred Stock shall not be
required to accept for registration of transfer any shares of
Series B Convertible Preferred Stock bearing the legend
contained in paragraph (a) above, except upon presentation of
satisfactory evidence that the restrictions on transfer of
shares of the Series B Convertible Preferred Stock referred to
in the legend in paragraph (a) have been complied with, all in
accordance with such reasonable regulations as the Corporation
may from time to time agree with the transfer agent for shares
of the Series B Convertible Preferred Stock.
12. Status of Acquired Shares. Shares of Series B
Convertible Preferred Stock redeemed or repurchased by the
Corporation, received upon conversion pursuant to Section 8 or
otherwise acquired by the Corporation will be restored to the
status of authorized but unissued shares of Preferred Stock,
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without designation as to class, and may thereafter be issued,
but not as shares of Series B Convertible Preferred Stock.
13. Special Covenants. The Corporation shall not on
or after June 1, 1994 issue or sell any shares of any Senior
Dividend Stock or Senior Liquidation Stock.
14. Permissible Distributions. In determining
whether a distribution (other than upon voluntary or
involuntary liquidation), by dividend, redemption or other
acquisition of shares or otherwise, is permitted under the
Maryland General Corporation Law, amounts that would be needed,
if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon
dissolution of holders of Series B Convertible Preferred Stock
whose preferential rights upon dissolution are superior to
those receiving the distribution shall not be added to the
Corporation's total liabilities.
15. Preemptive Rights. Holders of shares of
Series B Convertible Preferred Stock are not entitled to any
preemptive or subscription rights in respect of any securities
of the Corporation.
16. Severability of Provisions. Whenever possible,
each provision hereof shall be interpreted in a manner as to be
effective and valid under applicable law, but if any provision
hereof is held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of
time were extended or shortened or a particular percentage were
increased or decreased, then such court may make such change as
shall be necessary to render the provision in question
effective and valid under applicable law.
SECOND: The Series B Convertible Preferred Stock has
been classified by the Board of Directors under a power
contained in the Charter.
THIRD: These Articles Supplementary have been
approved by the Board of Directors in the manner and by the
vote required by law.
FOURTH: The undersigned acknowledges these Articles
Supplementary to be the act of the Corporation and states as to
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all matters and facts required to be verified under oath that,
to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and such
statement is made under penalties for perjury.
IN WITNESS WHEREOF, these Articles Supplementary are
executed on behalf of the Corporation by its Vice President and
attested by its Assistant Secretary this 15th day of July,
1994.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/ R.A. Kershaw
Name: R.A. Kershaw
Vice President & Treasurer
Attest:
/s/ Alice L. Russell
Name: Alice L. Russell
Assistant Secretary
1
EXHIBIT D
ARTICLES OF AMENDMENT
OF THE CHARTER OF
ALEXANDER & ALEXANDER SERVICES INC.
ALEXANDER & ALEXANDER SERVICES INC., a Maryland
corporation (the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST, the charter of the Corporation (the "Charter")
is hereby amended as follows:
1. The first paragraph of Article SIXTH of the
Charter is hereby amended to read in its entirety as follows:
SIXTH: The total number of shares of stock
which the Corporation has authority to issue is
two hundred ninety-two million (292,000,000)
shares of five classes, consisting of two hundred
million (200,000,000) shares of Common Stock,
$1.00 par value per share; twenty-six million
(26,000,000) shares of Class A Common Stock,
$.00001 par value per share; eleven million
(11,000,000) shares of Class C Common Stock, $1.00
par value per share; forty million (40,000,000)
shares of Class D Common Stock, $1.00 par value
per share; and fifteen million (15,000,000) shares
of Preferred Stock, $1.00 par value per share.
The aggregate par value of all shares of all
classes of stock which the Corporation has
authority to issue is $266,000,260.
2. Section A.(e) of Article SIXTH of the Charter is
hereby amended to read in its entirety as follows:
(e) redeemable, in whole or in part, at the
option of the Corporation or of the holder or
both, in cash, bonds or other property, at such
price or prices, within such period or periods,
and under such conditions as the Board of
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Directors shall so provide, including provision
for the creation of a sinking fund for the
redemption thereof; and/or
3. A new Section J of Article SIXTH of the Charter
is hereby added to the Charter to read in its entirety as
follows:
J. Class D Common Stock. Except as
expressly provided by law or as set forth in this
Section J, shares of Class D Common Stock shall be
identical in all respects to the Common Stock,
including with respect to stock splits, stock
combinations, the right to receive dividends, or
with respect to distributions upon liquidation,
dissolution, winding up of the Corporation or
otherwise, without preference or distinction,
except that if any dividends in additional shares
of Common Stock are declared on the Common Stock a
like dividend in shares of Class D Common Stock
shall be authorized and declared on the Class D
Common Stock and if any such dividend or
distribution with respect to the Common Stock
includes securities that vote together with the
Common Stock ("Other Securities"), such securities
distributed with respect to shares of Class D
Common Stock shall be identical in all respects to
the Other Securities, except they shall not have
voting rights.
The holders of shares of Class D Common Stock
shall not have any voting rights except (i) to the
extent required by applicable law; (ii) an
amendment to or modification of, the Charter that
would adversely affect the holders of shares of
Class D Common Stock may only be adopted if such
amendment or modification has been approved by the
affirmative vote of the holders of at least two-
thirds of the outstanding shares of Class D Common
Stock, for purpose of which vote the holders of 8%
Series B Cumulative Convertible Preferred Stock
("Series B Stock") shall be deemed to be holders
of that number of shares of Class D Common Stock
into
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which such Series B Stock would then be
convertible; and (iii) upon and after a "change of
control" of the Corporation, in which event the
holders of shares of Class D Common Stock shall
have the right to vote on all matters submitted to
a vote to the stockholders of the Corporation as a
single class together with the Common Stock, the
Class A Common Stock, the Class C Common Stock and
the Series B Stock, provided that with respect to
any matter contemplated by subparagraph (ii)
above, such vote shall be a class vote as
specified by such subparagraph.
For purposes of the foregoing provision,
"change of control" means such time as (i) the
Corporation shall consent or agree to the
acquisition of, or the commencement of a tender
offer for, or the Board of Directors shall
recommend or, within 10 business days after the
commencement of the tender offer, not recommend
that shareholders' reject, a tender offer for,
"beneficial ownership" (as defined in Rule 13d-3
under the Exchange Act) by any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended
("the Exchange Act")) other than American
International Group, Inc. ("AIG") and its
affiliates or any transferee thereof, of
securities of the Corporation entitled to vote
generally in the election of directors, or
securities convertible into or exchangeable for
such securities (collectively, "Designated
Securities"), representing, when added to the
Designated Securities already owned by such person
or group, thirty-five percent (35%) or more of
such Designated Securities; (ii) the Corporation
shall amend, modify or supplement, or waive the
benefit of, the Rights Agreement between Alexander
& Alexander Services Inc. and First Chicago Trust
Company of New York, dated as of June 11, 1987, as
amended and restated on March 22, 1990, as amended
on August 21, 1992 and June 6, 1994 (the "Rights
Agreement"), so as to permit any acquisition of
beneficial ownership of thirty-five percent (35%)
or more of the Designated Securities without
causing a person or group (other than AIG and its
affiliates or any transferee thereof) to become an
Acquiring Person (as defined in the Rights
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Agreement) or without causing the Distribution
Date or the Shares Acquisition Date (each as
defined in the Rights Agreement) to occur or
without giving rise to a Section 11(a)(ii) Event
(as defined in the Rights Agreement); (iii) the
Corporation shall take any action under
Section 3-603(c) of the Maryland General
Corporation Law to exempt any transaction between
the Corporation and any of its subsidiaries, on
the one hand, and any person or group (other than
AIG and its affiliates or any transferee thereof),
or any affiliates of any such person or group, on
the other hand, who (A) acquire, own or hold
beneficial ownership of Designated Securities
representing thirty-five percent (35%) or more of
such Designated Securities from the provisions of
Title 3, Subtitle 6 of the Maryland General
Corporation Law or (B) acquire, own or hold
beneficial ownership of Designated Securities
representing ten percent (10%) or more of such
Designated Securities unless such other person or
group, or any affiliate of such person or group,
enters into a standstill agreement with the
Corporation limiting the acquisition of Designated
Securities by such other person or group, or any
affiliates of such person or group, to less than
35% of the Designated Securities and such
standstill agreement remains in full force and
effect; (iv) the Corporation shall issue, sell or
transfer, in one or a series of related
transactions, Designated Securities to any person
or group (other than AIG and its affiliates or any
transferee thereof) if after giving effect thereto
said person or group shall have, or shall have the
then contractual right to acquire through
conversion, exercise of warrants or otherwise,
more than thirty-five percent (35%) of the
combined voting power to vote generally in the
election of directors of the Corporation; or
(v) the Corporation shall agree to merge or
consolidate with or into any person, firm,
corporation or other legal entity (other than AIG
and its affiliates or any transferee thereof) or
shall agree to sell all or substantially all its
assets to any such person, firm, corporation or
other legal entity other than (i) a merger or
consolidation of one subsidiary of the Corporation
into another or the Corporation, or (ii) a merger
or consolidation
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in which the securities of the Corporation outstanding
before the merger or consolidation are not affected
and in which the Corporation issues equity securities
having an aggregate market value of less than 20% of
the total market value of the Corporation's equity
securities outstanding prior to such merger or
consolidation. "Affiliate" means, when used with
reference to any person, any other person directly or
indirectly controlling, controlled by, or under direct
or indirect common control with, the referent person or
such other person, as the case may be, or any person who
beneficially owns, directly or indirectly, 10% or more of
the voting equity interests of such person or warrants,
options or other rights to acquire or hold more than 10%
of any class of voting equity interests of such person.
For the purposes of this definition, "control" when used
with respect to any specified person means the power to
direct or cause the direction of management or policies of
such person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled"
have meanings correlative to the foregoing.
The holders of Class D Common Stock shall
have the right to exchange each share of Class D
Common Stock for one share of Common Stock, at any
time, provided that, other than upon and after a
change of control, no person shall be entitled to
acquire shares of Common Stock upon such exchange
if after giving effect thereto such person shall
have, or shall have the then contractual right to
acquire through conversion, exercise of warrants,
or otherwise, more than 9.9% of the combined
voting power of the Common Stock, Class A Common
Stock and Class C Common Stock then outstanding.
The Corporation shall not be required to
register any transfer of shares of Class D Common
Stock, except as follows:
(a) to any person which acquired shares of
Class D Common Stock on the original issuance of
Class D Common Stock by the Corporation (a
"Purchaser");
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(b) to the ultimate parent corporation of
any Purchaser (an "Approved Parent") or any
wholly-owned direct or indirect subsidiary of any
Approved Parent (a "Controlled Subsidiary");
(c) in a transfer (otherwise than to a
Purchaser, an Approved Parent or a Controlled
Subsidiary) pursuant to Rule 144 under the
Securities Act of 1933, as amended (the
"Securities Act"), or a successor provision;
(d) in a private sale (otherwise than to a
Purchaser, an Approved Parent or a Controlled
Subsidiary), provided that, other than upon and
after a change of control, the transferor shall
not knowingly sell to any single person or group
of persons acting in concert a number of shares of
Class D Common Stock which, if exchanged for
Common Stock, when added to other securities owned
by such person or group and to securities that
such person or group has the right to acquire by
conversion, exercise of warrants, or otherwise,
would cause such person or group to own or to have
the right to acquire more than 9.9% of the
combined voting power of the shares of Common
Stock, Class A Common Stock and Class C Common
Stock then outstanding (for purposes of this
clause (d) "not knowingly" shall mean the absence
of actual knowledge and of knowledge that would
have then been available from a review of filings
as to the Corporation under section 13 of the
Securities Exchange Act of 1934, as amended, plus
the receipt of a representation from the buyer(s)
to the foregoing effect); and
(e) in the event that shares of Series B
Stock and/or Common Stock exchangeable for shares
of Class D Common Stock are to be offered in any
bona fide public offering registered under the
Securities Act, the Corporation shall provide:
(i) in the event that shares of Series B Stock are
offered publicly, for the conversion of such
shares of Series B Stock into Common Stock at the
election of the holders of shares of Series B
Stock; and (ii) in the event that shares of Common
Stock are offered publicly, for the exchange of
the shares of Class D Common Stock for shares of
7
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Common Stock at the election of the holders of
shares of Class D Common Stock; in each case so
that such offerings can be made without
restriction.
In connection with any sale or transfer
of shares of Class D Common Stock in accordance
with clauses (c) or (d) above, the Corporation
shall issue one share of Common Stock in exchange
for each share of Class D Common Stock to be so
sold or transferred, provided that in no event,
other than upon and after a change of control,
shall the number of shares of Common Stock issued
to such purchaser or transferee cause the combined
voting power of the shares of Common Stock, Class
A Common Stock and Class C Common Stock held by
such purchaser or transferee to exceed 9.9% of the
combined voting power of all such shares then
outstanding.
Any holder of shares of Class D Common
Stock desiring to exchange such shares for Common
Stock shall surrender the certificate or
certificates representing such shares of Class D
Common Stock at the office of the transfer agent
for the Class D Common Stock, which certificate or
certificates, if the Corporation shall so require,
shall be duly endorsed to the Corporation or in
blank, or accompanied by proper instruments of
transfer to the Corporation or in blank,
accompanied by irrevocable written notice to the
Corporation that the holder elects so to exchange
such shares of Class D Common Stock and specifying
the name or names (with address or addresses) in
which a certificate or certificates representing
shares of Common Stock are to be issued.
The Corporation shall, as soon as
practicable after such deposit of certificates
representing shares of Class D Common Stock
accompanied by the written notice and compliance
with any other conditions herein contained,
deliver at such office of such transfer agent to
the person for whose account such shares of Class
D Common Stock were so surrendered or to the
nominee or nominees of such person, certificates
representing the number of full shares of Common
Stock to which such
8
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person shall be entitled as aforesaid. Such exchange
shall be deemed to have been made as of the date of
such surrender of the shares of Class D Common Stock
to be exchanged, and the person or persons entitled to
receive the shares of Common Stock deliverable upon
exchange of such shares of Class D Common Stock shall
be treated for all purposes as the record holder or
holders of such Common Stock on such date.
The transfer agent for the Class D
Common Stock and the transfer agent and registrar
for the Common Stock shall not be required to
accept for registration of transfer a certificate
representing any shares of Class D Common Stock or
Common Stock bearing a restrictive legend
affecting transfer, except upon presentation of
satisfactory evidence that the restrictions on
transfer of the Class D Common Stock and Common
Stock referred to in such legend have been
complied with, all in accordance with such
reasonable regulations as the Corporation may from
time to time agree with the transfer agent for the
Class D Common Stock and the transfer agent and
registrar for the Common Stock.
The Corporation shall at all times
reserve and keep available, out of its authorized
and unissued stock, such number of shares of its
Common Stock, free of preemptive rights, as shall
from time to time be sufficient to effect the
exchange of all shares of Class D Common Stock.
The Corporation shall from time to time, in
accordance with the laws of the State of Maryland,
increase the number of authorized shares of Common
Stock if at any time the number of authorized and
unissued shares of Common Stock shall not be
sufficient to permit the exchange of all the then
outstanding shares of Class D Common Stock.
If any shares of Common Stock required
to be reserved for purposes of exchange of the
Class D Common Stock hereunder require
registration with or approval of any governmental
authority under any Federal or State law before
such shares may be issued upon conversion, the
Corporation will in good faith and as
expeditiously as
9
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possible endeavor to cause such shares to be duly
registered or approved, as the case may be. If
the Common Stock is listed on the New York Stock
Exchange or any other national securities exchange,
the Corporation will, if permitted by the rules of
such exchange, list and keep listed on such exchange,
upon official notice of issuance, all shares of Common
Stock issuable upon exchange of the Class D Common
Stock.
The Corporation shall pay any and all
issue or other taxes that may be payable in
respect of any issue or delivery of shares of
Common Stock on exchange of shares of Class D
Common Stock. The Corporation shall not, however,
be required to pay any tax which may be payable in
respect of any transfer involved in the issue or
delivery of Common Stock (or other securities or
assets) in a name other than that in which the
shares of Class D Common Stock so exchanged were
registered, and no such issue or delivery shall be
made unless and until the person requesting such
issue has paid to the Corporation the amount of
such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
Whenever possible, each provision hereof
shall be interpreted in a manner as to be
effective and valid under applicable law, but if
any provision hereof is held to be prohibited by
or invalid under applicable law, such provision
shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or
otherwise adversely affecting the remaining
provisions hereof. If a court of competent
jurisdiction should determine that a provision
hereof would be valid or enforceable if a period
of time were extended or shortened or a particular
percentage were increased or decreased, then such
court may make such change as shall be necessary
to render the provision in question effective and
valid under applicable law.
10
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4. Section (b) of Article SEVENTH of the Charter is
hereby deleted in its entirety and Sections (c) and (d) thereof
are relettered (b) and (c), respectively.
SECOND, the Board of Directors of the Corporation
duly adopted resolutions which set forth the foregoing
amendments of the Charter, declaring that the said amendments
to the Charter as proposed were advisable and directed that
they be submitted for action thereon by the stockholders of the
Corporation at a meeting to be held on July 15, 1994.
THIRD, notice setting forth the said amendments of
the Charter and stating that a purpose of the meeting of the
stockholders would be to take action thereon, was given, as
required by law, to all stockholders entitled to vote thereon.
The amendments of the Charter as hereinabove set forth were
approved by the stockholders of the Corporation at said meeting
by the affirmative vote of a majority of all of the votes
entitled to be cast thereon.
FOURTH, the information required to be provided under
subsection (b)(2)(i) of Section 2-607 of the Maryland General
Corporation Law with respect to the Common Stock, the Class A
Common Stock, the Class C Common Stock and the Preferred Stock
of the Corporation has not, except as to the number of
11
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authorized shares of Common Stock and Preferred Stock (which
have been increased pursuant to Article FIRST of these Articles
of Amendment), been changed by these Articles of Amendment and
remains as set forth in Article SIXTH of the Charter, which
Article SIXTH, as amended, is incorporated herein in its
entirety.
FIFTH, the total number of shares of stock which the
Corporation had authority to issue immediately prior to this
amendment was eighty-eight million five hundred thousand
(88,500,000) shares of four classes, consisting of sixty
million (60,000,000) shares of Common Stock, $1.00 par value
per share; thirteen million (13,000,000) shares of Class A
Common Stock, $.00001 par value per share; five million five
hundred thousand (5,500,000) shares of Class C Common Stock,
$1.00 par value per share; and ten million (10,000,000) shares
of Preferred Stock, $1.00 par value per share. The aggregate
par value of all shares of all classes of capital stock which
the Corporation had authority to issue was $75,500,130.
SIXTH, the total number of shares of stock which the
Corporation has authority to issue, pursuant to the Charter of
the Corporation as hereby amended, is two hundred ninety-two
million (292,000,000) shares of five classes, consisting of two
12
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hundred million (200,000,000) shares of Common Stock, $1.00 par
value per share; twenty-six million (26,000,000) shares of
Class A Common Stock, $.00001 par value per share; eleven
million (11,000,000) shares of Class C Common Stock, $1.00 par
value per share; forty million (40,000,000) shares of Class D
Common Stock, $1.00 par value per share; and fifteen million
(15,000,000) shares of Preferred Stock, $1.00 par value per
share. The aggregate par value of all shares of all classes of
stock which the Corporation has the authority to issue is
$266,000,260.
