EXHIBIT 4
THE FIRST AMERICAN FINANCIAL CORPORATION
and
WILMINGTON TRUST COMPANY,
as Rights Agent
____________
RIGHTS AGREEMENT
Dated as of October 23, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Issue of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . 9
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Reservation and Availability of Capital Shares; Registration of Securities . . . . . . . . . . 11
Section 10. Capital Shares Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights . . . . . . . . . 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . . . . 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . 23
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17. Rights Certificate Holder Not Deemed a Shareholder . . . . . . . . . . . . . . . . . . . . . . 29
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . 30
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 27. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 28. Determinations and Actions by the Board of Directors, etc . . . . . . . . . . . . . . . . . . 36
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Exhibit A - Form of Certificate of Determination of Series A Junior Participating Preferred Shares
Exhibit B - Form of Rights Certificate
Exhibit C - Form of Summary of Rights
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 23, 1997 (the "Agreement"), between
The First American Financial Corporation, a California corporation (the
"Company"), and Wilmington Trust Company (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on October 23, 1997 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one preferred share purchase right (individually a "Right" and
collectively the "Rights") for each Common Share (as hereinafter defined)
outstanding at the Close of Business on November 15, 1997 (the "Record Date"),
and has authorized the issuance of one Right (as such number may be
hereinafter adjusted pursuant to the provisions of Section 11(p) hereof) for
each Common Share issued or delivered between the Record Date and the earliest
of the Distribution Date, the date the Rights are redeemed or the Final
Expiration Date (as such terms are hereinafter defined) and as otherwise
provided herein, each Right initially representing the right to purchase one
Preferred Share Fraction (as hereinafter defined) upon the terms and subject
to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term
is hereinafter defined) and Associates (as such term is hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is hereinafter
defined) of 15% or more of the Common Shares then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, (iv) any dividend reinvestment plan of the Company
or (v) any Person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" (X) as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Shares then outstanding;
provided, however, that if a Person shall become the Beneficial Owner of 15%
or more of the Common Shares then outstanding by reason of such an acquisition
and shall, after such acquisition, become the Beneficial Owner of any
additional Common Shares (other than by means of any stock dividend or stock
split), then such Person shall be deemed to be an "Acquiring Person," or (Y)
if within 5 days after such Person would otherwise have become an Acquiring
Person (but for the operation of this subclause Y), such Person notifies the
Board of Directors in writing that such Person became the Beneficial Owner of
15% of more of the Common Shares then outstanding inadvertently and within 2
days after such written notification, such Person is the Beneficial Owner of
less than 15% of the outstanding Common Shares.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to beneficially own, any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights,
exchange rights, rights warrants or options, or otherwise; provided,
however, that a person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange, or (B) at any time prior to the occurrence of a Triggering
Event, securities issuable upon exercise of the Rights or (C) from and
after the occurrence of a Triggering Event, securities issuable upon
exercise of Rights which were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act and any
successor provision thereof), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agree-
ment, arrangement or understanding (whether or not in writing), but
excluding customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities
until the expiration of forty days after the date of such acquisition,
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (c) or disposing of any voting securities of the Company.
(d) "Board of Directors" shall mean the board of directors of the
Company.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
U.S. federal holiday or a day on which banking institutions in the States of
California, Delaware or New York are authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Shares" shall mean the common shares, $1.00 par value of the
Company, except that "Common Shares" when used with reference to any Person
other than the Company shall mean the capital shares of such Person with the
greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(h) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(j) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(k) "Person" shall mean any individual, firm, corporation, limited
liability company, partnership or other entity, and shall include any
successor (by merger or otherwise) to any such entity.
(l) "Preferred Shares" shall mean Series A Junior Participating
Preferred Shares, $1.00 par value, of the Company having the rights and
preferences set forth in the form of Certificate of Determination of Series A
Junior Participating Preferred Shares attached to this Agreement as Exhibit A.
(m) "Preferred Share Fraction" shall mean one one hundred-thousandth of
a Preferred Share.
(n) "Purchase Price" shall have the meaning set forth in Section 4
hereof as adjusted by the provisions of Section 11 hereof.
