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): September 11, 1998
EXEL Limited
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(Exact name of registrant as specified in its charter)
Cayman Islands 1-10804 98-0191089
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Cumberland House, 1 Victoria Street
Hamilton, Bermuda HM 11
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (441) 292-8515
None
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(Former name or former address, if changed since last report.)
Item 5. Other Events.
On September 11, 1998 the Board of Directors of EXEL Limited (the
"Company") declared a dividend distribution of one Right for each outstanding
Ordinary Share, U.S. $.01 par value (the "Ordinary Shares"), of the Company. The
distribution is payable on October 30, 1998 (the "Record Date") to the
shareholders of record on the Record Date. Each Right entitles the registered
holder to purchase from the Company one Ordinary Share at a price of U.S. $350
per share (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten days following the date (the "Shares
Acquisition Date") of the public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of a number of Ordinary
Shares equal to 20% or more of the outstanding Ordinary Shares or (ii) ten days
following the commencement or announcement of an intention to make a tender
offer or exchange offer if, upon consummation thereof, such person would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Company's
Ordinary Share certificates outstanding as of the Record Date, by such Ordinary
Share certificate. The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Company's Ordinary
Shares. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Ordinary Share certificates issued after the Record Date upon
transfer or new issuance of the Company's Ordinary Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any of the Company's Ordinary Share certificates outstanding as of
the Record Date will also constitute the transfer of the Rights associated with
the Ordinary Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Company's
Ordinary Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on September 15, 2008, unless earlier redeemed
or exchanged by the Company as described below.
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Exercise of Rights for Ordinary Shares of the Company
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Ordinary Shares are not changed or exchanged,
(ii) a Person becomes an Acquiring Person, (iii) an Acquiring Person engages in
one or more "self-dealing" transactions as set forth in the Rights Agreement, or
(iv) during such time as there is an Acquiring Person, an event occurs (e.g., a
reverse stock split) which results in such Acquiring Person's ownership interest
being increased by more than one percent, at any time following the Distribution
Date, each holder of a Right will thereafter have the right to receive, upon
exercise, Ordinary Shares (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to two times the Purchase Price
of the Right then in effect. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction,
or (ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, ordinary shares of the acquiring company having a value equal to two
times the Purchase Price of the Right then in effect. The events set forth in
this paragraph and in the preceding paragraph are referred to as the "Triggering
Events."
Adjustments to Purchase Price
The Purchase Price payable and the number of Ordinary Shares (or other
securities, as the case may be) issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
dividend of shares on, or a subdivision, combination or reclassification of, the
Ordinary Shares, (ii) upon the grant to holders of the Ordinary Shares of
certain rights or warrants to subscribe for Ordinary Shares or convertible
securities at less than the current market price of the Ordinary Shares or (iii)
upon the distribution to holders of Ordinary Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable in
Ordinary Shares) or of subscription rights or warrants (other than those
referred to above). Prior to the Distribution Date, the Board of Directors of
the Company may make such equitable adjustments as it deems appropriate in the
circumstances in lieu of any adjustment otherwise required by the foregoing.
With certain exceptions, no adjustment in the Purchase Price will be
required until the earlier of (i) three years from the date of the event giving
rise to such adjustment
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or (ii) the time at which cumulative adjustments require an adjustment of at
least one percent in such Purchase Price. No fractional shares will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Ordinary Shares on the last trading date prior to the date of
exercise.
Redemption and Exchange of Rights
At any time prior to 5:00 P.M. New York City time on the tenth day
following the Shares Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of U.S. $.01 per Right (the "Redemption
Price"). After the Shares Acquisition Date, the decision to redeem shall require
the concurrence of a majority of the Independent Directors. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights
with, if required, the concurrence of the Independent Directors, the Company
shall make announcement thereof, and upon such action, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time after the occurrence of any of the events set forth under the
heading "Exercise of Rights for Ordinary Shares of the Company" above, the Board
of Directors may exchange the Rights (other than Rights owned by an Acquiring
Person, which have become void), in whole or in part, at an exchange ratio of
one Ordinary Share, and of other securities, cash or other assets deemed to have
the same value as one Ordinary Share, per Right, subject to adjustment.
Until the Rights are exercised or exchanged for Ordinary Shares, the
holders thereof, as such, will have no rights as shareholders of the Company,
including, without limitation, the right to vote or to receive dividends.
The term "Independent Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the time that any person
becomes an Acquiring Person, and any person who is subsequently elected to the
Board if such person is recommended or elected by a majority of the Independent
Directors, but shall not include an Acquiring Person or any representative
thereof.
Amendments to 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 earlier of the Distribution Date or the
Shares Acquisition Date. After the earlier of the Distribution Date or the
Shares Acquisition Date, the provisions of the Rights Agreement may be amended
by the Board in order to cure any ambiguity, defect or inconsistency, or to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interest of any Acquiring Person); provided, that no supplement
or amendment may be made on or after the earlier of
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the Distribution Date or the Shares Acquisition Date which changes those
provisions relating to the principal economic terms of the Rights. The Board may
also, with the concurrence of a majority of the Independent Directors, extend
the redemption period for up to an additional 20 days.
A copy of the Rights Agreement is filed herewith as Exhibit 4.1. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such Exhibit, which is hereby
incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are filed herewith and incorporated
herein by reference:
4.1 Rights Agreement, dated as of September 11, 1998,
between EXEL Limited and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXEL LIMITED
Date: October 21, 1998 By: /s/ Paul S. Giordano
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Name: Paul S. Giordano
Title: Senior Vice President
and General Counsel
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EXHIBIT INDEX
Number Description
4.1 Rights Agreement, dated as of September 11, 1998, between
EXEL Limited and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent.
7