SEVENTH, the undersigned Vice President of the
Corporation acknowledges these Articles of Amendment to be the
corporate act of the Corporation and as to all matters and
facts required to be verified under oath, the undersigned Vice
President acknowledges that to the best of his knowledge,
information and belief, these matters and facts are true in all
material respects and that this statement is made under the
penalties for perjury.
IN WITNESS WHEREOF, ALEXANDER & ALEXANDER SERVICES
INC. has caused these presents to be signed in its name and on
its behalf by its Vice President and its corporate seal to be
13
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hereunto affixed and attested by its Assistant Secretary on
this 15th day of July, 1994.
ALEXANDER & ALEXANDER
SERVICES INC.
By: /s/ R.A. Kershaw
Name: R.A. Kershaw
Vice President & Treasurer
ATTEST: Alice L. Russell
Name: Alice L. Russell
Assistant Secretary
1
EXHIBIT E
_________________________________
STOCK PURCHASE AND SALE AGREEMENT
_________________________________
Between
ALEXANDER & ALEXANDER SERVICES INC.
and
AMERICAN INTERNATIONAL GROUP, INC.
__________
Dated as of June 6, 1994
2
TABLE OF CONTENTS
Section Heading Page
- ------- ------- ----
1. Definitions; Certain References............................. 2
a. Definitions........................................... 2
2. Closing..................................................... 9
a. Time and Place of the Closing......................... 9
b. Transactions at the Closing........................... 9
3. Conditions to the Closing................................... 10
a. Conditions Precedent to the
Obligations of the Purchasers......................... 10
1. Compliance by A&A............................... 10
2. No Legal Action................................. 11
3. Amendment of Charter............................ 11
4. Shareholder Approval............................ 11
5. Stock Exchange Listing.......................... 12
6. Rights Agreement................................ 12
7. Regulatory Matters.............................. 12
8. Insurance Arrangement........................... 13
9. Legal Opinions.................................. 13
10. Registration Rights Agreement................... 30
11. Other........................................... 30
12. Hart-Scott-Rodino............................... 31
13. Articles Supplementary;
Articles of Amendment........................... 31
14. Exemption from Special Voting
Requirements.................................... 31
15. Special Events.................................. 31
b. Conditions Precedent to Obligations
of A&A................................................ 32
1. Compliance by AIG............................... 32
2. No Legal Action................................. 32
3. Amendment of Charter............................ 33
4. Shareholder Approval............................ 33
5. Regulatory Matters.............................. 33
3
Section Heading Page
- ------- ------- ----
4. Representations and Warranties of A&A....................... 34
a. Organization, Good Standing, Power,
Authority, Etc........................................ 35
b. Capitalization of A&A................................. 36
c. Registration Rights................................... 38
d. SEC Documents......................................... 38
e. Proxy Statement....................................... 38
f. Authority and Qualification of A&A.................... 39
g. Subsidiaries.......................................... 39
h. Outstanding Securities................................ 41
i. No Contravention, Conflict, Breach,
Etc................................................... 41
j. Consents.............................................. 42
k. No Existing Violation, Default,
Etc................................................... 43
l. Licenses and Permits.................................. 45
m. Title to Properties................................... 46
n. Environmental Matters................................. 46
o. Taxes................................................. 47
p. Litigation............................................ 47
q. Labor Matters......................................... 49
r. Contracts............................................. 49
s. Finder's Fees......................................... 49
t. Financial Statements.................................. 50
u. ERISA................................................. 51
v. Contingent Liabilities................................ 53
w. No Material Adverse Change............................ 54
x. Investment Company.................................... 55
y. Exemption from Registration;
Restrictions on Offer and Sale of
Same or Similar Securities............................ 55
z. Use of Proceeds....................................... 56
5. Representations and Warranties of the
Purchasers.................................................. 57
a. Organization, Good Standing, Power,
Authority, Etc........................................ 57
b. No Conflicts; No Consents............................. 58
c. Investment Intent, Etc................................ 58
6. Covenants of the Parties.................................... 59
a. Restrictive Legends................................... 59
b. Certificates for Shares and
Conversion Shares To Bear Legends..................... 60
c. Removal of Legends.................................... 62
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4
Section Heading Page
- ------- ------- ----
d. Pre-Closing Activities................................ 62
e. Information........................................... 63
f. Restriction on Issuance of Stock...................... 64
g. Restriction on Amendments to
By-Laws............................................... 64
h. Stockholders Meeting.................................. 64
i. Hart-Scott-Rodino..................................... 65
j. Acquisition Proposals................................. 65
k. Access................................................ 67
l. Publicity............................................. 68
m. Certain Special Events................................ 68
n. Reservation of Shares................................. 69
o. Adjustment Payments................................... 70
7. Standstill.................................................. 74
8. Termination................................................. 83
9. Survival of Representations and
Warranties.................................................. 84
10. Performance; Waiver......................................... 84
11. Successors and Assigns...................................... 85
12. Miscellaneous............................................... 85
a. Notices............................................... 85
b. Expenses.............................................. 87
c. Governing Law......................................... 87
d. Severability; Interpretation.......................... 87
e. Headings.............................................. 88
f. Entire Agreement...................................... 88
g. Counterparts.......................................... 88
Exhibits
- --------
Exhibit 1 - Articles of Amendment
Exhibit 2 - Articles Supplementary
Exhibit 3 - Registration Rights Agreement
Exhibit 4 - Rights Agreement Amendment
Exhibit 5 - Charter of A&A
Exhibit 6 - By-laws of A&A
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5
STOCK PURCHASE AND SALE AGREEMENT
STOCK PURCHASE AND SALE AGREEMENT ("AGREEMENT") dated
as of June 6, 1994, between ALEXANDER & ALEXANDER SERVICES
INC., a Maryland corporation ("A&A"), and AMERICAN
INTERNATIONAL GROUP, INC., a Delaware corporation ("AIG").
WHEREAS, A&A desires to sell to one or more of AIG
and its wholly-owned subsidiaries as designated by AIG (the
"Purchasers" and each a "Purchaser"), and the Purchaser or
Purchasers desire to purchase, an aggregate of 4,000,000 shares
(the "Shares") of 8% Series B Cumulative Convertible Preferred
Stock, par value $1.00 per share, of A&A (the "Series B Stock")
for the consideration and upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and
of the respective representations, warranties, covenants,
agreements and conditions contained herein, each of A&A and AIG
agree as follows:
6
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1. Definitions; Certain References.
a. Definitions. The terms defined in this Sec-
tion 1, whenever used in this Agreement, shall have the
following meanings for all purposes of this Agreement:
"A&A" has the meaning set forth in the first
paragraph of this Agreement.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" has the meaning set forth in Rule 12b-2
under the Exchange Act.
"AIG" has the meaning set forth in the first
paragraph of this Agreement.
"AIG Group" has the meaning set forth in Section 7.a.
"Annual Report" has the meaning set forth in Section
3.a.9(A)(i).
"Articles of Amendment" means the Articles of
Amendment of the Charter of A&A, to be filed for record by A&A,
subject to the approval thereof by the stockholders of A&A as
contemplated by Section 3.a.3, with the State Department of
Assessments and Taxation of Maryland on or prior to the date
7
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and time of the Closing, a true and correct copy of which is
attached as Exhibit 1 hereto.
"Articles Supplementary" means the Articles
Supplementary classifying 6,200,000 shares of A&A's preferred
stock as Series B Stock, to be filed for record by A&A with the
State Department of Assessments and Taxation of Maryland on or
prior to the date and time of the Closing, a true and correct
copy of which is attached as Exhibit 2 hereto.
"Charter" means the Articles of Restatement of the
charter of A&A as filed for record with the State Department of
Assessments and Taxation of Maryland, as amended to date and as
it is to be amended by the Articles of Amendment.
"Class A Common Stock" means the Class A Common
Stock, par value $.00001 per share, of A&A.
"Class C Common Stock" means the Class C Common
Stock, par value $1.00 per share, of A&A.
"Class D Common Stock" means the Class D Common
Stock, par value $1.00 per share, of A&A, to be created by A&A
as described in the Articles of Amendment.
8
-4-
"Closing" has the meaning set forth in Section 2.a of
this Agreement.
"Closing Date" has the meaning set forth in Sec-
tion 2.a of this Agreement.
"Common Stock" means the common stock, par value
$1.00 per share, of A&A.
"Conversion Shares" means the shares of Class D
Common Stock issuable or issued upon conversion of the Shares
pursuant to the terms of this Agreement and the Articles
Supplementary.
"Encumbrances" has the meaning set forth in Section
4.g of this Agreement.
"Environmental Laws" has the meaning set forth in
Section 4.k of this Agreement.
"ERISA" has the meaning set forth in Section 4.u of
this Agreement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
9
-5-
"Exchange Shares" means the shares of Common Stock
issuable or issued in exchange for the Conversion Shares (or,
in the case of a registered public offering of Series B Stock,
upon conversion of Series B Stock) pursuant to the terms of
this Agreement and the Charter.
"Incorporated Document" has the meaning set forth in
Section 3.a.9(A)(v) of this Agreement.
"Licenses" has the meaning set forth in Section 4.l
of this Agreement.
"Material Adverse Effect" has the meaning set forth
in Section 4.f of this Agreement.
"Proxy Statement" means the proxy statement with
respect to the transactions contemplated by this Agreement sent
to the holders of Common Stock, Class A Common Stock and
Class C Common Stock in compliance with the Exchange Act, as
the same may be amended or supplemented.
"Purchase Price" means, in the case of each
Purchaser, $50 multiplied by the number of Shares to be
purchased by such Purchaser and $200,000,000 in the aggregate.
10
-6-
"Purchaser" has the meaning set forth in the first
recital of this Agreement.
"Purchasers" has the meaning set forth in the first
recital of this Agreement.
"Registrable Securities" means the Series B Stock,
the Conversion Shares, the Exchange Shares and any other
securities issued or issuable with respect to the Series B
Stock, the Conversion Shares or the Exchange Shares by way of a
stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization; provided, however, that a security
ceases to be a Registrable Security when it is no longer a
Transfer Restricted Security.
"Registration Rights Agreement" means the
Registration Rights Agreement to be dated as of the date of the
Closing among A&A and the Purchasers party thereto, in the form
attached as Exhibit 3 hereto, as amended, supplemented and
modified from time to time in accordance with the terms
thereof.
"Restricted Securities" has the meaning set forth in
Section 7.a(i) of this Agreement.
11
-7-
"Rights Agreement" means the Rights Agreement between
A&A and First Chicago Trust Company of New York, dated as of
June 11, 1987, as amended and restated on March 22, 1990, as
amended on April 21, 1992 and as it is to be amended pursuant
to Section 3.a.6 hereof.
"Rights Agreement Amendment" has the meaning set
forth in Section 3.a.6 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all documents filed by A&A with
the SEC since January 1, 1993.
"Series B Stock" has the meaning set forth in the
first recital of this Agreement.
"Shares" has the meaning set forth in the first
recital of this Agreement.
"Significant Subsidiary" means each of Alexander &
Alexander Services UK plc, Reed Stenhouse Companies Limited and
each other Subsidiary of A&A that had consolidated assets at
December 31, 1993 with a book value, net of intercompany
accounts, in excess of 10% of the consolidated assets of A&A at
such date or that, net of intercompany items, contributed more
12
-8-
than 10% to the consolidated revenues or consolidated operating
income of A&A for the year ended December 31, 1993.
"Special Event" has the meaning specified in the
Articles Supplementary.
"Standstill Period" has the meaning set forth in
Section 7.c of this Agreement.
"Subsidiary" means, with respect to any person, any
corporation, limited or general partnership, joint venture,
association, joint stock company, trust, unincorporated
organization, or other entity analogous to any of the foregoing
of which a majority of the equity ownership (whether voting
stock or comparable interest) is, at the time, owned, directly
or indirectly by such person.
"Transaction Documents" means the Articles of
Amendment, the Articles Supplementary, the Rights Agreement
Amendment and the Registration Rights Agreement.
"Transfer Restricted Security" means a share of
Series B Stock, a Conversion Share, an Exchange Share and any
other security which is a Registrable Security until such share
of Series B Stock, Conversion Share, Exchange Share or other
security (i) has been effectively registered under the Act and
13
-9-
disposed of in accordance with a registration statement filed
under the Act covering it or (ii) is distributed to the public
pursuant to Rule 144 under the Act.
2. Closing.
a. Time and Place of the Closing. The Closing (the
"Closing") shall take place at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York, at 10:00 A.M., New
York time, on the third business day following the first date
on which the conditions to Closing set forth in Section 3
hereof have first been satisfied or waived. A&A shall give AIG
two business days prior written notice of the date the Closing
is scheduled to occur. The "Closing Date" shall be the date
the Closing occurs.
b. Transactions at the Closing. At the Closing,
subject to the terms and conditions of this Agreement, A&A
shall issue and sell to AIG and the other Purchasers and AIG
shall purchase, or shall cause the other Purchasers to
purchase, the Shares. At the Closing, A&A shall deliver to
each Purchaser a certificate or certificates representing the
number of Shares to be purchased by such Purchaser as reflected
in a schedule delivered to A&A one business day prior to the
Closing registered in the name of such Purchaser or its nominee
against
14
-10-
payment of the Purchase Price with respect thereto by
wire transfer of immediately available funds to an account or
accounts previously designated by A&A.
3. Conditions to the Closing.
a. Conditions Precedent to the Obligations of the
Purchasers. The obligations of the Purchasers to be discharged
under this Agreement on or prior to the Closing are subject to
satisfaction of the following conditions at or prior to the
Closing (unless expressly waived in writing by AIG at or prior
to the Closing):
1. Compliance by A&A. All of the terms, covenants
and conditions of this Agreement to be complied with and
performed by A&A at or prior to the Closing shall have
been complied with and performed by it in all material
respects, and the representations and warranties made by
A&A in this Agreement shall be true and correct in all
material respects at and as of the Closing, with the same
force and effect as though such representations and
warranties had been made at and as of the Closing, except
for changes expressly contemplated by this Agreement and
except for representations and warranties that are made as
15
-11-
of a specific time which shall be true and correct in all
material respects only as of such time.
2. No Legal Action. No action, suit, investigation
or other proceeding relating to the transactions
contemplated hereby shall have been instituted or
threatened before any court or by any governmental body
which presents a substantial risk of the restraint or
prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in
connection therewith.
3. Amendment of Charter. The Articles of Amendment
shall have been duly approved by the required holders of
A&A's stock, shall have been filed with the State
Department of Assessments and Taxation of Maryland and
shall have become effective.
4. Shareholder Approval. The transactions
contemplated by this Agreement, including the issuance of
the Series B Stock, the Conversion Shares and the Exchange
Shares, shall have been duly approved by the holders of
A&A's stock as required by the rules of the New York Stock
Exchange, Inc. and any other securities exchange on which
the Common Stock is listed.
16
-12-
5. Stock Exchange Listing. The Exchange Shares
shall have been approved for listing, subject to notice of
issuance, by the New York Stock Exchange, Inc. and any
other securities exchange on which the Common Stock is
listed.
6. Rights Agreement. The Rights Agreement shall
have been amended by an amendment in the form of Exhibit 4
hereto (the "Rights Agreement Amendment") and shall
otherwise be in full force and effect and not have been
otherwise amended, modified or supplemented on or after
the date of this Agreement.
7. Regulatory Matters. AIG shall be satisfied in
its sole discretion as to the non-applicability of the
insurance holding company and broker-controlled insurer
statutes of each jurisdiction (x) in the United States of
America or any state, territory or possession thereof and
(y) each other jurisdiction wherever located which is
material to the conduct of the business conducted by it
and its Subsidiaries, in each case with respect to the
purchase and holding by the Purchasers of the Series B
Stock, the Conversion Shares and the Exchange Shares
(including the receipt of such approvals or advice from
17
-13-
regulatory authorities with respect thereto as AIG may
determine). AIG shall be satisfied as to the
applicability of foreign investment and other similar laws
or regulations of each jurisdiction outside the United
States of America where AIG or its subsidiaries or A&A or
its Subsidiaries conduct business with respect to the
purchase and holding by the Purchasers of the Series B
Stock, the Conversion Shares and the Exchange Shares such
that the application of such laws or regulations would not
in its reasonable discretion have, individually or in the
aggregate, a material adverse effect on AIG and its
subsidiaries taken as a whole or A&A and its Subsidiaries
taken as a whole.
8. Insurance Arrangement. On or before July 5,
1994, A&A shall have entered into an insurance or
reinsurance arrangement with respect to its discontinued
operations that is reasonably satisfactory to AIG with an
insurer reasonably satisfactory to AIG.
9. Legal Opinions.
(A) A&A shall have furnished to the Purchasers
on the Closing Date the opinion of Ronald J.