(o) "Record Date" shall have the meaning set forth in the first Whereas
clause.
(p) "Rights Dividend Declaration Date" shall have the meaning set forth
in the first Whereas clause.
(q) "Section 11(a)(ii) Event" shall mean the event described in Section
11(a)(ii) hereof.
(r) "Section 13 Event" shall mean any event described in clause (x), (y)
or (z) of Section 13(a) hereof.
(s) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person, that an Acquiring Person has become
such.
(t) "Subsidiary" shall mean, with reference to any other Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to elect at
least a majority of the directors or other persons performing similar
functions is beneficially owned, directly or indirectly, by such Person, or
which is otherwise controlled by such Person.
(u) "Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day.
(v) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Shares) in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until Close of Business on the earlier of (i) the tenth day after
the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition
Date occurs before the Record Date, the Close of Business on the Record Date)
or (ii) the Close of Business on the tenth Business Day (or such later date as
may be determined by the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the
Common Shares then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders of the
Common Shares (which certificates for Common Shares shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
Common Shares (including a transfer to the Company). As soon as practicable
after its receipt from the Company of a written notice setting forth the
Distribution Date, the Rights Agent will send, at the Company's expense, by
first-class, postage prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company as provided to the Rights Agent,
one or more Rights Certificates, prepared by and at the expense of the
Company, in substantially the form of Exhibit B hereto (individually a "Rights
Certificate" and collectively the "Rights Certificates"), evidencing one Right
for each Common Share so held, subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per Common Share has been
made pursuant to Section 11(p) hereof, prior to the time of distribution of
the Rights Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) and advise the
Rights Agent thereof in writing, so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding on or after the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for Common Shares with or
without a copy of the Summary of Rights attached thereto and the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing Common Shares
with or without a copy of the Summary of Rights attached thereto in respect of
which Rights have been issued shall also constitute the transfer of the Rights
associated with such Common Shares.
(c) Rights shall be issued in respect of all Common Shares which are
issued after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date. Common Share certificates issued after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration
Date, shall also be deemed to be Certificates for Rights and shall bear the
following legend:
"This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between The
First American Financial Corporation and Wilmington Trust Company,
dated October 23, 1997 (as it may be amended, modified or
supplemented from time to time, the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of The First American
Financial Corporation. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate.
The Rights will expire on the Close of Business on October 23, 2007
unless redeemed prior thereto. The First American Financial
Corporation will mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement), whether currently held
by or on behalf of such person or by any subsequent holder, may
become null and void."
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Shares
shall also be the registered holders of the associated Rights, and the
transfer of any of such Certificates shall also constitute the transfer of the
Rights associated with the Common Shares represented by such Certificates. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but before the Distribution date, any Rights associated with such
shares shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date (or, in the case of
Rights issued with respect to Common Shares issued by the Company after the
Record Date, as of the date of issuance of such Common Shares), shall note the
date of issuance and on their face shall entitle the holders thereof to
purchase such number of Preferred Share Fractions as shall be set forth
therein at the price set forth therein (such exercise price per Preferred
Share Fraction, the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing plan, agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors has
determined is part of a plan, agreement, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of the Rights
Agreement."
