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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 14, 1998
CMAC INVESTMENT CORPORATION
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(Exact name of registrant specified in Charter)
DELAWARE 1-11356 23-2691170
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
1601 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103
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(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (215) 564-6600
Not Applicable
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(Former name and former address, if changed since last report)
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Item 5. Other Events.
On April 14, 1998 the Board of Directors of CMAC Investment
Corporation (the "Company") declared a dividend distribution of one right (a
"Right") for each outstanding share of Common Stock, $.001 par value (each, a
"Common Share"), of the Company to stockholders of record at the close of
business on May 5, 1998. Each Right entitles the registered holder to purchase
from the Company a unit consisting of one one-thousandth of a share (a "Unit")
of the Series A Junior Participating Preferred Shares, par value $.001 per
share, of the Company (the "Preferred Shares"), or a combination of securities
and assets of equivalent value, at a Purchase Price of $300 per Unit, subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The Bank of New York,
as Rights Agent.
Initially, ownership of the Rights will be evidenced by the
Common Share certificates representing shares then outstanding, and no separate
Rights Certificates will be distributed. The Rights will separate from the
Common Shares and a distribution date will occur (the "Distribution Date") upon
the earlier of (i) ten (10) business days following a determination by the Board
of Directors that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 12% or more of the outstanding Common Shares (the "Stock
Acquisition Date"), or (ii) ten (10) business days following the commencement of
a tender offer or exchange offer that would result in a person or group
beneficially owning 12% or more of the outstanding Common Shares. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Share
certificates, (ii) new Common Share certificates issued after May 5, 1998 will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Shares outstanding will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate and will be transferred with and only with such
Common Share certificates. Therefore, the surrender for transfer of any
certificates for Common Shares outstanding will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on May 5, 2008, unless earlier redeemed by
the Company as described below or unless a transaction under Section 13(d) of
the Rights Agreement has occurred.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Shares as of the close of
business on the Distribution Date and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, and except in connection with the exercise of employee
stock options or stock appreciation rights or under any other benefit plan for
employees or directors or in connection with the exercise of warrants or
conversion of convertible securities, only Common Shares issued after May 5,
1998 and prior to the Distribution Date will be issued with Rights.
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Except in the circumstances described below, after the
Distribution Date each Right will be exercisable for one one-thousandth of a
Preferred Share (a "Preferred Share Fraction"). Each Preferred Share Fraction
carries voting and dividend rights that are intended to produce the equivalent
of one Common Share. The voting and dividend rights of the Preferred Shares are
subject to adjustment in the event of dividends, subdivisions and combinations
with respect to the Common Shares of the Company. In lieu of issuing
certificates for Preferred Share Fractions which are less than an integral
multiple of one Preferred Share (i.e. 1,000 Preferred Share Fractions), the
Company may pay cash representing the current market value of the Preferred
Share Fractions.
In the event that at any time following the Stock Acquisition
Date, (i) the Company is the surviving corporation in a merger with an Acquiring
Person and its Common Shares remain outstanding, (ii) a person, including
affiliates and associates, becomes the beneficial owner of more than 12% of the
then outstanding Common Shares other than pursuant to a tender offer that
provides fair value to all shareholders, (iii) an Acquiring Person engages in
one or more "self-dealing" transactions as set forth in the Rights Agreements,
or (iv) during such time as there is an Acquiring Person an event occurs that
results in such Acquiring Person's ownership interest being increased by more
than one percent (1%) (e.g., a reverse stock split), each holder of a Right will
thereafter have the right to receive, upon exercise, Common Shares (or, in
certain circumstances, cash, property or other securities of the Company) having
a value equal to two times the exercise price of the Right. In lieu of requiring
payment of the Purchase Price upon exercise of the Rights following any such
event, the Company may permit the holders simply to surrender the Rights, in
which event they will be entitled to receive Common Shares (and other property,
as the case may be) with a value of 50% of what could be purchased by payment of
the full Purchase Price. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in clauses (i), (ii), (iii) or (iv) of
this paragraph, all Rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person who
was involved in the transaction giving rise to any such event will be null and
void. However, Rights are not exercisable following the occurrence of any of the
events set forth above until such time as the Rights are no longer redeemable by
the Company as set forth below.
For example, at an exercise price of $300 per Right, each Right
not otherwise voided following an event set forth in the preceding paragraph
would entitle its holder to purchase $600 worth of Common Shares (or other
consideration, as noted above) for $300. Assuming that the Common Shares had a
per share value of $60 at such time, the holder of each valid Right would be
entitled to purchase ten Common Shares for $300. Alternatively, the Company
could permit the holder to surrender each Right in exchange for five Common
Shares (with a value of $300) without the payment of any consideration other
than the surrender of the Right.
In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction in which the
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Company is not the surviving corporation (other than a merger that is described
in, or that follows a tender offer or exchange offer described in, the second
preceding paragraph), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common shares of the acquiring company having a value
equal to two times the exercise price of the Right. Again, provision is made to
permit surrender of the Rights in exchange for one-half of the value otherwise
purchasable. The events set forth in this paragraph and in the second preceding
paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of Preferred
Shares or other securities or property issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) if holders of the Preferred Shares are granted certain
rights or warrants to subscribe for Preferred Shares or convertible securities
at less than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments amount to at least one percent (1%) of
the Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading date prior to the date of exercise.
At any time until ten (10) days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$.001 per Right. That ten (10) day redemption period may be extended by the
Board of Directors so long as the Rights are still redeemable. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem will
require the concurrence of a majority of the Continuing Directors. Immediately
upon the action of the Board of Directors ordering redemption of the Rights,
with, where required, the concurrence of the Continuing Directors, the Rights
will terminate and the only right of the holders of Rights will be to receive
the $.001 redemption price.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of the
Rights Agreement, and any person who is subsequently elected to the Board if
such person is recommended or approved by a majority of the Continuing
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the
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event that the Rights become exercisable for Preferred Shares (or other
consideration) of the Company or for common shares of the acquiring company as
set forth above.
Other than those provisions relating to certain principal
economic terms of the Rights, any of the provisions of the Rights Agreement may
be amended by the Board of Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board (in certain circumstances with the concurrence of the
Continuing Directors) in order to cure any ambiguity, to make changes that do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an Exhibit to this Form 8-K. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
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4 Rights Agreement, dated as of April 14, 1998,
between CMAC Investment Corporation and The Bank
of New York, as Rights Agent.
99 Press Release dated April 20, 1998.
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Signature
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CMAC INVESTMENT CORPORATION
By: /s/ Howard S. Yaruss
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Name: Howard S. Yaruss
Title: Senior Vice President
Dated: April 30, 1998
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Exhibit No. Exhibit Page
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4 Rights Agreement, dated as of April 14, 1998,
between CMAC Investment Corporation and The Bank
of New York, as Rights Agent.
99 Press Release dated April 20, 1998.
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