Roessler, Senior Vice President and General Counsel
18
-14-
of A&A, dated the Closing Date, in form reasonably
satisfactory to the Purchasers, to the effect that:
(i) each of A&A and the Significant
Subsidiaries has been duly incorporated and,
where applicable, is validly existing as a
corporation in good standing under the laws of
the jurisdiction in which it is chartered or
organized, with full corporate power and
authority to own its properties and conduct its
business as described in A&A's Annual Report on
Form 10-K for the year ended December 31, 1993
as filed with the SEC ("Annual Report"); A&A is
duly qualified to do business as a foreign
corporation and is in good standing under the
laws of New York; Alexander Reinsurance
Intermediaries Inc. is duly qualified to do
business as a foreign corporation and is in good
standing under the laws of Connecticut;
(ii) all the outstanding shares of stock of
each Significant Subsidiary have been duly and
validly authorized and issued and are full paid
and nonassessable (or, with respect to foreign
19
-15-
subsidiaries, have similar status), and all
outstanding shares (except for directors'
qualifying shares) of stock of the Significant
Subsidiaries are owned by A&A either directly or
through wholly-owned subsidiaries (except as set
forth in Exhibit 21 to A&A's Annual Report and
as disclosed in a single writing from A&A to AIG
specifically identified as such and dated the
date hereof) free and clear of any perfected
security interest and, to the best knowledge of
such counsel, any other security interests,
claims, liens or encumbrances, except where the
failure to so own the stock of a Significant
Subsidiary would not have a Material Adverse
Effect;
(iii) to the actual knowledge of such
counsel, neither A&A nor any of the Significant
Subsidiaries incorporated under the laws of New
York or Maryland is in violation of any term or
provision of (A) its charter or bylaws or
(B) any judgment, decree or order specifically
applicable to A&A or such Significant
Subsidiary, or any applicable United States
federal,
20
-16-
New York or Maryland statute, rule or
regulation, except with respect to clause (B) of
this paragraph (iii) such violations which would
not individually or in the aggregate have a
Material Adverse Effect;
(iv) except as set forth in the Annual
Report or in A&A's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994 (the
"Quarterly Report"), to the actual knowledge of
such counsel no default exists, and no event has
occurred which with notice, lapse of time, or
both, would constitute a default, in the due
performance and observance of any term, covenant
or condition of any debt agreement to which A&A
or any of the Significant Subsidiaries is a
party or by which it or any of them is bound,
except such defaults which would not
individually or in the aggregate have a Material
Adverse Effect;
(v) to the actual knowledge of such
counsel, there is no pending or threatened
action or suit or proceeding before any court or
21
-17-
governmental agency or body or any arbitrator
involving A&A or any of the Subsidiaries which
is reasonably likely to have a Material Adverse
Effect and which is not adequately disclosed in
the Annual Report, the Quarterly Report, another
SEC Document filed after the date of this
Agreement or a document filed with the SEC and
incorporated by reference therein ("Incorporated
Document") after the date of this Agreement;
(vi) to the actual knowledge of such
counsel, there is no pending or threatened
action, suit or proceeding before any court or
governmental agency or body or any arbitrator to
which A&A is a party that questions the validity
of this Agreement or the Registration Rights
Agreement or any action to be taken pursuant
hereto or thereto, with only such exceptions as
shall have been disclosed in reasonable detail
to AIG;
(vii) A&A's authorized equity capitalization
is as set forth in Section 4.b of this
Agreement; the outstanding shares of stock of
A&A have been duly and validly authorized and
issued
22
-18-
and are full paid and nonassessable; and
the holders of outstanding shares of stock of
A&A are not entitled pursuant to A&A's Charter
or bylaws or any agreement known to such counsel
to preemptive or other rights to subscribe for
the Shares, the Conversion Shares or the
Exchange Shares;
(viii) A&A has all requisite corporate power
and authority, and has taken all requisite
corporate action, necessary to enter into this
Agreement, the Rights Agreement Amendment and
the Registration Rights Agreement, to carry out
the provisions and conditions of this Agreement,
the Rights Agreement Amendment and the
Registration Rights Agreement and the
transactions contemplated in this Agreement, the
Rights Agreement Amendment and the Registration
Rights Agreement, to issue and sell the Shares
in the manner contemplated by this Agreement, to
issue shares of Series B Stock as dividends on
the Shares (subject only to declaration by the
Board of Directors of A&A), to issue the
Conversion Shares issuable upon conversion of
the Series B
23
-19-
Stock, to issue Exchange Shares upon the
exchange of shares of Class D Common Stock or
(in the case of a registered public offering of
the Series B Stock) conversion of the shares of
Series B Stock as provided for in the Charter
and Articles Supplementary and to otherwise
perform its obligations hereunder;
(ix) the issuance and sale of the Shares in
the manner contemplated herein, the issuance of
the Conversion Shares issuable upon conversion
of shares of the Series B Stock in accordance
with the terms of the Charter and the Articles
Supplementary, the issuance of the Exchange
Shares upon exchange of the Class D Common Stock
or (in the case of a registered public offering
of the Series B Stock) conversion of shares of
the Series B Stock in accordance with the terms
of the Charter and the Articles Supplementary,
the execution, delivery and performance by A&A
of this Agreement, the Rights Agreement
Amendment and the Registration Rights Agreement
and the consummation of any other transaction
contemplated in this Agreement, the Rights
24
-20-
Agreement Amendment and the Registration Rights
Agreement, and the performance, as of the
Closing Date if performed on such date, by A&A
of the obligations under the Charter and the
Articles Supplementary will not conflict with,
result in a breach or violation of, or
constitute a default under (A) the charter or
bylaws of A&A or any of its Subsidiaries or
(B) the terms of any indenture or other
agreement or instrument known to such counsel
and to which A&A or any of its Subsidiaries is a
party or by which it or any of them is bound, or
(C) any judgment, order or decree known to such
counsel to be specifically applicable to A&A or
any of its Subsidiaries of any court, regulatory
body, administrative agency, governmental body
or arbitrator, except with respect to
clauses (B) and (C) of this paragraph (ix), such
conflicts, breaches, violations or defaults
which would not, individually or in the
aggregate, have a Material Adverse Effect; and
(x) those provisions of any contract or
agreement that are described in the Annual
25
-21-
Report conform in all material respects to the
description thereof contained in the Annual
Report.
Such counsel shall state that, without independent
check or verification of the factual accuracy or
completeness of the Annual Report or the Quarterly Report
(except to the limited extent set forth in
paragraphs (iv), (v), (vii) and (x) above) or the Proxy
Statement, no facts have come to the attention of such
counsel which causes such counsel to believe that the
statements in the Annual Report and the Quarterly Report
at their respective filing dates with the SEC or the Proxy
Statement at its mailing date and the date of the meeting
of shareholders to which it relates (other than the
financial statements and other financial and statistical
information contained therein, as to which such counsel
need express no belief) contained an untrue statement of a
material fact or omitted to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than
26
-22-
the laws of the States of Maryland and New York or the
federal laws of the United States, to the extent such
counsel deems proper and specifies in such opinion, upon
the opinion of other counsel of good standing believed by
such counsel to be reliable and which opinion and counsel
are satisfactory to the Purchasers (provided that such
counsel states that the Purchasers are justified in
relying on such specified opinion or opinions), and (B) as
to matters of fact, to the extent such counsel deems
proper, on certificates of responsible officers of A&A and
public officials.
(B) A&A shall have furnished to the Purchasers
on the Closing Date the opinion of Debevoise &
Plimpton, special counsel for A&A, dated the Closing
Date, in form reasonably satisfactory to the
Purchasers, to the effect that:
(i) to the actual knowledge of such
counsel, there is no pending or threatened
action, suit or proceeding before any court, or
governmental agency or body or any arbitrator to
which A&A is or is threatened to be made a party
that questions the validity of this Agreement,
the
27
-23-
Rights Agreement Amendment or the Registration
Rights Agreement or any action to be taken
pursuant hereto or thereto;
(ii) the certificates representing the
Shares are in valid and sufficient form; and the
holders of outstanding shares of stock of A&A
are not entitled pursuant to A&A's Charter or
the Articles Supplementary or bylaws to
preemptive or other rights as shareholders to
subscribe for the Series B Stock or the
Conversion Shares issuable upon conversion of
the Series B Stock or the shares of Common Stock
issuable upon exchange for Class D Stock or (in
the case of a registered public offering of
Series B Stock) conversion of Series B Stock;
(iii) the Series B Stock and the Articles of
Amendment and the Articles Supplementary have
been duly authorized, and, when issued and
delivered in accordance with the terms of this
Agreement and as a dividend on shares of
Series B Stock, the Series B Stock will be
validly issued, full paid and nonassessable;
28
-24-
(iv) upon due execution, issuance and
delivery in accordance with this Agreement, the
Charter and the Articles Supplementary, the
Shares will be convertible into the Conversion
Shares or (in the case of a registered public
offering of the Series B Stock) into the
Exchange Shares in accordance with the terms of
the Charter and the Articles Supplementary; the
Conversion Shares issuable upon such conversion
have been duly authorized and validly reserved
for issuance upon conversion and, when so issued
upon conversion in accordance with the terms of
the Charter and the Articles Supplementary, will
be validly issued, full paid, and nonassessable;
the shares of Common Stock issuable upon
exchange of the Class D Common Stock or (in the
case of a registered public offering of the
Shares) upon conversion of the Series B Stock
have been duly authorized and validly reserved
for issuance upon exchange of the Class D Common
Stock or conversion of the Series B Stock, and
when so issued upon exchange or conversion in
accordance with the terms of the Charter and the
29
-25-
Articles Supplementary will be validly issued,
full paid and nonassessable; the holders of
shares of the Series B Stock, Conversion Shares,
or Exchange Shares of A&A will not be subject to
personal liability for obligations of A&A by
reason of being such holders; all consents,
approvals, authorizations, orders, registration
and qualifications of or with any New York,
Maryland or Federal court or governmental agency
or body, if any, and all corporate approvals and
authorizations, required to be obtained or taken
by A&A for or in connection with the
authorization, issuance and delivery of the
Series B Stock and for the consummation of the
transactions contemplated hereby have been
validly and sufficiently obtained or taken
(other than the declaration of dividends on
Series B Stock in Series B Stock) and are in
full force and effect, except such as may be
required under the securities or blue sky laws
of any jurisdiction in connection with the
purchase and distribution of the Series B Stock
by the Purchasers and such
30
-26-
other approvals (specified in such opinion) as
have been obtained;
(v) each of this Agreement, the Rights
Agreement Amendment and the Registration Rights
Agreement has been duly authorized, executed and
delivered by A&A and, assuming due
authorization, execution and delivery thereof by
the other parties hereto and thereto, is the
valid and binding obligation of A&A, subject to
applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and
subject, as to enforceability, to general
principles of equity (regardless of whether
enforcement is sought in a proceeding in equity
or at law);
(vi) the issuance and sale of the Series B
Stock in the manner contemplated herein, the
issuance of the Conversion Shares issuable upon
conversion of shares of the Series B Stock in
accordance with the terms of the Charter and the
Articles Supplementary, the issuance of the
Exchange Shares upon exchange of the Class D
31
-27-
Common Stock or (in the case of a registered
public offering of Series B Stock) upon
conversion of the Series B Stock in accordance
with the terms of the Charter and the Articles
Supplementary, the execution, delivery and
performance by A&A of this Agreement, the Rights
Agreement Amendment and the Registration Rights
Agreement and the consummation of any other of
the transactions contemplated in this Agreement,
the Rights Agreement Amendment and the
Registration Rights Agreement, and the
performance, as of the Closing Date if performed
on such date, by A&A of the obligations under
the Charter and the Articles Supplementary will
not conflict with, result in a violation or
breach of, or constitute a default under (A) the
charter or bylaws of A&A or (B) any United
States federal, Maryland or New York statute,
rule or regulation applicable to A&A or any of
the Significant Subsidiaries, except with
respect to clause (B) of this paragraph (vi),
such conflicts, breaches, violations or defaults
which would not have a Material Adverse Effect;
32
-28-
(vii) A&A is not an "investment company"
within the meaning of the Investment Company Act
of 1940, as amended; and
(viii) in connection with the offer and sale
of the Shares and the delivery of the
certificates representing the Shares delivered
on such Closing Date by A&A to the Purchasers
pursuant to this Agreement, and assuming the
correctness of all representations and
warranties made by the Purchasers in Section 5.c
and by A&A in Section 4.y, it is not necessary
to register such Shares under the Act.
Such counsel shall state that (x) such counsel have
not themselves checked the accuracy and completeness of,
or otherwise verified, and are not passing upon and assume
no responsibility for the accuracy or completeness of, the
statements contained in the Proxy Statement, and (y) in
the course of such counsel's review and discussion of the
contents of the Proxy Statement with certain officers and
employees of A&A, including its general counsel and his
staff, the Purchasers and their counsel and A&A's
independent accountants, but without independent check or
33
-29-
verification, no facts have come to the attention of such
counsel which causes such counsel to believe that the
statements in the Proxy Statement at its mailing date and
the date of the meeting of shareholders to which it
relates contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances
under which they were made, not misleading, except that
such counsel need not express any view with respect to the
adequacy or accuracy of, or the application of generally
accepted accounting principles to, the financial
statements or other financial or numerical data included
in the Proxy Statement.
In rendering such opinion, such counsel may (A) rely
as to matters involving the application of laws other than
the State of New York or the federal laws of the United
States, to the extent such counsel deems proper and
specifies in such opinion, upon the opinion of other
counsel of good standing believed by such counsel to be
reliable and which counsel and opinion are satisfactory to
the Purchasers (provided that such counsel states that the
Purchasers are justified in relying upon such specified
opinion or opinions), and (B) rely as to matters of fact,
to the
34
-30-
extent such counsel deems proper, on certificates
of responsible officers of A&A and public officials.
(C) The Purchasers shall have received from
Cahill Gordon & Reindel, counsel for the Purchasers,
such opinion or opinions, dated such Closing Date,
with respect to the exemption from registration under
the Act for the offer and sale of such Shares and
delivery of the Shares by A&A to the Purchasers
pursuant to this Agreement, and other related matters
as they may reasonably require, and A&A shall have
furnished to such counsel such documents as they
reasonably request for the purpose of enabling them
to pass upon such matters.
10. Registration Rights Agreement. A&A shall have
executed and delivered at the Closing for the benefit of
the Purchasers and their successors and assigns the
Registration Rights Agreement.
11. Other. A&A shall have furnished to the
Purchasers such executed and conformed copies of such
other opinions and such certificates, letters and
documents as the Purchasers may reasonably request and as
are customary for transactions such as those contemplated
by this Agreement.
35
-31-
12. Hart-Scott-Rodino. The waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 shall
have expired or been terminated, to the extent applicable.
13. Articles Supplementary; Articles of Amendment.
The Articles Supplementary and the Articles of Amendment
shall each have been filed for record with the State
Department of Assessments and Taxation of Maryland and
shall have become effective.
14. Exemption from Special Voting Requirements. The
Board of Directors of A&A shall have irrevocably taken all
action necessary under Section 3-603(c) of the Maryland
General Corporation Law to exempt future transactions
between A&A and its Subsidiaries, on the one hand, and AIG
and its subsidiaries, on the other hand, from the
provisions of Subtitle 6 of the Maryland General
Corporation Law, provided that such exemption shall be
applicable only if AIG or its Subsidiaries shall have
become "interested stockholders" as a result of the
acquisition of securities of A&A in a manner and to an
extent permitted by this Agreement.
15. Special Events. No Special Event shall have
occurred on or after the date of this Agreement and on or
36
-32-
prior to the Closing, other than the execution and
delivery of the Rights Agreement Amendment.
b. Conditions Precedent to Obligations of A&A. The
obligations of A&A to be discharged under this Agreement on or
prior to the Closing are subject to satisfaction of the
following conditions at or prior to the Closing (unless waived
by A&A at or prior to the Closing):
1. Compliance by AIG. All of the terms, covenants
and conditions of this Agreement to be complied with and
performed by AIG at or prior to the Closing shall have
been complied with and performed by AIG in all material
respects, and the representations and warranties made by
the Purchasers in this Agreement shall be true and correct
in all material respects at and as of the Closing, with
the same force and effect as though such representations
and warranties had been made at and as of the Closing,
except for changes contemplated by this Agreement.
2. No Legal Action. No action, suit, investigation
or other proceeding relating to the transactions
contemplated hereby shall have been instituted before any
court or instituted or threatened by any governmental body
which presents a substantial risk of the restraint or
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prohibition of the transactions contemplated hereby or the
obtaining of material damages or other material relief in
connection therewith.
3. Amendment of Charter. The Articles of Amendment
shall have been approved by the required holders of A&A's
stock, shall have been filed with the State Department of
Assessments and Taxation of the State of Maryland and
shall have become effective.
4. Shareholder Approval. The transactions
contemplated by this Agreement, including the issuance of
the Series B Stock, the Conversion Shares and the Exchange
Shares, shall have been approved by the holders of A&A's
capital stock as required by the rules of the New York
Stock Exchange, Inc. and any other securities exchange on
which the Common Stock is listed.
5. Regulatory Matters. A&A shall be satisfied in
its sole discretion as to the non-applicability of the
insurance holding company and broker-controlled insurer
statutes of each jurisdiction (x) in the United States of
America or any state, territory or possession thereof and
(y) each other jurisdiction wherever located which is
material to the conduct of the business conducted by it
38
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and its Subsidiaries, in each case with respect to the
purchase and holding by the Purchasers of the Series B
Stock, the Conversion Shares and the Exchange Shares
(including the receipt of such approvals or advice from
regulatory authorities with respect thereto as A&A may
determine). A&A shall be satisfied as to the
applicability of foreign investment and other similar laws
or regulations of each jurisdiction outside the United
States of America where A&A or its Subsidiaries or AIG or
its Subsidiaries conduct business with respect to the
purchase and holding by the Purchasers of the Series B
Stock, the Conversion Shares and the Exchange Shares such
that the application of such laws or regulations would not
in its reasonable discretion have, individually or in the
aggregate, a material adverse effect on A&A and its
Subsidiaries taken as a whole.
4. Representations and Warranties of A&A. A&A
hereby represents and warrants to each of the Purchasers that,
except as specifically disclosed in a single writing from A&A
to AIG specifically identified as such and dated the date
hereof:
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a. Organization, Good Standing, Power, Authority,
Etc. A&A is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Maryland. A&A has the full corporate power and
authority to execute and deliver this Agreement and each
Transaction Document and to perform its obligations under
this Agreement and each Transaction Document. A&A has
taken all action required by law, its Charter, its by-laws
or otherwise required to be taken by it to authorize the
execution, delivery and performance by it of this
Agreement and each Transaction Document. This Agreement
is, and after the Closing each Transaction Document will
be, a valid and binding obligation of A&A, enforceable in
accordance with their respective terms, except that such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and
general principles of equity and except that rights to
indemnity and contribution may be limited by federal or
state securities laws or policies underlying such laws.
True and complete copies of the Charter and bylaws of A&A
as in effect on the date hereof are attached as Exhibits 5
and 6 hereto.
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b. Capitalization of A&A. After giving effect to
the Articles of Amendment and the Articles Supplementary
the authorized stock of A&A will at the Closing consist
of: 200,000,000 shares of Common Stock, of which at May
1, 1994, 40,766,215 shares were outstanding; 26,000,000
shares of Class A Common Stock, of which at May 1, 1994,
2,366,690 shares were outstanding; 11,000,000 shares of
Class C Common Stock, of which at June 2, 1994, 385,594
shares were outstanding; 40,000,000 shares of Class D
Common Stock, none of which will be issued and outstanding
at the Closing; and 15,000,000 shares of preferred stock,
of which (w) 2,300,000 shares have been designated as
$3.625 Series A Convertible Preferred Stock and at June 2,
1994, 2,300,000 shares were outstanding, (x) 600,000
shares have been designated as Series A Junior
Participating Preferred Stock, and at June 2, 1994 none of
which were outstanding, and (y) 6,200,000 shares will be
designated as Series B Stock, of which 4,000,000 shares
will be issued and outstanding at the Closing and
2,200,000 shares will be reserved for issuance to holders
of Series B Stock as dividends pursuant to the Charter and
the Articles Supplementary. Since May 1, 1994, the
Company has only issued shares of Common Stock and Class A
Common Stock in
41
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accordance with the terms of its employee benefit plans
as in existence on May 1, 1994, in all cases in the ordinary
course of business and in a manner and in amounts consistent
with past practice. All of the shares of Series B Stock
issued at the Closing or issued as dividends pursuant to the
Charter and the Articles Supplementary will be duly authorized,
validly issued, full paid and nonassessable and entitled to
the benefits of, and have the terms and conditions set forth
in, the Charter and the Articles Supplementary. The Conversion
Shares will be duly authorized and will be reserved for
such issuance and, when issued in accordance with the
Charter and the Articles Supplementary, will be duly and
validly issued, full paid and nonassessable. The Exchange
Shares are duly authorized and, when issued in accordance
with the Charter and the Articles Supplementary, will be
duly and validly issued, full paid and nonassessable. All
outstanding shares of stock of A&A have been duly
authorized, are validly issued, full paid and
nonassessable and have been issued in compliance with
applicable federal and state securities laws. The
shareholders of A&A have no preemptive or similar rights
with respect to the securities of A&A. No further
approval or authority of the shareholders
42
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or of the Board of Directors of A&A will be required for
the consummation by A&A of the transactions contemplated
by this Agreement and each of the Transaction Documents,
except for the declaration of dividends on Series B Stock
in Series B Stock and such as have been obtained or made
and are in full force and effect.
c. Registration Rights. Each Purchaser shall, by
virtue of its purchase of Shares hereunder, be a holder of
Registrable Securities, as defined in the Registration
Rights Agreement, and be entitled to the rights of such a
holder under the Registration Rights Agreement.
d. SEC Documents. Each of the SEC Documents, as of
the date of its filing with the SEC, did not include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading.
e. Proxy Statement. The Proxy Statement will not
include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
therein, in the light of the circumstances under which
they were made, not misleading.
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f. Authority and Qualification of A&A. A&A has the
corporate power and authority to own, lease and operate
its properties and to conduct its business as described in
the SEC Documents and as currently owned or leased and
conducted. A&A is duly qualified to transact business as
a foreign corporation and is in good standing in each
jurisdiction in which the conduct of its business or its
ownership, leasing or operation of property requires such
qualification, other than any failure to be so qualified
or in good standing as would not singly or in the
aggregate with all such other failures reasonably be
expected to have a material adverse effect on the assets,
liabilities, results of operations, prospects or condition
(financial or otherwise) of A&A and the Subsidiaries taken
as a whole (each a "Material Adverse Effect").
g. Subsidiaries. Exhibit 21 to the Annual Report
is a true, accurate and correct statement of all of the
information required to be set forth therein by the
regulations of the SEC. Each Subsidiary has been duly
incorporated or organized and is validly existing as a
corporation or other legal entity in good standing under
the laws of the jurisdiction of its incorporation or
formation, has the corporate or other power and authority
to own, lease
44
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and operate its properties and to conduct its business as
described in the SEC Documents and as currently owned or
leased and conducted and is duly qualified to transact
business as a foreign corporation or other legal entity and
is in good standing (if applicable) in each jurisdiction in
which the conduct of its business or its ownership, leasing
or operation of property requires such qualification, other
than any failure to be so qualified or in good standing as
would not singly or in the aggregate with all such other
failures reasonably be expected to have a Material Adverse
Effect. Except as disclosed in the SEC Documents filed with
the SEC prior to the date of this Agreement, all of the
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and
nonassessable and is owned by A&A, directly or through
Subsidiaries (other than directors' qualifying shares),
free and clear of any mortgage, pledge, lien, security
interest, restriction upon voting or transfer, claim or
encumbrance of any kind ("Encumbrance") (other than such
transfer restrictions as may exist under federal and state
securities laws), and there are no rights granted to or in
favor of any third party (whether acting in an individual,
fiduciary or other
45
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capacity) other than A&A to acquire any such capital stock,
any additional capital stock or any other securities of any
Subsidiary.
h. Outstanding Securities. Except as set forth in
the SEC Documents filed with the SEC prior to the date of
this Agreement and except as contemplated by this
Agreement, there are no outstanding (A) securities or
obligations of A&A convertible into or exchangeable for
any capital stock of A&A, (B) warrants, rights or options
to subscribe for or purchase from A&A any such capital
stock or any such convertible or exchangeable securities
or obligations or (C) obligations of A&A to issue such
shares, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
i. No Contravention, Conflict, Breach, Etc. The
execution, delivery and performance of each of this
Agreement and each of the Transaction Documents by A&A and
the consummation of the transactions herein and therein
contemplated will not (A) contravene any provision of the
charter, by-laws or other organization documents of it or
of any of the Subsidiaries, or (B) conflict with or result
in a breach or violation of any of the terms and
46
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provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or
encumbrance upon any assets or properties of it or of any
of the Subsidiaries under, any statute, rule, regulation,
order or decree of any governmental agency or body or any
court having jurisdiction over it or the Subsidiaries or
any of its or their respective properties, assets or
operations, or any indenture, mortgage, loan agreement,
note or other agreement or instrument for borrowed money,
any guarantee of any agreement or instrument for borrowed
money or any lease, permit, license or other agreement or
instrument to which it or any of the Subsidiaries is a
party or by which it or any such Subsidiary is bound or to
which any of the properties, assets or operations of it or
any such Subsidiary is subject which conflict, breach,
violation, default, creation or imposition has, or will
have, individually or in the aggregate, a Material Adverse
Effect.
j. Consents. No consent, approval, authorization,
order, registration, filing or qualification of or with
any (A) court or (B) government agency or body or
(C) other third party (whether acting in an individual,
fiduciary or other capacity) is required for the
47
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consummation of the transactions contemplated by this
Agreement or by any of the Transaction Documents to be
performed by A&A, except (1) such as will have been
obtained and made and will be in full force and effect as
of the Closing and (2) such as may be required under the
Act and state securities laws in connection with the
performance by A&A of its obligations under the
Registration Rights Agreement.
k. No Existing Violation, Default, Etc. Neither
A&A nor any of the Subsidiaries is in violation of (A) its
charter, by-laws or other organization documents or
(B) any applicable law, ordinance, administrative or
governmental rule or regulation or (C) any order, decree
or judgment of any court of governmental agency or body
having jurisdiction over A&A or any Subsidiary. The
properties, assets and operations of A&A and the
Subsidiaries are in compliance in all material respects
with all applicable federal, state, local and foreign
laws, rules and regulations, orders, decrees, judgments,
permits and licenses relating to public and worker health
and safety and to the protection and clean-up of the
natural environment and activities or conditions related
thereto, including, without limitation, those relating to
the generation,
48
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handling, disposal, transportation or release of hazardous
materials (collectively, "Environmental Laws"), other than
any such failure to be in compliance as would not singly or
in the aggregate with all such other failures reasonably be
expected to have a Material Adverse Effect. With respect to
such properties, assets and operations, including any
previously owned, leased or operated properties, assets or
operations, to the best knowledge of A&A, after due inquiry,
there are no past, present or reasonably anticipated future
events, conditions, circumstances, activities, practices,
incidents, actions or plans of A&A or any of the
Subsidiaries that may interfere with or prevent compliance
or continued compliance in all material respects with
applicable Environmental Laws, other than any such
interference or prevention as would not singly or in the
aggregate with any such other interference or prevention
reasonably be expected to have a Material Adverse Effect.
The term "hazardous materials" shall mean those substances
that are regulated by or form the basis for liability
under any applicable Environmental Laws.
Except as set forth in SEC Documents filed with the
SEC prior to the date of this Agreement, no event of
default or event that, but for the giving of notice or the
49
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lapse of time or both, would constitute an event of
default exists or, upon the consummation by A&A of the
transactions contemplated by this Agreement or any of the
Transaction Documents, will exist under any indenture,
mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any
agreement or instrument for borrowed money or any lease,
permit, license or other agreement or instrument to which
A&A or any of the Subsidiaries is a party or by which A&A
or any such Subsidiary is bound or to which any of the
properties, assets or operations of A&A or any such
Subsidiary is subject.
l. Licenses and Permits. A&A and the Subsidiaries
have such certificates, permits, licenses, franchises,
consents, approvals, orders, authorizations and clearances
from appropriate governmental agencies and bodies
("Licenses") as are necessary to own, lease or operate
their properties and to conduct their businesses in the
manner described in the SEC Documents and as currently
owned or leased and conducted and all such Licenses are
valid and in full force and effect except such licenses
which the failure to have or to be in full force and
effect individually or in the aggregate do not have a
50
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Material Adverse Effect. To the best of A&A's knowledge,
after due inquiry, A&A and the Subsidiaries are in
compliance in all material respects with their respective
obligations under such Licenses, with such exceptions as
individually or in the aggregate do not have a Material
Adverse Effect, and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or
termination of such Licenses.
m. Title to Properties. A&A and the Subsidiaries
have sufficient title to all material properties (real and
personal) owned by A&A and the Subsidiaries which are
necessary for the conduct of the business of A&A and the
Subsidiaries as described in the SEC Documents and as
currently conducted, free and clear of any Encumbrance
that may materially interfere with the conduct of the
business of A&A and the Subsidiaries, taken as a whole,
and to the best of A&A's knowledge, after due inquiry, all
material properties held under lease by A&A or the
Subsidiaries are held under valid, subsisting and
enforceable leases.
n. Environmental Matters. Neither A&A nor any of
the Subsidiaries is the subject of any federal, state,
local or foreign investigation, and neither A&A nor any of
51
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the Subsidiaries has received any notice or claim (or is
aware of any facts that would form a reasonable basis for
any claim), nor entered into any negotiations or
agreements with any third party, relating to any material
liability or remedial action or potential material
liability or remedial action under Environmental Laws, nor
are there any pending, reasonably anticipated or, to the
best knowledge of A&A, threatened actions, suits or
proceedings against or affecting A&A, any of the
Subsidiaries or their properties, assets or operations in
connection with any such Environmental Laws.
o. Taxes. A&A and the Subsidiaries have filed all
federal, and all material state, local and foreign, tax
returns which, to the best knowledge of A&A's officers,
are required to be filed, and each has paid all taxes as
shown on such returns and on assessments received by it to
the extent that such taxes and assessments have become
due. United States Federal income tax returns of A&A and
its Subsidiaries have been examined and closed through the
fiscal year ended December 31, 1978. The charges,
accruals and reserves on the books of A&A and its
Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of A&A, adequate.
52
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p. Litigation. Except as set forth in SEC
Documents filed with the SEC prior to the date of this
Agreement, there are no pending actions, suits,
proceedings, arbitrations or investigations against or
affecting A&A or any of the Subsidiaries or any of their
respective properties, assets or operations, or with
respect to which A&A or any of the Subsidiaries is
responsible by way of indemnity or otherwise, that are
required under the Exchange Act to be described in such
SEC Documents, that questions the validity of this
Agreement or any of the Transaction Documents or any
action to be taken pursuant to this Agreement or any of
the Transaction Documents, or that would singly or in the
aggregate, with all such other actions, suits,
investigations or proceedings, reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect, or could reasonably be expected to have a material
adverse effect on the ability of A&A to perform its
obligations under this Agreement or any of the Transaction
Documents; and, to the best knowledge of A&A, after due
inquiry, except as set forth in SEC Documents filed with
the SEC prior to the date of this Agreement, no such
actions, suits, proceedings or investigations are
53
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threatened or contemplated and there is no basis for any
such action, suit, proceeding or investigation.
q. Labor Matters. No labor disturbance by the
employees of A&A or any of the Subsidiaries that has had
or that is reasonably likely to have a Material Adverse
Effect exists or, to the best knowledge of A&A, after due
inquiry, is threatened.
r. Contracts. All of A&A's material contracts that
are required to be described in the SEC Documents or to be
filed as exhibits thereto are described in the SEC
Documents or filed as exhibits thereto and are in full
force and effect. Neither A&A nor any of the Subsidiaries
nor, to the best knowledge of A&A, any other party is in
breach of or default under any such contracts except for
such breaches and defaults as in the aggregate have not
had and would not have a Material Adverse Effect.
s. Finder's Fees. No broker, finder or other party
is entitled to receive from A&A, any of the Subsidiaries
or any other person any brokerage or finder's fee or any
other fee, commission or payment as a result of the
transactions contemplated by this Agreement for which any
Purchaser would have any liability or responsibility.
54
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t. Financial Statements. The audited consolidated
financial statements and related schedules and notes
included in the SEC Documents comply in all material
respects with the requirements of the Exchange Act and the
Act and the rules and regulations of the SEC thereunder,
were prepared in accordance with generally accepted
accounting principles consistently applied throughout the
period involved and fairly present the financial
condition, results of operations, cash flows and changes
in stockholders' equity of the A&A and the Subsidiaries at
the dates and for the periods presented. The unaudited
quarterly consolidated financial statements and the
related notes included in the SEC Documents present fairly
the financial condition, results of operations and cash
flows of A&A and the Subsidiaries at the dates and for the
periods to which they relate, subject to year-end audit
adjustments (consisting only of normal recurring
accruals), have been prepared in accordance with generally
accepted accounting principles applied on a consistent
basis except as otherwise stated therein and have been
prepared on a basis substantially consistent with that of
the audited financial statements referred to above except
as otherwise stated therein.
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u. ERISA. Each Plan complies in all material
respects with the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Internal Revenue Code
of 1986, as amended (the "Code") and all other applicable
statutes and governmental rules and regulations, and
(i) no "reportable event" (within the meaning of Sec-
tion 4043 of ERISA) has occurred with respect to any Plan,
(ii) neither A&A nor any of its ERISA Affiliates has
withdrawn from any Plan or Multiemployer Plan or
instituted steps to do so, and (iii) no steps have been
instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any
Plan which could result in the incurrence by A&A or any of
its ERISA Affiliates of a material liability. No Plan, or
any trust created thereunder, has incurred any
"accumulated funding deficiency" as defined in Section 302
of ERISA, whether or not waived. To the best knowledge of
A&A, there are no actions, suits or claims pending or
threatened (other than routine claims for benefits) with
respect to any Plan. Neither A&A nor any of its ERISA
Affiliates has incurred or reasonably expects to incur any
material liability under or pursuant to Title IV of ERISA.
No prohibited transactions described in Section 406 of
ERISA or
56
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Section 4975 of the Code have occurred which could result
in material liability to A&A or its Subsidiaries. Neither
A&A nor any of its ERISA Affiliates has incurred or expects
to incur any "withdrawal liability" (within the meaning of
Part 1 of Subtitle E of Title IV of ERISA). Neither A&A nor
any of its ERISA Affiliates has been notified by any
Multiemployer Plan that such Multiemployer Plan is currently
in reorganization or insolvency under and within the meaning
of Section 4241 or 4245 of ERISA or that such
Multiemployer Plan intends to terminate or has been
terminated under Section 4041A of ERISA. As used herein
the term "Plan" means a "pension plan", as such term is
defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) established or maintained by A&A or
any of its ERISA Affiliates or as to which A&A or any of
its ERISA Affiliates has contributed or otherwise may have
any liability. "Multiemployer Plan" shall mean a
"multiemployer plan", as such term is defined in
Section 4001(a)(3) of ERISA, to which A&A or any of its
ERISA Affiliates is obligated to contribute or otherwise
may have any liability. "ERISA Affiliate" means any trade
or business (whether or not incorporated) which is under
common control or would be considered a single employer
57
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with A&A within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations promulgated under
those sections or within the meaning of Section 4001(b) of
ERISA and the regulations promulgated thereunder.
v. Contingent Liabilities. Except as fully
reflected or reserved against in the financial statements
included in the Annual Report or the Quarterly Report, or
disclosed in the footnotes contained in such financial
statements, A&A and its Subsidiaries had no liabilities
(including tax liabilities) at the date of such financial
statements, absolute or contingent, that were material
either individually or in the aggregate to A&A and its
Subsidiaries taken as a whole. Except as so reflected,
reserved, or disclosed, A&A and its Subsidiaries have no
commitments which are materially adverse either
individually or in the aggregate to A&A and its
Subsidiaries taken as a whole. Contingent liabilities
arising from the Share Purchase Agreement dated as of
October 9, 1987 between Sphere Drake Acquisition (U.K.)
Limited and Alexander Stenhouse & Partners Ltd., other
than (a) such liabilities arising out of sections 10.4,
10.5, or 10.6(b) of said Agreement or (b) such liabilities
as to which recourse under said Agreement is directly or
indirectly limited to
58
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a purchase price adjustment, are not material relative to
the total amount of contingent liabilities arising from
said Agreement.
w. No Material Adverse Change. Since the latest
date as of which information is given in the SEC Documents
filed prior to June 5, 1994, (A) A&A and the Subsidiaries
have not incurred any material liability or obligation
(indirect, direct or contingent), or entered into any
material oral or written agreement or other transaction,
that is not in the ordinary course of business or that
could reasonably be expected to result in a Material
Adverse Effect; (B) A&A and the Subsidiaries have not
sustained any loss or interference with its business or
properties from fire, flood, windstorm, accident or other
calamity (whether or not covered by insurance) that has
had or that could reasonably be expected to have a
Material Adverse Effect; (C) there has been no material
change in the indebtedness of A&A and the Subsidiaries, no
change in the stock of A&A except for the issuance of
shares of Common Stock pursuant to options or conversion
rights in existence at the date of this Agreement, and no
dividend or distribution of any kind declared, paid or
made by A&A on any class of its stock, except for regular
quarterly
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dividends of not more than $0.90625 per share of
$3.625 Series A Convertible Preferred Stock and of not
more than $0.025 per share of Common Stock, Class A Common
Stock and Class C Common Stock (or the equivalent in
foreign currency); and (D) there has been no event causing
a Material Adverse Effect, nor any development that could,
singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
x. Investment Company. A&A is not an "investment
company" within the meaning of the Investment Company Act
of 1940, as amended.
y. Exemption from Registration; Restrictions on
Offer and Sale of Same or Similar Securities. Assuming
the representations and warranties of the Purchasers set
forth in Section 5.c hereof are true and correct in all
material respects, the offer and sale of the Shares made
pursuant to this Agreement will be exempt from the
registration requirements of the Act. Neither A&A nor any
person acting on its behalf has, in connection with the
offering of the Shares, engaged in (A) any form of general
solicitation or general advertising (as those terms are
used within the meaning of Rule 502(c) under the Act), (B)
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any action involving a public offering within the meaning
of Section 4(2) of the Act, or (C) any action which would
require the registration of the offering and sale of the
Shares pursuant to this Agreement under the Act or which
would violate applicable state securities or "blue sky"
laws. A&A has not made and will not make, directly or
indirectly, any offer or sale of Shares or of securities
of the same or a similar class as the Shares if as a
result the offer and sale of Shares contemplated hereby
could fail to be entitled to exemption from the
registration requirements of the Act. As used herein, the
terms "offer" and "sale" have the meanings specified in
Section 2(3) of the Act.
z. Use of Proceeds. The net proceeds of the sale
of the Shares will be used by A&A and its Subsidiaries for
general corporate purposes. A&A intends that such net
proceeds will be used for investment in the continuing
businesses of A&A and the Subsidiaries and to fund the
insurance or reinsurance arrangement referred to in
Section 3.a.8.
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5. Representations and Warranties of the
Purchasers. Each Purchaser hereby represents and warrants to
A&A that:
a. Organization, Good Standing, Power, Authority,
Etc. Such Purchaser has the full power and authority to
execute and deliver this Agreement and the Registration
Rights Agreement (to the extent that it is a party
thereto), and to perform its obligations under this
Agreement and the Registration Rights Agreement. Such
Purchaser has taken all action required by law, its
charter, its by-laws or otherwise required to be taken by
it to authorize the execution and delivery of this
Agreement and the Registration Rights Agreement (to the
extent that it is a party thereto) and the consummation of
the transactions contemplated to be performed by it hereby
and thereby. Each of this Agreement and the Registration
Rights Agreement (to the extent that it is a party
thereto) is a valid and binding agreement of such
Purchaser, enforceable in accordance with their respective
terms, except that such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to
creditors' rights and general principles of equity and
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except to the extent that rights to indemnity and
contribution may be limited by federal or state securities
laws or policies underlying such laws.
b. No Conflicts; No Consents. Neither the
execution and delivery of this Agreement and the
Registration Rights Agreement (to the extent that it is a
party thereto) nor the consummation by such Purchaser of
the purchase contemplated hereby will (i) conflict with,
or result in a breach of, any provision of its charter or
by-laws or (ii) violate any statute or law or any
judgment, order, writ, injunction, decree, rule or
regulation applicable to the Purchaser and/or any of its
subsidiaries. No consent, authorization or approval of,
or declaration, filing or registration with, or exemption
by, any governmental or regulatory authority is required
in connection with the execution and delivery of, and the
performance by such Purchaser of its obligations under,
this Agreement or the Registration Rights Agreement or the
consummation by such Purchaser of the transactions to be
performed by it as contemplated hereby and thereby.
c. Investment Intent, Etc. Such Purchaser (i) has
such knowledge, sophistication and experience in business
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and financial matters that it is capable of evaluating the
merits and risks of an investment in the Shares,
(ii) fully understands the nature, scope and duration of
the limitations on transfer contained in this Agreement,
(iii) can bear the economic risk of an investment in the
Shares and can afford a complete loss of such investment,
and (iv) is purchasing the Shares for investment and not
with a view to, or for a sale in connection with, any
public distribution in violation of the Act. Such
Purchaser acknowledges (x) receipt of the SEC Documents
filed with the SEC prior to the date of this Agreement and
(y) that such Purchaser has been afforded the opportunity
to ask such questions as it has deemed necessary of, and
to receive answers from, representatives of A&A concerning
the merits and risks of investing in the Shares, and to
obtain such additional information that A&A possesses or
can acquire without unreasonable effort or expense that is
necessary to verify the accuracy and completeness of the
information contained in such SEC Documents.
6. Covenants of the Parties.
a. Restrictive Legends. Each Purchaser represents
and warrants to and agrees with A&A that such Purchaser will
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not dispose of any of such Purchaser's shares of Series B
Stock, Conversion Shares or Exchange Shares (unless, with
respect to such Conversion Shares or Exchange Shares, such
Conversion Shares or Exchange Shares were previously issued
pursuant to an effective registration statement under the Act)
except pursuant to (i) an effective registration statement
under the Act or (ii) an applicable exemption from registration
under the Act. In connection with any sale by a Purchaser
pursuant to clause (ii) of the preceding sentence, such
Purchaser shall furnish to A&A an opinion of counsel reasonably
satisfactory to A&A to the effect that such exemption from
registration is available in connection with such sale.
b. Certificates for Shares and Conversion Shares To
Bear Legends. (A) So long as the Series B Stock is
Registrable Securities, they shall be subject to a stop-
transfer order and the certificate or certificates therefor
shall bear the following legend by which each holder thereof
shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
AND ANY SECURITIES ISSUABLE UPON CONVERSION OR
EXCHANGE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, OR
(ii) AN APPLICABLE EXEMPTION FROM REGISTRATION
THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF
THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ALEXANDER & ALEXANDER SERVICES INC. TO THE EFFECT
THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE
IN
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CONNECTION WITH SUCH SALE. IN ADDITION, THE
VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE OR
HYPOTHECATION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS FURTHER SUBJECT TO RESTRICTIONS
WHICH ARE CONTAINED IN THE CHARTER, AS AMENDED, OF
ALEXANDER & ALEXANDER SERVICES INC., IN THE
ARTICLES SUPPLEMENTARY GOVERNING THESE SHARES AND
IN A STOCK PURCHASE AND SALE AGREEMENT DATED AS OF
JUNE 6, 1994, A COPY OF EACH OF WHICH IS ON FILE
WITH ALEXANDER & ALEXANDER SERVICES INC. AND WILL
BE FURNISHED BY THE CORPORATION TO THE STOCKHOLDER
ON REQUEST AND WITHOUT CHARGE."
(B) So long as the Conversion Shares are Registrable
Securities, they shall, unless previously issued pursuant to an
effective registration statement under the Act, be subject to a
stop-transfer order and the certificate or certificates
representing any such Conversion Shares shall bear the
following legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
AND ANY SHARES OR OTHER SECURITIES ISSUABLE UPON
EXCHANGE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, OR
(ii) AN APPLICABLE EXEMPTION FROM REGISTRATION
THEREUNDER. ANY SALE PURSUANT TO CLAUSE (ii) OF
THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ALEXANDER & ALEXANDER SERVICES INC. TO THE EFFECT
THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE
IN CONNECTION WITH SUCH SALE. IN ADDITION, THE
VOTING, SALE, ASSIGNMENT, TRANSFER, PLEDGE OR
HYPOTHECATION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS FURTHER SUBJECT TO RESTRICTIONS
WHICH ARE CONTAINED IN THE CHARTER, AS AMENDED, OF
ALEXANDER & ALEXANDER SERVICES INC. AND IN A STOCK
PURCHASE AND SALE AGREEMENT DATED AS OF JUNE 6,
1994, A COPY OF EACH OF WHICH IS ON FILE WITH
ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE
FURNISHED BY
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THE CORPORATION TO THE STOCKHOLDER ON REQUEST AND
WITHOUT CHARGE."
(C) So long as the Exchange Shares are Registrable
Securities, they shall, unless previously issued pursuant to an
effective registration statement under the Act, be subject to a
stop-transfer order and the certificate or certificates
representing any such Exchange Shares shall bear the following
legend by which each holder thereof shall be bound:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION THEREUNDER. ANY SALE PURSUANT TO CLAUSE
(ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
ALEXANDER & ALEXANDER SERVICES INC. TO THE EFFECT
THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE. IN ADDITION, THE VOTING,
SALE, ASSIGNMENT, TRANSFER, PLEDGE OR HYPOTHECATION
OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
FURTHER SUBJECT TO RESTRICTIONS WHICH ARE CONTAINED
IN A STOCK PURCHASE AND SALE AGREEMENT DATED AS OF
JUNE 6, 1994, A COPY OF EACH OF WHICH IS ON FILE WITH
ALEXANDER & ALEXANDER SERVICES INC. AND WILL BE
FURNISHED BY THE CORPORATION TO THE STOCKHOLDER ON
REQUEST AND WITHOUT CHARGE."
c. Removal of Legends. After termination of the
requirement that all or part of such legend be placed upon a
certificate, A&A shall, upon receipt by A&A of evidence
reasonably satisfactory to it that such requirement has
terminated and upon the written request of the holders of
Series B Stock,
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Conversion Shares or Exchange Shares, issue certificates for the
Shares, Conversion Shares or Exchange Shares, as the case may be,
that do not bear such legend.
d. Pre-Closing Activities. From and after the date
of this Agreement until the Closing, each of A&A and AIG shall
act with good faith towards, and shall use its best efforts to
consummate, the transactions contemplated by this Agreement,
and neither A&A nor AIG will take any action that would
prohibit or impair its ability to consummate the transactions
contemplated by this Agreement.
e. Information. So long as any of the Series B
Stock, the Exchange Shares or the Conversion Shares are
outstanding, A&A shall file with the SEC the annual reports and
quarterly reports and the information, documents and other
reports that are required to be filed with the SEC pursuant to
Sections 13 and 15 of the Exchange Act, whether or not A&A has
or is required to have a class of securities registered under
the Exchange Act and whether or not A&A is then subject to the
reporting requirements of the Exchange Act, at the time A&A is
or would be required to file the same with the SEC and,
promptly after A&A is or would be required to file such
reports, information or documents with the SEC, to mail copies
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of such reports, information and documents to the holders of
the Series B Stock, the Exchange Shares and the Conversion
Shares at their addresses set forth in the register of Shares
and Conversion Shares maintained by the transfer agent
therefor.
f. Restriction on Issuance of Stock. So long as
any shares of Series B Stock or any Conversion Shares are
outstanding, A&A shall not issue, except upon conversion of
Series B Stock or in connection with a stock split, stock
combination or dividend with respect to Class D Common Stock,
shares of Class D Common Stock.
g. Restriction on Amendments to By-Laws. A&A shall
not amend its by-laws so as to affect the exemption contained
therein from Subtitle 7 of Title 3 of the Maryland General
Corporation Law.
h. Stockholders Meeting. A&A shall, as promptly as
practical, call a meeting of the holders of its voting stock,
shall recommend, and shall use its best efforts (including the
preparation and circulation of the Proxy Statement) to obtain,
the approval of such holders for the transactions contemplated
by this Agreement. The Proxy Statement shall not be filed, and
no amendment or supplement to the Proxy Statement shall be
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made, without consultation with AIG. A&A shall notify AIG
promptly of the receipt by it of any comments from the SEC or
its staff and of any request by the SEC for amendments or
supplements to the Proxy Statement and shall supply AIG with
copies of all correspondence between it and its
representatives, on the one hand, and the SEC or the members of
its staff, on the other hand, with respect to the Proxy
Statement.
i. Hart-Scott-Rodino. To the extent applicable,
A&A and AIG shall make all filings and furnish all information
required with respect to the transactions contemplated by this
Agreement by the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and shall use their best efforts to obtain the early
termination of the waiting period thereunder, provided that
neither A&A nor AIG shall be required to agree to dispose of or
hold separate any portion of its business or assets.
j. Acquisition Proposals. Prior to the Closing,
A&A agrees that neither A&A nor any of the Subsidiaries nor any
of the respective officers and directors of A&A or any of the
Subsidiaries shall, and A&A shall direct and use its best
efforts to cause its employees, agents and representatives
(including, without limitation, any investment banker, attorney
or accountant retained by A&A or any of the Subsidiaries) not
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to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to stockholders of
A&A) with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any
substantial portion of the assets or any equity securities of,
A&A or any of the Subsidiaries (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or
otherwise facilitate directly or indirectly any effort or
attempt to make or implement an Acquisition Proposal.
Notwithstanding the foregoing, A&A shall be entitled to sell or
otherwise dispose of assets to the extent previously disclosed
to the Purchaser in writing. A&A will immediately cease and
cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect
to any of the foregoing. A&A will take the necessary steps to
inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this subsec-
tion j. A&A will notify AIG immediately if any such inquiries
or proposals are received by, any such information is requested
from, or any such
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negotiations or discussions are sought to be initiated or
continued with AIG. Nothing contained in this Agreement shall
prohibit A&A and its directors from making to the stockholders
any recommendation and related filing with the SEC, as required
by Rules 14e-2 and 14d-9 under the Exchange Act, with respect to
any tender offer, or from informing the stockholders of A&A in
the proxy materials with respect to the meeting of stockholders
called to consider the transactions contemplated by this
Agreement of information that is material to the vote with
respect to such transactions, or from changing or withdrawing
the recommendation of the directors with respect to such
transactions if the directors conclude that such change or
withdrawal is required by their fiduciary duties (as determined
in good faith by the Board of Directors of A&A upon the advice
of counsel).
k. Access. Upon reasonable notice, A&A shall (and
shall cause each of the Subsidiaries to) afford AIG's officers,
employees, counsel, accountants and other authorized
representatives ("Representatives") reasonable access during
normal business hours before the Closing to its properties,
books, contracts and records and personnel and advisers (who
will be instructed by A&A to cooperate) and A&A shall (and
shall cause each of the Subsidiaries to) furnish promptly to
AIG all
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information concerning its business, properties and personnel
as AIG or its Representatives may reasonably request,
provided that any review will be conducted in a way that will
not interfere unreasonably with the conduct of A&A's business,
and provided, further, that no review pursuant to this Sub-
section k shall affect or be deemed to modify any
representation or warranty made by A&A. AIG will keep all
information and documents obtained pursuant to this
Subsection k on a confidential basis subject to the
confidentiality provisions contained in paragraphs 1, 2, 3, 4
and 9 of the Confidentiality Agreement dated May 6, 1994
between A&A and AIG.
l. Publicity. A&A and the Purchaser will consult
with each other before issuing any press release or otherwise
making any public statements with respect to the transactions
contemplated hereby and shall not issue any such press release
or make any such public statement prior to such consultation,
except as may be required by law or by obligations pursuant to
any listing agreement with any securities exchange.
m. Certain Special Events. Notwithstanding
anything in the Articles Supplementary to the contrary, so long
as any Series B Stock is outstanding neither A&A nor any of its
Subsidiaries shall declare, pay or make any dividend or
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distribution or commence a tender or exchange offer for A&A
securities that are subordinate to or pari passu with the
Series B Stock as to liquidation preference or dividends or be
a party to any transaction (including without limitation any
recapitalization or reclassification of stock), any
consolidation of A&A or any such Subsidiary with, or merger of
A&A or any such Subsidiary into, or share exchange with, any
other person, any merger of any other person into A&A or any
such Subsidiary or any sale or transfer of assets which, in any
such case, would constitute a Special Event (as such term is
defined in the Articles Supplementary) unless after giving
effect thereto A&A would have the ability and the right (and
the Board of Directors of A&A, including a majority of the
Directors of A&A who are not officers or employees of A&A or
any of its subsidiaries, shall have adopted a resolution
confirming such ability and right) to purchase at the then
applicable price specified in Section 7 of the Articles
Supplementary all of the then issued and outstanding Series B
Stock, assuming all such stock is tendered to it for purchase
pursuant to such Section 7.
n. Reservation of Shares. A&A shall at all times
reserve and keep available, out of its authorized and unissued
stock, solely for the purpose of effecting the exchange of
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Class D Common Stock or conversion of Series B Stock, such
number of shares of its Common Stock or Class D Common Stock,
as the case may be, free of preemptive rights as shall from
time to time be sufficient to effect the exchange of all shares
of Class D Common Stock or conversion of Series B Stock from
time to time.
o. Adjustment Payments. (i) If, at any time or
from time to time, there is a Tax Amount, then A&A shall pay,
as an adjustment to the purchase price, to AIG in cash in
immediately available funds an amount equal to AIG's Pro Rata
Share of such Tax Amount.
"Tax Amount" shall mean the excess, if any, of
(x) all reserves, accruals or payments by or on behalf of A&A
or any of its Subsidiaries (without duplication) on account of
liabilities, expenses, penalties, fines or interest with
respect to any income or other tax (foreign, federal, state or
local) with respect to any period ending on or prior to March
31, 1994 over (y) the stated amount of A&A's tax reserve as
specifically set forth on its consolidated balance sheet at
March 31, 1994 set forth in its Quarterly Report on Form 10-Q
for the three months ended March 31, 1994 filed by A&A with the
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Securities and Exchange Commission in May, 1994 (the "March 31,
1994 Balance Sheet").
"AIG Pro Rata Share" shall mean, as of any date of
determination, a fraction equal to the number of shares of
Common Stock then owned, on a fully diluted basis, as of such
date, by the AIG Group over the outstanding number of shares of
Common Stock as of such date, giving effect to the conversion
or exchange of all securities held by the AIG Group into Common
Stock.
(ii) A&A shall within 90 days after the end of its
fiscal year December 31, 1994 furnish to AIG a certification
(the "AIG Certification") signed by each of its chief executive
officer, chief financial officer and principal accounting
officer certifying (A) whether there were any liabilities as of
March 31, 1994 (1) which were not set forth on the March 31,
1994 Balance Sheet or, (2) which are in an amount in excess of
the amount stated therefor on the March 31, 1994 Balance Sheet
or (3) as to which the full amount of such liability is not
then determinable (specifying, in each case, as to type,
determinability and amount); and (B) whether there were any
assets set forth on the March 31, 1994 Balance Sheet the
ultimate realizable value of which is less than the of the
carrying
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value of such assets at such date (specifying, in each
case, as to type and amount.)
A&A shall cause to be delivered with the AIG
Certification a report of its certified public accountants as
to A&A's compliance with the immediately preceding paragraph.
A liability shall be deemed to be in an amount in
excess of the amount set forth in the March 31, 1994 Balance
Sheet or an asset shall be deemed to have a carrying value
below the amount set forth in such Balance Sheet based upon all
facts or circumstances in existence on or prior to March 31,
1994, whether or not then known by A&A or any of its
Subsidiaries and whether or not, under generally accepted
accounting principles, such liabilities or assets were, as of
March 31, 1994 or as of the date of such AIG Certification,
correctly stated or a reserve would have been required. Assets
shall be carried at the lower of stated book value or
realizable value, and liabilities shall be stated without
discount.
If an adjustment is made to any balance sheet
subsequent to the March 31, 1994 Balance Sheet based upon any
of the matters referred to in the AIG Certification or if a
liability set forth in the AIG Certification is paid ("Other
Adjustments"), then A&A shall within five business days of the
making
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of each such Other Adjustment pay to AIG, as an adjustment to
the purchase price, an amount in cash in immediately available
funds equal to AIG's Pro Rata Share of each such Other Adjustment.
This section (ii) shall not apply (x) to the matters
covered by clause (i) and (y) to the matters set forth in a
single letter agreement between us identified as relating to
this provision:
(iii) A&A shall not be required to make duplicate
payments to the extent that a payment is made as a result of a
reserve, accrual or balance sheet adjustment and the related
liability is latter paid, or with respect to the same Tax
Amount.
AIG's rights under this Section 6.o. are not
assignable and shall not limit in any way any of AIG's other
rights or remedies under this Agreement or otherwise.
As long as any member of the AIG Group owns any
shares of Common Stock, on a fully diluted basis, then within
30 days of the end of each fiscal quarter (other than the final
fiscal quarters of each year), and within 90 days of the final
fiscal quarter of each fiscal year and with respect to the
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period from March 31, 1994 to December 31, 1994 (the "First
Period"), A&A shall deliver to AIG a certificate signed by its
chief financial officer and principal accounting officer as to
any Tax Amounts and Other Adjustments in such fiscal quarter
(or the First Period).
7. Standstill.
a. AIG hereby agrees that during the Standstill
Period (hereinafter defined) it will not, nor will it permit
any of its Affiliates (AIG together with its Affiliates being
hereinafter referred to as the "AIG Group") to, directly or
indirectly, unless in any such case specifically requested in
advance to do so by the Board of Directors of A&A:
(i) acquire, offer to acquire, or agree to
acquire by purchase, by joining a partnership, limited
partnership, syndicate or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act, hereinafter
referred to as "13D Group"), any securities of A&A
entitled to vote generally in the election of directors,
or securities convertible into or exercisable or
exchangeable for such securities (collectively,
"Restricted Securities") or any material portion of the
assets or businesses of A&A and its Subsidiaries;
provided, however, that
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nothing contained herein shall prohibit any member of the
AIG Group from acquiring any Restricted Securities (w)
upon conversion of convertible securities of A&A currently
owned by the AIG Group or acquired pursuant to this
Agreement or upon the exchange of Conversion Shares for
Common Stock of A&A as contemplated and permitted by the
Charter and Articles Supplementary, (x) as a result of a
stock split, stock dividend or similar recapitalization
by A&A, (y) upon the execution of unsolicited buy orders
by any member of the AIG Group which is a registered
broker-dealer for the bona fide accounts of its brokerage
customers unaffiliated and not acting in concert with any
member of the AIG Group, or (z) pursuant to the exercise of
any warrant, option or other right to acquire Restricted
Securities ("Rights"), which it receives directly from A&A
pursuant to a distribution to stockholders or from acquiring
such Rights directly from A&A; and provided, further, that
if during the Standstill Period, as a result of a business
combination transaction between A&A or an affiliate of A&A
and any other entity which is not an affiliate of any
member of the AIG Group (an "Other Entity"), any one or
more members of the AIG Group shall acquire beneficial
ownership (within the meaning of Rule
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13d-3 of the Exchange Act) of Restricted Securities in such
business combination, such members may continue to own
beneficially such Restricted Securities so acquired by such
members and such Restricted Securities shall continue to be
subject to the provisions of this Section;
(ii) participate in, or encourage, the formation
of any 13D Group which owns or seeks to acquire beneficial
ownership of, or otherwise acts in respect of, Restricted
Securities;
(iii) make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies"
(as such terms are defined or used in Regulation 14A under
the Exchange Act) or become a "participant" in any
"election contest" (as such terms are defined or used in
Rule 14a-11 under the Exchange Act) with respect to A&A,
or initiate, propose or otherwise solicit stockholders for
the approval of one or more stockholder proposals with
respect to A&A or induce or attempt to induce any other
person to initiate any stockholder proposal, provided,
however, that the limitation contained in this clause
(iii) shall not apply to any matter to be voted on by
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A&A's stockholders that is not initiated or proposed by
any member of the AIG Group or any affiliate thereof;
(iv) call or seek to have called any meeting of
the stockholders of A&A; or
(v) otherwise act, directly or indirectly,
alone or in concert with others, to seek to control the
management, Board of Directors, policies or affairs of
A&A, or solicit, propose, seek to effect or negotiate with
A&A or any other person with respect to any form of
business combination transaction with A&A or any affiliate
thereof (other than an Other Entity with respect to which
any member of the AIG Group or any affiliate thereof shall
have filed a Schedule 13D with the SEC with respect to any
class of equity securities of such Other Entity prior to
the public announcement of A&A's intent to consummate a
business transaction with such Other Entity), or any
restructuring, recapitalization or similar transaction
with respect to A&A or any affiliate thereof (except as
aforesaid), or solicit, make or propose or encourage or
negotiate with any other person with respect to, or
announce an intent to make, any tender offer or exchange
offer for any Restricted Securities (other than an
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exchange of Conversion Shares for Common Stock of A&A as
contemplated by the Charter and Articles Supplementary) or
disclose an intent, purpose, plan or proposal with respect
to A&A or any Restricted Securities inconsistent with the
provisions of this Section, including an intent, purpose,
plan or proposal that is conditioned on or would require
A&A to waive the benefit of, or amend, any provisions of
this Section, or assist, participate in, facilitate,
encourage or solicit any effort or attempt by any person
to do or seek to do any of the foregoing.
b. Nothing in this Section 7 shall preclude
members of the AIG Group, (i) from exercising the voting and
other rights granted to the Purchasers pursuant to this
Agreement, the Registration Rights Agreement, the Rights
Agreement, the Charter and the Articles Supplementary or
(ii) in the case of any proposed merger, sale of assets or
similar transaction which under the Charter and Articles
Supplementary requires a vote of the holders of Restricted
Securities and has been approved or recommended by the Board of
Directors of A&A, or in the case of a tender or exchange offer
made without encouragement by or the participation of AIG or
any of its affiliates (if the Board of Directors of A&A shall
have (A) recommended approval of such tender or exchange offer,
(B) not recommended,
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within 10 business days after the commencement of such tender or
exchange offer, that shareholders reject such tender or exchange
offer, or (C) amended the Rights Agreement or otherwise acted to
permit or in any way facilitate acquisition of shares under such
tender or exchange offer), from making an offer to the Board of
Directors of A&A, in respect of such transaction, upon terms more
favorable to A&A or its stockholders than those of the other
transaction, as proposed.
c. As used herein, the term "Standstill Period"
shall mean the period from the date of this Agreement until the
earlier to occur of:
(i) the date which is the eighth anniversary of
the Closing Date; or
(ii) the designation of any date as the
termination date of the Standstill Period by a majority of
the directors of A&A at a duly convened meeting thereof or
by all of the directors of A&A by written consent; or
(iii) A&A's material breach of any of its
obligations contained in the Registration Rights
Agreement; or
(iv) default in the payment of principal or
interest after the expiration of any grace periods
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applicable thereto with respect to indebtedness of A&A and
its Subsidiaries for money borrowed in the aggregate
amount of $15,000,000 or more; or
(v) A&A or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11
of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto (the
"Bankruptcy Code"), which, in the case of a Subsidiary of
A&A, has had or would have a Material Adverse Effect; or
an involuntary case is commenced against A&A or any of its
Subsidiaries and the petition not controverted within 10
days, or is not dismissed within 60 days after
commencement of the case, which, in the case of a
Subsidiary of A&A, has had or would have a Material
Adverse Effect; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all
or any substantial part of the property of A&A or any of
its Subsidiaries, which, in the case of a Subsidiary of
A&A, has had or would have a Material Adverse Effect; or
A&A or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, rehabilitation,
dissolution, insolvency or liquidation or similar law of
any jurisdiction, whether now or hereafter
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in effect, relating to A&A or such Subsidiary, or there is
commenced against A&A or any of its Subsidiaries any such
proceeding which remains undismissed for a period of 60 days,
which, in the case of a Subsidiary of A&A, has had or would
have a Material Adverse Effect; or A&A or any of its
Subsidiaries is adjudicated insolvent or bankrupt, which,
in the case of a Subsidiary of A&A, has had or would have
a Material Adverse Effect; or any order of relief or other
order approving any such case or proceeding is entered,
which, in the case of a Subsidiary of A&A, has had or
would have a Material Adverse Effect; or A&A or any of the
Subsidiaries suffers any appointment of any custodian or
the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days,
which, in the case of a Subsidiary of A&A, has had or
would have a Material Adverse Effect; or A&A or any of its
Subsidiaries makes a general assignment for the benefit of
creditors, which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse Effect; or A&A shall
fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts, generally as they
become due, which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse Effect; or A&A or any
of its Subsidiaries shall call a meeting of its creditors
with a view to arranging a composition or adjustment of
its debts, which, in the case of a Subsidiary of A&A, has
had or would have a Material Adverse
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Effect; or A&A or any of its Subsidiaries shall by any
act or failure to act indicate its consent to, approval of
or acquiescence in any of the foregoing, which, in the case
of a Subsidiary of A&A, has had or would have a Material
Adverse Effect; or any corporate action is taken by A&A or
any of its Subsidiaries for the purpose of effecting any of
the foregoing, which, in the case of a Subsidiary of A&A,
has had or would have a Material Adverse Effect; or
(vi) without encouragement by or the
participation of AIG or any of its Affiliates, the
acquisition by any person or 13D Group (other than members
of the AIG Group or Affiliates thereof) of, the
commencement of a tender offer by such person or 13D Group
for, or the public announcement of an intention to
acquire, Restricted Securities which, if added to the
Restricted Securities (if any) already owned by such
person or 13D Group, would represent thirty-five percent
(35%) or more of the total voting power (including rights
to acquire voting power) of
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A&A's Restricted Securities, or the receipt by such person
or 13D Group of A&A's agreement or consent to make such
acquisition; provided that such a public announcement or
commencement of a tender offer shall end the Standstill
Period only if such person or 13D Group shall have received
A&A's agreement or consent to make such intended acquisition,
and such a tender offer shall terminate the Standstill Period
only if and when the Board of Directors of A&A shall have (A)
recommended approval of such tender offer, (B) not recommended,
within 10 business days after the commencement of such tender
offer, that shareholders reject such tender offer, or (C)
amended the Rights Agreement to permit acquisition of shares
under such tender offer; or
(vii) the date this Agreement is terminated in
accordance with Section 8 hereof.
8. Termination. Except for the obligations in
Section 12.b, this Agreement and the transactions contemplated
hereby shall terminate without any action by the parties hereto
if the Closing shall not have occurred on or before October 31,
1994 and may be terminated at any time prior to the Closing (i)
by a written instrument executed and delivered by A&A and AIG;
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(ii) by AIG upon any material breach or default by A&A under
this Agreement; or (iii) by A&A upon any material breach or
default by AIG under this Agreement.
9. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement
shall survive the execution and delivery of this Agreement and
the delivery of the Shares for a period of three years from the
date of such delivery and any examination or investigation made
by any party to this Agreement or any of their successors and
assigns.
10. Performance; Waiver. The provisions of this
Agreement (including this Section 10) may be modified or
amended, and waivers and consents to the performance and
observance of the terms hereof may be given by written
instrument executed and delivered by A&A and (1) prior to the
Closing, by AIG and (2) after the Closing by the holder or
holders of a majority of the Conversion Shares, with the
holders of the Series B Stock for this purpose being deemed to
be the holders of that number of Conversion Shares into which
the Series B Stock of each holder are convertible. The failure
at any time to require performance of any provision hereof
shall in no way affect the full right to require such
performance at any time
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thereafter (unless performance thereof has been waived in
accordance with the terms hereof for all purposes and at all
times by the parties to whom the benefit of such performance
is to be rendered). The waiver by any party to this Agreement
of a breach of any provision hereof shall not be taken or held
to be a waiver of any succeeding breach of such provision or
any other provision or as a waiver of the provision itself.
11. Successors and Assigns. All covenants and
agreements contained in this Agreement by or on behalf of the
parties hereto shall bind, and inure the benefit of, the
respective successors and assigns of the parties hereto;
provided, however, that the rights granted to the parties
hereto may not be assigned (except to wholly-owned subsidiaries
of such parties) without the prior written consent of the other
parties. AIG may assign to one or more of its wholly-owned
subsidiaries its obligations as Purchaser hereunder in whole or
in part, but shall not be relieved of such obligations.
12. Miscellaneous.
a. Notices. All notices or other communications
given or made hereunder shall be validly given or made if in
writing and delivered by facsimile transmission or in person
at, or mailed by registered or certified mail, return receipt
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requested, postage prepaid, to, the following addresses (and
shall be deemed effective at the time of receipt thereof).
If to A&A:
Alexander & Alexander Services Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: Ronald J. Roessler, Esq.
Senior Vice President and
General Counsel
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Meredith M. Brown, Esq.
If to AIG or any other Purchaser in care of AIG:
American International Group, Inc.
70 Pine Street
New York, New York 10270
Attention: Wayland M. Mead, Esq.
Acting General Counsel
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Immanuel Kohn, Esq.
or to such other address as the party to whom notice is to be
given may have previously furnished notice in writing to the
other in the manner set forth above.
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b. Expenses. Whether or not the Shares are sold or
this Agreement is terminated, A&A agrees to pay all reasonable
expenses (including reasonable attorneys fees and expenses)
incurred by the Purchasers in connection with the transactions
contemplated by this Agreement.
c. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE STATE AND FEDERAL COURTS IN THE STATE OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT.
d. Severability; Interpretation. If any term,
provision, covenant or restriction of this Agreement is held by
a court of competent jurisdiction to be invalid, void or
unenforceable, each of A&A and AIG directs that such court
interpret and apply the remainder of this Agreement in the
manner which it determines most closely effectuates their
intent in entering into this Agreement, and in doing so
particularly take into account the relative importance of the
term, provision,
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covenant or restriction being held invalid, void or unenforceable.
e. Headings. The index and section headings herein
are for convenience only and shall not affect the construction
hereof.
f. Entire Agreement. This Agreement embodies the
entire agreement between the parties relating to the subject
matter hereof and any and all prior oral or written agreements,
representations or warranties, contracts, understandings,
correspondence, conversations, and memoranda, whether written
or oral, between A&A and AIG, or between or among any agents,
representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest, with
respect to the subject matter hereof (including without
limitation the Confidentiality Agreement between A&A and AIG
dated May 6, 1994), are merged herein and replaced hereby,
except that paragraphs 1, 2, 3, 4, 8 and 9 of such
Confidentiality Agreement shall survive to the extent provided
in Section 6.k hereof and paragraph 5 of such Confidentiality
Agreement shall survive until the Closing Date.
g. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original
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and all of which together shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.
ALEXANDER & ALEXANDER SERVICES
INC.
By: /s/ Robert E. Boni
Name: Robert E. Boni
Title: Chairman
AMERICAN INTERNATIONAL GROUP,
INC.
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Vice Chairman-Finance
1
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
Dated as of July 15, 1994
by and among
ALEXANDER & ALEXANDER SERVICES INC.
and
THE PURCHASERS WHO ARE SIGNATORIES HERETO
2
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS........................................ 1
SECTION 2. REGISTRATION RIGHTS................................ 5
2.1 Demand Registration Rights.................. 5
2.2 Incidental Registration..................... 7
2.3 Supplements and Amendments.................. 8
2.4 Restrictions on Public Sale by
the Company and Others..................... 9
2.5 Underwritten Registrations.................. 10
2.6 Registration Procedures..................... 11
2.7 Registration Expenses....................... 18
2.8 Rule 144.................................... 20
SECTION 3. INDEMNIFICATION.................................... 20
3.1 Indemnification by the Company............... 20
3.2 Indemnification by Holder of
Registrable Securities..................... 21
3.3 Conduct of Indemnification
Proceeding................................. 22
3.4 Contribution................................. 23
3.5 Other Indemnities............................ 24
SECTION 4. MISCELLANEOUS...................................... 24
4.1 Remedies.................................... 24
4.2 No Inconsistent Agreements.................. 24
4.3 Amendments and Waivers...................... 24
4.4 Notices..................................... 25
4.5 Successors and Assigns...................... 25
4.6 Counterparts................................ 25
4.7 Headings.................................... 25
4.8 Governing Law............................... 26
4.9 Severability................................ 26
4.10 Entire Agreement............................ 26
4.11 Attorneys' Fees............................. 26
4.12 Securities Held by the Company
or Its Subsidiaries....................... 26
Signature Pages.................................................. S-1
3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"),
dated as of July 15, 1994, by and among ALEXANDER & ALEXANDER
SERVICES INC., a Maryland corporation (or any successor, the
"Company"), and the purchasers whose signatures appear on the
execution pages of this Agreement (each a "Purchaser" and
collectively, the "Purchasers").
This Agreement is entered into in connection with the
Stock Purchase and Sale Agreement, dated as of June 6, 1994,
among the Company and American International Group, Inc. (the
"Purchase Agreement"), relating to the issuance and sale by the
Company of an aggregate of 4,000,000 shares of the Company's 8%
Series B Cumulative Convertible Preferred Stock, par value
$1.00 per share (together with additional shares of such
Preferred Stock issued as dividends thereon, the "Preferred
Stock"). In order to induce the purchaser party thereto to
enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement for
the equal benefit of each of the Purchasers and their direct
and indirect transferees. The execution and delivery of this
Agreement is a condition to each Purchaser's obligation to
purchase the Preferred Stock under the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Advice" has the meaning set forth in the last
paragraph of Section 2.6.
"Affiliate" means, when used with reference to any
Person, any other Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with,
the referent Person or such other Person, as the case may be,
or any Person who beneficially owns, directly or indirectly, 5%
or more of the equity interests of such Person or warrants,
options or other rights to acquire or hold more than 5% of any
class of equity interests of such Person. For the purposes of
this definition, "control" when used with respect to any
4
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specified Person means the power to direct or cause the
direction of management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "affiliated",
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" has the meaning set forth in the first
paragraph of this Agreement.
"Articles Supplementary" means the Articles
Supplementary of the Company classifying the Preferred Stock
filed by the Company with the State Department of Assessments
and Taxation of the State of Maryland on July 15, 1994, which
Articles Supplementary is substantially in the form of
Exhibit 2 to the Purchase Agreement.
"Charter" means the Articles of Restatement of the
Company as filed with the State Department of Assessments and
Taxation of the State of Maryland as amended through the date
hereof.
"Class D Common Stock" means the Class D Common
Stock, par value $1.00 per share, of the Company.
"Company" has the meaning set forth in the first
paragraph of this Agreement.
"Conversion Shares" means the shares of Class D
Common Stock issuable or issued upon conversion of the
Preferred Stock pursuant to the terms of the Purchase Agreement
and the Articles Supplementary.
"DTC" has the meaning set forth in Section 2.6(i) of
this Agreement.
"Effectiveness Date" has the meaning set forth in
Section 2.1(a) of this Agreement.
"Effectiveness Period" has the meaning set forth in
Section 2.1(a) of this Agreement.
"Exchange Act" has the meaning set forth in
Section 2.6(a) of this Agreement.
"Exchange Shares" means the shares of Common Stock,
par value $1.00 per share, of the Company issuable or issued
5
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(x) in exchange for the Class D Common Stock pursuant to the
terms of the Purchase Agreement and the Charter or (y) upon
conversion of the Preferred Stock pursuant to the terms of the
Purchase Agreement and the Articles Supplementary.
"Filing Date" has the meaning set forth in
Section 2.1(a) of this Agreement.
"Holder" means any holder of a Registrable Security.
"Incidental Registration" has the meaning set forth
in Section 2.2(a) of this Agreement.
"Inspectors" has the meaning set forth in
Section 2.6(n) of this Agreement.
"NASD" has the meaning set forth in Section 2.7 of
this Agreement.
"Person" means any individual, trustee, corporation,
partnership, joint stock company, trust, unincorporated
association, union, business association, firm or other legal
entity.
"Preferred Stock" has the meaning set forth in the
second paragraph of this Agreement.
"Prospectus" means the prospectus included in any
Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted
from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Purchase Agreement" has the meaning set forth in the
second paragraph of this Agreement.
"Purchaser" has the meaning set forth in the first
paragraph of this Agreement.
"Purchasers" has the meaning set forth in the first
paragraph of this Agreement.
6
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"Registrable Securities" means the Preferred Stock,
the Exchange Shares and any other securities issued or issuable
with respect to the Preferred Stock or the Exchange Shares by
way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization; provided, however, that a security
ceases to be a Registrable Security when it is no longer a
Transfer Restricted Security. In determining the number of
Registrable Securities outstanding at any time or whether the
holders of the requisite number of Registrable Securities have
taken any action hereunder and in calculating the number of
Registrable Securities for all other purposes under this
Agreement, each share of Preferred Stock shall be deemed to be
equal to the number of Exchange Shares then deliverable upon
(i) the conversion of such share of Preferred Stock into
Conversion Shares in accordance with the Articles Supplementary
and (ii) the exchange of such Conversion Shares in accordance
with the Charter.
"Registration Statement" means any registration
statement of the Company that covers any of the Registrable
Securities pursuant to the provisions of Section 2.1 of this
Agreement, including the Prospectus, amendments and supplements
to such registration statement, including post-effective
amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or any similar
rule (other than Rule 144A) or regulation hereafter adopted by
the SEC providing for offers and sales of securities made in
compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"Transfer Restricted Security" means a share of
Preferred Stock or an Exchange Share until such share of
Preferred Stock or Exchange Share, as the case may be, (i) has
been effectively registered under the Securities Act and
disposed of
7
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in accordance with a registration statement filed under
the Securities Act covering it or (ii) is distributed to
the public pursuant to Rule 144.
"underwritten registration" or "underwritten
offering" means a registration in which securities of the
Company (including Registrable Securities) are sold to an
underwriter for reoffering to the public.
SECTION 2. REGISTRATION RIGHTS
2.1 Demand Registration Rights. (a) The Company
covenants and agrees with each Holder of Registrable Securities
that if on or after July 15, 1995, the Company receives a
written request from Holders of not less than 33 1/3% of the
then outstanding Registrable Securities, then within thirty
(30) days after receipt of such notice (the 30th day after such
notice, the "Filing Date") the Company shall use its best
efforts to file a Registration Statement and cause such
Registration Statement to become effective under the Securities
Act at the earliest possible date after such notice (such date,
the "Effectiveness Date") with respect to the offering and sale
or other disposition of such Registrable Securities as such
Holders desire to have covered by such Registration Statement;
provided, however, that the Company shall not be obligated to
file any other Registration Statement or cause any such other
Registration Statement to become effective, pursuant to this
Section 2.1(a), (i) for a period of 360 days following the
Filing Date of a Registration Statement filed pursuant to this
Section 2.1(a), (ii) for a period of 180 days following the
effective date of a Registration Statement covering not less
than 25% of the then outstanding Registrable Securities, which
Registrable Securities have been included in such registration
pursuant to Section 2.2 hereof, (iii) for a period of 90 days
following the filing of a public offering of common stock by
the Company, (iv) for a period of up to 90 days if such filing
would require disclosure of bona fide confidential information
relating to an acquisition or disposition of material assets
then in progress or (v) which would cover less than 1,000,000
Registrable Securities (or if the number of Registrable
Securities then outstanding is less than 1,000,000, which would
cover less than the aggregate amount of Registrable Securities
then outstanding). The Company shall use its best efforts to
continuously maintain the effectiveness of such Registration
Statement until the earlier of (i) 270 days after the effective
date of the Registration Statement or (ii) the consummation of
the distribution by the Holders of all of the Registrable
Securities
8
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covered by such Registration Statement (the "Effectiveness Period"). The
Company shall not include any securities other than the Registrable Securities
in any such Registration Statement pursuant to any "piggyback" or similar
registration rights granted by the Company without the consent of the Holders
of a majority of the Registrable Securities to be covered by such Registration
Statement, other than "piggyback" registration rights provided for in the
Registration Rights Agreement between the Company and the Selling Shareholders
as defined therein dated November 30, 1993 (the "1993 Registration Rights
Agreement") as in effect on June 5, 1994. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be required to comply with
more than three requests for registration pursuant to this Section 2.1. Each
notice to the Company requesting registration to be effected shall set forth
(1) the number of shares of Preferred Stock and the number of Exchange Shares
to be included; (2) the name of the Holders of the Registrable Securities and
the amount to be sold; and (3) the proposed manner of sale. Within 10 (ten)
days after receipt of such notice, the Company shall notify each Holder of
Registrable Securities who is not a party to the written notice served on the
Company (or the transferee(s) of such Holder) and offer to them the opportunity
to include their Registrable Securities in such registration. A Registration
Statement will not count as complying with the terms hereof unless it is
declared effective by the SEC and remains continuously effective for the
Effectiveness Period, provided that a Registration Statement which does not
become effective after the Company has filed it solely by reason of the refusal
to proceed of the Holders of Registrable Securities requesting the registration
shall not be deemed to have been effected by the Company at the request of such
Holders but the Holders of Registrable Securities covered by such Registration
Statement shall reimburse the Company for 50% of the out-of-pocket costs paid
by the Company in the performance of its obligations hereunder in respect of
such Registration Statement.
(b) Each Holder of Registrable Securities agrees, if
requested by the managing underwriter or underwriters in an
underwritten offering, not to effect any public sale or
distribution of Registrable Securities or of securities of the
Company of the same class as any securities included in such
Registration Statement, including a sale pursuant to Rule 144
under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during
the 180-day period beginning on, the closing date of each
underwritten offering made pursuant to such Registration
9
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Statement, to the extent timely notified in writing by the
Company or the managing underwriter or underwriters.
(c) The foregoing provisions of Section 2.1(b) shall
not apply to any Holder of Registrable Securities if such
Holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any
such Holder shall undertake, in its request to participate in
any such underwritten offering, not to effect any public sale
or distribution of any applicable class of Registrable
Securities commencing on the date of sale of such applicable
class of Registrable Securities unless it has provided 45 days
prior written notice of such sale or distribution to the
underwriter or underwriters.
2.2 Incidental Registration. (a) If the Company at
any time before the third anniversary of this Agreement
proposes to register any of its securities under the Act (other
than a registration on Form S-4 or S-8 or any successor form
thereto), whether or not for sale for its own account, and the
registration form to be used therefor may be used for the
registration of Registrable Securities, it will each such time
give prompt written notice to all Holders of Registrable
Securities of the Company's intention to do so and, upon the
written request of any such Holder to the Company made within
10 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be
disposed of by such Holder and the intended method of
disposition thereof), the Company will use its best efforts to
effect the registration (an "Incidental Registration") under
the Act of all Registrable Securities which the Company has
been so requested to register by the Holders thereof; provided,
however, that at any time prior to the first anniversary of
this Agreement the Company will not be obligated under this
Section 2.2(a) to include Registrable Securities in any
registration of securities of the Company which is solely on
behalf of the holders of such securities and which is being
conducted pursuant to registration rights agreements with such
holders in existence on the date of the Purchase Agreement.
(b) Subject to Section 2.2(c), if an Incidental
Registration is an underwritten registration, and the managing
underwriters thereof advise the Company in writing that in
their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in
such offering without adversely affecting the marketability of
the offering, the Company will include in such registration
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(i) first, the securities the Company proposes to sell for its
own account in such registration, (ii) second, the Registrable
Securities requested to be included in such registration and
the securities entitled to participate in such registration
pursuant to the terms of the 1993 Registration Rights Agreement
as in effect on June 5, 1994, pro rata among the Holders of
such Registrable Securities and the beneficiaries of the
"piggyback" registration rights contained in the 1993
Registration Rights Agreement as in effect on June 5, 1994 on
the basis of the number of shares owned by each such Holder and
such beneficiaries and (iii) third, other securities requested
to be included in such registration.
(c) Notwithstanding Section 2.2(b), if an Incidental
Registration is an underwritten secondary registration solely
on behalf of holders of the Company's securities, and the
managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in
such offering without adversely affecting the marketability of
the offering, the Company will include in such registration (i)
first, the securities requested to be included therein by the
holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such
registration, pro rata among the Holders of such Registrable
Securities on the basis of the number of shares owned by each
such Holder, and (iii) third, other securities requested to be
included in such registration.
2.3 Supplements and Amendments. If a Registration
Statement ceases to be effective for any reason at any time
during the period for which it is required to be effective
under this Agreement, the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the
effectiveness thereof and shall in connection therewith
promptly supplement and amend any such Registration Statement
in a manner reasonably and in good faith expected to obtain the
withdrawal of the order suspending the effectiveness thereof,
and the Company shall use its best efforts to cause any such
Registration Statement to be declared effective as soon as
practicable after such amendment or supplement and to keep such
Registration Statement continuously effective for a period
equal to the period for which it is required to be effective
under this Agreement less the aggregate number of days during
which any predecessor Registration Statement was previously
effective.
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The Company shall supplement and amend a Registration
Statement if required by the rules, regulations or instructions
applicable to the applicable registration form for such
Registration Statement, if required by the Securities Act or
the SEC, or if reasonably requested by the Holders of a
majority of the Registrable Securities covered by such
Registration Statement or by any underwriter of the Registrable
Securities.
2.4 Restrictions on Public Sale by the Company and
Others. The Company agrees (i) that it shall not, and that it
shall not cause or permit any of its subsidiaries to, effect
any public sale or distribution of any securities of the same
class as any of the Registrable Securities or any securities
convertible into or exchangeable or exercisable for such
securities (or any option or other right for such securities)
(except for any securities that may be issued to the holders of
the Preferred Stock pursuant to the Articles Supplementary, the
holders of Class D Common Stock pursuant to the Charter and the
holders of the Company's Series A Preferred Stock, and except
for securities issued to officers, directors and/or employees
of the Company or its subsidiaries pursuant to options or
agreements entered into with such officers, directors and/or
employees in connection with their employment or pursuant to
the Company's stock option, stock bonus and other stock plans
and arrangements for officers, directors and employees) during
the 15-day period prior to, and during the 180-day period
beginning on, the commencement of any underwritten offering of
Registrable Securities which has been scheduled prior to the
Company or any of its subsidiaries publicly announcing its
intention to effect any such public sale or distribution;
(ii) that any agreement entered into after the date of this
Agreement pursuant to which the Company (or, if applicable, any
subsidiary of the Company) issues or agrees to issue any
securities which have registration rights shall contain (x) a
provision under which the holders of such securities agree, in
the event of an underwritten offering of Registrable
Securities, not to effect any public sale or distribution of
any securities of the same class as any of the Registrable
Securities (or any securities convertible into or exchangeable
or exercisable for any such securities), or any option or other
right for such securities, during the periods described in
clause (i) of this Section 2.4, in each case including a sale
pursuant to Rule 144 under the Securities Act (or any similar
provision then in effect) and (y) a provision that effects,
upon notice given pursuant to Section 2.1 hereof to the Company
that an underwritten offering of Registrable Securities is to
be undertaken, the lapse of any demand registration rights with
respect to any securities of the Company (or, if applicable, of
any subsidiary of the Company) until the expiration of 180 days
after the date of the completion of any such underwritten
offering; (iii) that the Company (and, if applicable, each
subsidiary of the Company) will not after the date hereof enter
into any agreement or contract wherein the holders of any
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securities of the Company or of any subsidiary of the Company
issued or to be issued are granted any "piggyback" registration
rights with respect to any registration effected pursuant to
Section 2.1 hereof, and (iv) that the Company (and, if
applicable, each subsidiary of the Company) will not after the
date hereof enter into any agreement or contract wherein the
exercise by any Holder of its right to an Incidental
Registration hereunder would result in a breach thereof or a
default thereunder or would otherwise conflict with any
provision thereof.
2.5 Underwritten Registrations. If any of the
Registrable Securities covered by a Registration Statement
filed pursuant to Section 2.1 are to be sold in an underwritten
offering, the investment banker or investment bankers and
manager or managers that will manage the offering will be
selected by the Holders of not less than a majority of the
Registrable Securities covered by such Registration Statement
and will be reasonably acceptable to the Company. If the
managing underwriter or underwriters advise the Company and the
Holders in writing that in the opinion of such underwriter or
underwriters the amount of Registrable Securities proposed to
be sold in such offering exceeds the amount of securities that
can be sold in such offering, there shall be included in such
underwritten offering the amount of Registrable Securities
which in the opinion of such underwriter or underwriters can be
sold, and such amount shall be allocated pro rata among the
Holders of Registrable Securities on the basis of the number of
Registrable Securities requested to be included by each such
Holder and all Holders. The Holders of Registrable Securities
sold in any such offering shall pay all underwriting discounts
and commissions of the underwriter or underwriters pro rata;
provided, however, that this Section 2.5 shall not relieve the
Company of its obligations under Section 2.7 hereof.
No Holder of Registrable Securities may participate
in any underwritten registration hereunder unless such Holder
(a) agrees to sell such Holder's Registrable Securities on the
basis provided in any underwriting arrangements approved by the
Holders of not less than a majority of the Registrable
Securities and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and
other
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documents reasonably required under the terms of such
underwriting arrangements.
2.6 Registration Procedures. In connection with any
Registration Statement, the Company shall effect such
registrations to permit the offering and sale of the
Registrable Securities in accordance with the intended method
or methods of disposition thereof, and pursuant thereto the
Company shall as expeditiously as possible:
(a) Prepare and file with the SEC as soon as
practicable each such Registration Statement and cause such
Registration Statement to become effective and remain effective
as provided herein; provided, however, that before filing any
such Registration Statement or any Prospectus or any amendments
or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference,
including such documents filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") that would be
incorporated therein by reference), the Company shall afford
promptly to the Holders of the Registrable Securities covered
by such Registration Statement, their counsel and the managing
underwriter or underwriters, if any, an opportunity to review
copies of all such documents proposed to be filed a reasonable
time prior to the proposed filing thereof and the Company shall
give reasonable consideration in good faith to any comments of
such Holders, counsel and underwriters; provided that the
Company may discontinue any registration of its securities
giving rise to registration rights pursuant to Section 2.2
hereof at any time prior to the effective date of the
registration statement relating thereto. The Company shall not
file any Registration Statement or Prospectus or any amendments
or supplements thereto if the Holders of a majority of the
Registrable Securities covered by such Registration Statement,
their counsel, or the managing underwriter or underwriters, if
any, shall reasonably object in writing.
(b) Prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep such Registration Statement
continuously effective for the time periods prescribed hereby;
cause the related Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations
of the SEC promulgated thereunder applicable to it with respect
to the
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disposition of all securities covered by such Registration
Statement as so amended or in such prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities,
their counsel and the managing underwriter or underwriters, if
any, promptly, and confirm such notice in writing, (i) when a
Prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has
become effective (including in such notice a written statement
that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules and
exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of such Registration Statement or
of any order preventing or suspending the use of any
preliminary prospectus or the initiation or threatening of any
proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Securities the
representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated
by Section 2.6(m) below, to the knowledge of the Company, cease
to be true and correct in any material respect, (iv) of the
receipt by the Company of any notification with respect to
(A) the suspension of the qualification or exemption from
qualification of the Registration Statement or any of the
Registrable Securities covered thereby for offer or sale in any
jurisdiction, or (B) the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event,
the existence of any condition or information becoming known to
the Company that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the
case of such Registration Statement, it will conform in all
material respects with the requirements of the Securities Act
and it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not
misleading, and that in the case of the Prospectus, it will
conform in all material respects with the requirements of the
Securities Act and it will not contain any untrue statement of
a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination
15
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that a post-effective amendment to such Registration Statement
would be appropriate.
(d) Use every reasonable effort to prevent the
issuance of any order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending
the use of a Prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable
Securities covered thereby for sale in any jurisdiction, and,
if any such order is issued, to obtain the withdrawal of any
such order at the earliest possible moment.
(e) If requested by the managing underwriter or
underwriters, if any, or the Holders of a majority of the
Registrable Securities being sold in connection with an
underwriting offering, (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the
managing underwriter or underwriters, if any, or such Holders
reasonably request to be included therein to comply with
applicable law and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of
the matters to be incorporated in such prospectus supplement or
post-effective amendment.
(f) Furnish to each Holder of Registrable Securities
who so requests and to counsel for the Holders of Registrable
Securities and each managing underwriter, if any, without
charge, upon request, one conformed copy of the Registration
Statement and each post-effective amendment thereto, including
financial statements and schedules, and of all documents
incorporated or deemed to be incorporated therein by reference
and all exhibits (including exhibits incorporated by
reference).
(g) Deliver to each Holder of Registrable
Securities, their counsel and each underwriter, if any, without
charge, as many copies of each Prospectus (including each form
of prospectus) and each amendment or supplement thereto as such
persons may reasonably request but only for so long as the
Company is required to keep such registration statement
effective; and, subject to the last paragraph of this
Section 2.6, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of
the Holders of Registrable Securities and the underwriter or
underwriters or agents, if any, in connection with the offering
and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
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(h) Prior to any offering of Registrable Securities,
to use its best efforts to register or qualify, and cooperate
with the Holders of Registrable Securities, the underwriter or
underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption
from such registration or qualification) of, such Registrable
Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as may be
required to permit the resale thereof by the Holders of
Registrable Securities, or as the managing underwriter or
underwriters reasonably request in writing; provided, however,
that where Registrable Securities are offered other than
through an underwritten offering, the Company agrees to cause
its counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant
to this Section 2.6(h); keep each such registration or
qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be effective
hereunder and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such
jurisdictions of the securities covered thereby; provided,
however, that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it is not
then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is
not then so subject or (C) become subject to taxation in any
jurisdiction where it is not then so subject.
(i) Cooperate with the Holders of Registrable
Securities and the managing underwriter or underwriters, if
any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends
whatsoever and shall be in a form eligible for deposit with The
Depository Trust Company ("DTC"); and enable such Registrable
Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or
Holders may reasonably request at least two business days prior
to any sale of Registrable Securities in a firm commitment
underwritten public offering.
(j) Use its best efforts to cause the Registrable
Securities covered by a Registration Statement to be registered
with or approved by such other governmental agencies or
authorities as may be reasonably necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any,
to consummate the disposition of such Registrable Securities,
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except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case the Company
will cooperate in all reasonable respects with the filing of
the Registration Statement and the granting of such approvals.
(k) Upon the occurrence of any event contemplated by
Section 2.6(c)(v) or 2.6(c)(vi) above, as promptly as
practicable prepare a supplement or post-effective amendment to
the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be
incorporated therein by reference, and, subject to Section
2.6(a) hereof, file such with the SEC so that, as thereafter
delivered to the purchasers of Registrable Securities being
sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading and will otherwise comply with
law.
(l) Prior to the effective date of a Registration
Statement, (i) provide the registrar for the Preferred Stock
and the Exchange Shares or such other Registrable Securities
with printed certificates for such securities in a form
eligible for deposit with DTC and (ii) provide a CUSIP number
for such securities.
(m) Enter into an underwriting agreement in form,
scope and substance as is customary in underwritten offerings
and take all such other actions as are reasonably requested by
the managing underwriter or underwriters in order to expedite
or facilitate the registration or disposition of such
Registrable Securities in any underwritten offering to be made
of the Registrable Securities in accordance with this
Agreement, and in such connection, (i) make such
representations and warranties to the underwriter or
underwriters, with respect to the business of the Company and
the subsidiaries of the Company, and the Registration
Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case,
in form, substance and scope as are customarily made by issuers
to underwriters in underwritten offerings, and confirm the same
if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to
the managing underwriter or underwriters), addressed to the
underwriter or underwriters covering the matters customarily
covered in opinions requested in underwritten offerings with
respect to secondary distributions and
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such other matters as may be reasonably requested by underwriters; (iii) use
its best efforts to obtain "cold comfort" letters and updates thereof (which
letters and updates shall be reasonably satisfactory in form, scope and
substance to the managing underwriter or underwriters) from the independent
certified public accountants of the Company (and, if applicable, the
subsidiaries of the Company) and, to the extent reasonably practicable, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement, addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings; and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in Section 3
hereof (or such other provisions and procedures acceptable to Holders of a
majority of Registrable Securities covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to all parties
to be indemnified pursuant to said Section. The above shall be done at each
closing under such underwriting agreement, or as and to the extent required
thereunder.
(n) Make available for inspection by a
representative of the Holders of Registrable Securities being
sold, any underwriter participating in any such disposition of
Registrable Securities, if any, and any attorney or accountant
retained by such representative of the Holders or underwriter
(collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all pertinent financial
and other records, pertinent corporate documents and properties
of the Company and the subsidiaries of the Company, and cause
the officers, directors and employees of the Company and the
subsidiaries of the Company to supply all information in each
case reasonably requested by any such Inspector in connection
with such Registration Statement; provided, however, that any
information that is designated in writing by the Company, in
good faith, as confidential at the time of delivery of such
information, shall be kept confidential by such Inspector and
not used by such Inspector for any purpose other than in
connection with such Inspector's review of the Registration
Statement for such registration except to the extent
(i) disclosure of such information is required by court or
administrative order, (ii) disclosure of such information, in
the written opinion of counsel to such Inspector (a copy of
which is furnished to the
19
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Company), is necessary to avoid or correct a misstatement or omission of a
material fact in the Registration Statement, Prospectus or any supplement or
post- effective amendment thereto or disclosure is otherwise required by law,
(iii) disclosure of such information is in the written opinion of counsel for
any such Inspector (a copy of which is furnished to the Company), necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, relating to or involving this Agreement or any of the
transactions contemplated hereby or arising hereunder, or (iv) such information
becomes generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector; without limiting the
foregoing, no such information shall be used by such Inspector as the basis for
any market transactions in securities of the Company or the subsidiaries of the
Company in violation of applicable law. Each selling Holder of such
Registrable Securities agrees that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or of
any of its Affiliates unless and until such is made generally available to the
public. Each selling Holder of such Registrable Securities further agrees that
it will, upon learning that disclosure of such information is sought in a court
of competent jurisdiction, give prompt notice to the Company and allow the
Company, at the Company's expense, to undertake appropriate action to prevent
disclosure of the information deemed confidential.
(o) Comply with all applicable rules and regulations
of the SEC and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than
forty-five (45) days after the end of any 12-month period (or
ninety (90) days after the end of any 12-month period if such
period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to an
underwriter or to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to an
underwriter or to underwriters in such an offering, commencing
on the first day of the first fiscal quarter of the Company
after the effective date of the relevant Registration
Statement, which statements shall cover said 12-month periods.
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(p) Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed
on each securities exchange, if any, on which similar
securities issued by the Company are then listed.
Each seller of Registrable Securities as to which any
registration is being effected agrees, as a condition to the
registration obligations with respect to such Holder provided
herein, to furnish promptly to the Company such information
regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably
request in writing to comply with the Securities Act and other
applicable law. The Company may exclude from such registration
the Registrable Securities of any seller who unreasonably fails
to furnish such information within a reasonable time after
receiving such request. If the identity of a seller of
Registrable Securities is to be disclosed in the Registration
Statement, such seller shall be permitted to include all
information regarding such seller as it shall reasonably
request.
Each Holder of Registrable Securities agrees by
acquisition of such Registrable Securities that, upon receipt
of any notice from the Company of the happening of any event of
the kind described in Section 2.6(c)(ii), 2.6(c)(iv),
2.6(c)(v), or 2.6(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities covered
by the Registration Statement or Prospectus until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 2.6(k), or until it is advised in
writing (the "Advice") by the Company that the use of the
applicable prospectus may be resumed, and has received copies
of any amendments or supplements thereto, and, if so directed
by the Company, such Holder will deliver to the Company all
copies, other than permanent file copies, then in such Holder's
possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. In
the event the Company shall give any such notice, the period of
time for which a Registration Statement is required hereunder
to be effective shall be extended by the number of days during
such periods from and including the date of the giving of such
notice to and including the date when each seller of
Registrable Securities covered by such Registration Statement
shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 2.6(k) or (y) the
Advice.
2.7 Registration Expenses. All fees and expenses
incident to the performance of or compliance with the
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provisions of Section 2 of this Agreement by the Company shall
be borne by the Company whether or not any Registration
Statement is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required
to be made with the National Association of Securities Dealers
Inc. (the "NASD") in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities
or Blue Sky laws (including, without limitation, fees and
disbursements of counsel for the underwriter or underwriters in
connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such
jurisdictions as provided in Section 2.6(h)), (ii) printing
expenses (including, without limitation, expenses of printing
certificates for Registrable Securities in a form eligible for
deposit with DTC and of printing prospectuses if the printing
of prospectuses is requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Securities,
by the Holders of a majority of Registrable Securities included
in any Registration Statement), (iii) reasonable fees and
disbursements of all independent certified public accountants
referred to in Section 2.6(m)(iii) (including, without
limitation, the reasonable expenses of any special audit and
"cold comfort" letters required by or incident to such
performance), (iv) the fees and expenses of any "qualified
independent underwriter" or other independent appraiser
participating in an offering pursuant to Schedule E to the
By-laws of the NASD, (v) liability insurance under the
Securities Act, if the Company so desires such insurance,
(vi) fees and expenses of all attorneys, advisors, appraisers
and other persons retained by the Company or any subsidiary of
the Company, (vii) internal expenses of the Company and the
subsidiaries of the Company (including, without limitation, all
salaries and expenses of officers and employees of the Company
and the subsidiaries of the Company performing legal or
accounting duties), (viii) the expense of any annual audit,
(ix) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities
exchange and (x) the expenses relating to printing, word
processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply
with this Agreement.
In connection with any Registration Statement
hereunder or any amendment thereto, the Company shall reimburse
the Holders of the Registrable Securities being registered in
such
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registration for the reasonable out-of-pocket expenses of such
Holders incurred in connection therewith including, without
limitation, the reasonable fees and disbursements of not more
than one counsel (together with appropriate local counsel) chosen
by the Holders of a majority of the Registrable Securities to
be included in such Registration Statement.
2.8 Rule 144. The Company covenants that it will
file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner
and, if at any time the Company is not required to file such
reports, it will, upon the reasonable request of any Holder of
Registrable Securities, make publicly available other
information so long as necessary to permit sales pursuant to
Rule 144 and Rule 144A under the Securities Act. The Company
further covenants that it will take such further action as any
Holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided
by (a) Rule 144 and Rule 144A under the Securities Act, as such
Rules may be amended from time to time, or (b) any similar rule
or regulation hereafter adopted by the SEC. Upon the request
of any Holder of Registrable Securities, the Company will
deliver to such Holder a written statement as to whether it has
complied with such information requirements.
SECTION 3. INDEMNIFICATION
3.1 Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Holder and each
Person, if any, who controls any Holder within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims,
damages and liabilities, joint or several, to which such Holder
or controlling Person may become subject, under the Securities
Act or otherwise, caused by any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement or any Prospectus or any amendment or
supplement thereto or any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
Holder for any legal or other expenses reasonably incurred by
such Holder in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses
are
23
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incurred; provided, however, that the Company will not be
liable insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished
in writing to the Company by any Holder expressly for use
therein; and provided further, that the Company shall not be
liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or
omission or alleged omission in the Prospectus, if such untrue
statement or alleged untrue statement or omission or alleged
omission is completely corrected in an amendment or supplement
to the Prospectus and the seller of Registrable Securities
thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of
Registrable Securities to the person asserting such loss,
claim, damage, or liability after the Company had furnished
such seller with a sufficient number of copies of the same or
if the seller received written notice from the Company of the
existence of such untrue statement or alleged untrue statement
or omission or alleged omission and the seller continued to
dispose of Registrable Securities prior to the time of the
receipt of either (A) an amended or supplemented Prospectus
which completely corrected such untrue statement or omission or
(B) a notice from the Company that the use of the existing
Prospectus may be resumed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of any Holder or any Person controlling such Holder
within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act.
3.2 Indemnification by Holder of Registrable
Securities. Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Company's
directors, the Company's officers who sign the Registration
Statement and any person controlling the Company to the same
extent as the foregoing indemnity from the Company to each
Holder set forth in Section 3.1, but only with reference to,
and in conformity with, information relating to such Holder
furnished in writing by such Holder expressly for use in a
Registration Statement, the Prospectus or any preliminary
prospectus, or any amendment or supplement thereto and will
reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses
are incurred. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of
the Company or any such
24
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director, officer or Person controlling the Company within
the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act and shall survive the transfer
of such securities by such Holder.
3.3 Conduct of Indemnification Proceeding. In case
any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which
indemnity may be sought pursuant to either Section 3.1 or
Section 3.2, such Person (the "indemnified party") shall
promptly notify the Person against whom such indemnity may be
sought (the "indemnifying party") in writing; but the omission
so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party
otherwise than as provided above. In case any such proceeding
is instituted against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the
indemnifying party shall have the right to retain counsel
satisfactory to such indemnified party to defend against such
proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or
(ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them or (iii) the indemnifying
party has not retained counsel to defend such proceeding. It
is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the
same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing
by the Holders of a majority of the Registrable Securities
included in such Registration Statement in the case of parties
indemnified pursuant to Section 3.1 and by the Company in the
case of parties indemnified pursuant to Section 3.2. All fees
and expenses which an indemnified party is entitled to receive
from an indemnifying party under this Section 3 shall be
reimbursed as they are incurred. No indemnifying party shall,
without prior written consent of the indemnified party (which
shall not be unreasonably withheld or delayed), effect any
settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party
25
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and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are
the subject matter of such action.
3.4 Contribution. If the indemnification provided
for in Section 3.1 or Section 3.2 is unavailable as a matter of
law to an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then each
indemnifying party under either such Section, in lieu of
indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of the
Holders of Registrable Securities covered by the Registration
Statement in question on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Company,
or by the Holders of Registrable Securities covered by the
Registration Statement in question and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company and the Holders agree that it would not
be just and equitable if contribution pursuant to this
Section 3 were determined by pro rata allocation or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding
paragraph of this Section 3.4 shall be deemed to include,
subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 3, no
Holder shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable
Securities sold by such Holder and distributed to the public
were offered to the public exceeds the amount of any damages
which such Holder has otherwise been required to pay by reason
of such untrue statement or omission or alleged omission. No
person guilty of fraudulent
26
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misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
3.5 Other Indemnities. The obligations of the
Company and of each of the Holders under this Section 3 shall
be in addition to any liability which the Company or which any
of the Holders may otherwise have.
SECTION 4. MISCELLANEOUS
4.1 Remedies. In the event of a breach by the
Company of any of its obligations under this Agreement, each
Holder of Registrable Securities, in addition to being entitled
to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement.
4.2 No Inconsistent Agreements. The Company shall
not, after the date of this Agreement, enter into any agreement
with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions
hereof. The Company will not enter into any agreement with
respect to any of its securities which will grant to any Person
"piggyback" rights with respect to any Registration Statement
filed pursuant to Section 2.1 of this Agreement.
4.3 Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the prior
written consent of Holders of at least a majority of the then
outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the
rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable
Securities may be given by Holders of at least a majority of
the Registrable Securities being sold by such Holders pursuant
to such Registration Statement; provided, however, that the
provisions of this sentence may not be amended, modified or
supplemented except in
27
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accordance with the provisions of the immediately preceding
sentence. The last sentence of the definition of Registrable
Securities and this Section 4.3 may not be amended, modified
or supplemented, and waivers or consents to departures therefrom
may not be given at any time.
4.4 Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air
courier or telecopier:
(i) if to a Holder of Registrable Securities, at the
most current address given by such Holder to the Company
in accordance with the provisions of this Section 4.4,
which address initially is, with respect to each Holder,
the address set forth on the signature page attached
hereto; and
(ii) if to the Company, 1211 Avenue of the Americas,
New York, New York 10036, Attention: Corporate Secretary,
Telecopier No. (212) 444-4696 with a copy to Debevoise &
Plimpton, 875 Third Avenue, New York, New York 10022,
Attention: Meredith M. Brown, Esq., Telecopier No. (212)
909-6836.
All such notices and communications shall be deemed
to have been duly given: when delivered by hand, if personally
delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; one business day after being
timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
4.5 Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation
and without the need for an express assignment, subsequent
Holders of Registrable Securities.
4.6 Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same Agreement.
4.7 Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
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4.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
4.9 Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by
such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or
unenforceable.
4.10 Entire Agreement. This Agreement, together
with the Purchase Agreement, is intended by the parties as a
final expression of their agreement, and is intended to be a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter contained herein and therein. This Agreement and the
Purchase Agreement supersede all prior agreements and
understandings between the parties with respect to such subject
matter.
4.11 Attorneys' Fees. As between the parties to
this Agreement, in any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof
is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
4.12 Securities Held by the Company or Its
Subsidiaries. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or by any
of its Subsidiaries shall not be counted in determining whether
such consent or approval was given by the Holders of such
required percentage.
29
S-1
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/ R.A. Kershaw
Name: R.A. Kershaw
Title: Vice President & Treasurer
Address:
1211 Avenue of the Americas
44th Floor
New York, New York 10036
Telecopy No. (212) 444-4696
Attention: Corporate Secretary
30
S-2
AMERICAN HOME ASSURANCE COMPANY
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
Address:
70 Pine Street
New York, New York 10270
Telephone No. (212) 770-7000
Attention: Corporate Secretary
31
S-3
COMMERCE AND INDUSTRY INSURANCE
COMPANY
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
Address:
70 Pine Street
New York, New York 10270
Telephone No. (212) 770-7000
Attention: Corporate Secretary
32
S-4
THE INSURANCE COMPANY OF THE STATE OF
PENNSYLVANIA
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
Address:
70 Pine Street
New York, New York 10270
Telephone No. (212) 770-7000
Attention: Corporate Secretary
1
EXHIBIT G
Amendment Number 2 to Rights Agreement
The Rights Agreement dated as of June 11, 1987,
between Alexander & Alexander Services Inc. (the "Company") and
First Chicago Trust Company of New York, as amended and
restated as of March 22, 1990, as amended April 21, 1992 (the
"Rights Agreement"), is hereby amended, effective as of June 6,
1994, as follows. All capitalized terms used herein without
definition shall have the meanings assigned to such terms in
the Rights Agreement.
A. Notwithstanding anything to the contrary in the
Rights Agreement, none of the following events shall (a) cause
any person to become an Acquiring Person, (b) cause the
Distribution Date or the Shares Acquisition Date to occur, or
(c) give rise to a Section 11(a)(ii) Event:
1. The acquisition of 8% Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock")
pursuant to the terms of a Stock Purchase and Sale
Agreement dated June 6, 1994 between the Company and
American International Group, Inc. ("AIG") (the "Purchase
Agreement").
2. The acquisition of Class D Common Stock
("Class D Stock") of the Company upon conversion of the
Series B Preferred Stock in accordance with the terms of
the Series B Preferred Stock.
3. The acquisition of Common Stock in exchange for
Class D Stock in accordance with the terms of the Class D
Stock.
4. The acquisition of Common Stock upon conversion
of the Series B Preferred Stock in accordance with the
terms of the Series B Preferred Stock.
5. The acquisition by AIG or its Affiliates of any
securities of the Company and the acquisition of any such
securities by any transferee thereof, to the extent that
such acquisition occurs at or after the time that (i) the
Company shall consent or agree to the acquisition of, or
the commencement of a tender offer for, or the Board of
Directors of the Company shall recommend or, within 10
business days after the commencement of the tender offer,
not recommend that shareholders reject, a tender offer
for, "beneficial ownership" (as defined in Rule 13d-3
under the Exchange Act) by any "person" or "group" (within
2
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the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("the Exchange
Act")), of securities of the Company entitled to vote
generally in the election of directors, or securities
convertible into or exchangeable for such securities
(collectively, "Designated Securities"), representing,
when added to the Designated Securities already owned by
such person or group, thirty-five percent (35%) or more of
such Designated Securities; (ii) the Company shall amend,
modify or supplement, or waive the benefit of, this
Agreement, as amended to date, so as to permit any
acquisition of beneficial ownership of thirty-five percent
(35%) or more of the Designated Securities without causing
such person or group to become an Acquiring Person or
without causing the Distribution Date or the Shares
Acquisition Date to occur or without giving rise to a Sec-
tion 11(a)(ii) Event; (iii) the Company shall take any
action under Section 3-603(c) of the Maryland General
Corporation Law to exempt any transaction between the
Company and any of its subsidiaries, on the one hand, and
any such person or group, or any affiliates of any person
or group, on the other hand, who (A) acquire, own or hold
beneficial ownership of Designated Securities representing
thirty-five percent (35%) or more of such Designated
Securities from the provisions of Title 3, Subtitle 6 of
the Maryland General Corporation Law or (B) acquire, own
or hold beneficial ownership of Designated Securities
representing ten percent (10%) or more of such Designated
Securities unless such other person or group, or any
affiliate of such person or group, enters into a
standstill agreement with the Company limiting the
acquisition of Designated Securities by such other person
or group, or any affiliates of such person or group, to
less than 35% of the Designated Securities and such
standstill agreement remains in full force and effect;
(iv) the Company shall issue, sell or transfer, in one or
a series of related transactions, Designated Securities to
any person or group if after giving effect thereto said
person or group shall have, or shall have the then
contractual right to acquire through conversion, exercise
of warrants or otherwise, more than thirty-five percent
(35%) of the combined voting power to vote generally in
the election of directors of the Company; or (v) the
Company shall agree to merge or consolidate with or into
any person, firm, corporation or other legal entity or
shall agree to sell all or substantially all its assets to
any person, firm, corporation or other legal entity other
than (i) a merger or consolidation of one
3
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subsidiary of the Company into another or the Company, or
(ii) a merger or consolidation in which the securities of
the Company outstanding before the merger or consolidation
are not affected and in which the Company issues equity
securities having an aggregate market value of less than 20%
of the total market value of the Company's equity securities
outstanding prior to such merger or consolidation.
B. Shares of Class D Stock will be treated under
the Rights Agreement as if they were Class C Shares. Without
limiting the generality of the foregoing, Rights shall be
issued in respect of all shares of Class D Stock that are
issuable upon conversion of the Series B Preferred Stock, prior
to the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date, as contemplated by Section 3 of
the Rights Agreement, provided that, at the option of any
holder of Class D Stock, any securities issued upon exercise of
such Rights shall be voting only to the extent that the Class D
Stock is voting.
This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument. In all respects not inconsistent with the terms
and provisions of this amendment, the Rights Agreement is
hereby ratified, adopted, approved and confirmed.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed and their respective corporate
seals to be hereunto affixed and attested.
ATTEST: ALEXANDER & ALEXANDER
SERVICES INC.
/s/ Andrea Schuman By: /s/ R.A. Kershaw
Attorney Vice President & Treasurer
ATTEST: FIRST CHICAGO TRUST
COMPANY OF NEW YORK
/s/ Michael J. Kane By: /s/ Joanne Gorostiola
Customer Service Operator Assistant Vice President
1
EXHIBIT H
AGREEMENT OF JOINT FILING
In accordance with Rule 13D-1(f) under the Securities
Exchange Act of 1934, as amended, the undersigned hereby agree
to the joint filing on behalf of each of them of a Statement on
Schedule 13D, or any amendments thereto, with respect to the
Common Stock, par value $1.00 per share, of Alexander & Alexander
Services Inc. and that this Agreement be included as an Exhibit
to such filing.
Each of the undersigned parties represents and warrants
to the other that the information contained in any amendment thereto
about it will be, true, correct and complete in all material respects
and in accordance with all applicable laws. Each of the undersigned
parties agrees to inform the other of any changes in such information
or of any additional information which would require any amendment
to Schedule 13D and to promptly file such amendment.
Each of the undersigned parties agrees to indemnify
the other for any losses, claims, liabilities or expenses (including
reasonable legal fees and expenses) resulting from, or arising in
connection with, the breach by such party of any of its representations,
warranties or agreements in this Agreement.
This Agreement may be executed in any number of counter-
parts, each of which shall be deemed to be an original and all of
which together shall be deemed to constitute one and the same
Agreement.
IN WITNESS WHEREOF, the undersigned hereby execute this
Agreement as of July 18, 1994.
AMERICAN INTERNATIONAL GROUP, INC.
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Vice Chairman-Finance
AMERICAN HOME ASSURANCE COMPANY
2
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
COMMERCE AND INDUSTRY INSURANCE
COMPANY
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
THE INSURANCE COMPANY OF THE STATE
OF PENNSYLVANIA
By: /s/ Edward E. Matthews
Name: Edward E. Matthews
Title: Senior Vice President-Finance