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, its President or its Secretary, either manually
or by facsimile signature, and shall have affixed thereto the Company's seal
or a facsimile thereof. The Rights Certificates shall be countersigned
manually by the Rights Agent upon the written direction of the Company, and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certifi-
xxxxx, nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or offices designated as the appropriate
place for such purpose, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses
of the respective holders of the Rights Certificates, the certificate number
of each of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights Certifi-
xxxxx.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the Close of Business on the Distribution Date,
and prior to the Close of Business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or certificates, entitling the
registered holder to purchase (or receive) a like number of Preferred Share
Fractions (or, following a Triggering Event, Common Shares, other securities,
cash or other assets, as the case may be) as the Rights Certificate, or
Certificates surrendered then entitled such holder or holders in the case of a
transfer to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment set
forth on the reverse side of each such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, upon the written direction
of the Company, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment from the holder of the Right of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of indem-
nity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights Certifi-
cate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and
delivery, upon the written direction of the Company, to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase set
forth on the reverse side thereof and the certificate contained therein duly
executed, to the Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate
Purchase Price (except as provided in Section 11(q)) with respect to the
surrendered Rights for the total number of the Preferred Share Fractions (or
Common Shares, other securities or property, as the case may be) as to which
such surrendered Rights are exercisable, prior to the earlier of (i) the Close
of Business on October 23, 2007 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof or (iii) the
time at which the Rights are exchanged as provided in Section 11(q) hereof
(the earlier of (i), (ii) or (iii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each Preferred Share Fraction pursuant to the
exercise of a Right shall initially be $265, and shall be subject to
adjustment from time to time as provided in Section 11 and Section 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase set forth on the reverse side
thereof and the certificate contained therein duly executed, accompanied by
payment (except as provided in Section 11(q)), with respect to each Right so
exercised, of the Purchase Price per Preferred Share Fraction (or Common
Shares, other securities or property, as the case may be) to be purchased as
set forth below and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) and Section 14(b) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is the transfer agent for the
Preferred Shares) certificates for the total number of Preferred Share
Fractions to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests subject to applicable law, or
(B) if the Company shall have elected to deposit the total number of Preferred
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of Preferred Share Fractions as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be made (x)
in cash or by certified bank check or money order payable to the order of the
Company, or (y) by delivery of a certificate or certificates (with appropriate
stock powers executed in blank attached thereto) evidencing a number of Common
Shares equal to the then Purchase Price divided by the current market price
(as determined pursuant to Section 11(d) hereof) per Common Share on the date
of such exercise. In the event that the Company is obligated to issue other
securities (including Common Shares) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
executed by the Company and delivered to the Rights Agent together with a
written instruction instructing the Rights Agent to countersign such Rights
Certificate and to deliver the same to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing plan, agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors has determined is part of a plan, agreement, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of its failure to make, or error in
making, any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affili-
ates or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company, otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Shares;
Registration of Securities.
(a) The Company covenants and agrees that at all times it will cause to
be reserved and kept available out of its authorized and unissued Preferred
Shares, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights and, after the occurrence of a
Section 11(a)(ii) Event, shall, to the extent reasonably practicable, so
reserve and keep available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise of the Rights
pursuant to this Agreement.
(b) So long as the Preferred Shares (and following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (and the Company reasonably
anticipates that a Right may be exercised), all shares (or other securities)
reserved for such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), or as soon
as is required by law or regulation following the Distribution Date, as the
case may be, a registration statement or statements under the Securities Act
of 1933 (the "Securities Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form or forms, (ii) cause such
registration statement or statements to become effective as soon as
practicable after such filing and (iii) cause such registration statement or
statements to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
date of the expiration of the Rights. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the securities or
blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement and deliver to the Rights Agent a written notice stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement and written notice to the Rights Agent at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained or the exercise thereof would be in violation of applicable
law.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Share Fractions (and
following the occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and non-
assessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates
and of any certificates for a number of Preferred Share Fractions (or Common
Shares and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Rights
Certificates to a person other than, or the issuance or delivery of a number
of Preferred Share Fractions (or Common Shares and/or other securities, as the
case may be) in respect of a name other than that of, the registered holder of
the Rights Certificates evidencing Rights surrendered for exercise or to issue
or deliver any certificates for a number of Preferred Share Fractions (or
Common Shares and/or other securities, as the case may be) in a name other
than that of the registered holder upon the exercise of any Rights until such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificates at the time of surrender) or until it has been established
to the Company's satisfaction that no such tax is due.
Section 10. Capital Shares Record Date. Each person in whose name any
certificate for a number of Preferred Share Fractions (or Common Shares and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
Preferred Share Fractions (or Common Shares and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Share Fraction (or Common Shares
and/or other securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
shares (fractional or otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Share Fraction (or Common
Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a share-
holder of the Company with respect to shares (fractional or otherwise) for
which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable
in Preferred Shares or other capital shares, (B) subdivide the
outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of shares, or (D) issue any share of its
capital shares in a reclassification of the Preferred Shares (including
any such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), except as
otherwise provided in Section 11(a)(ii) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or re-
classification, and the number and kind of Preferred Shares or capital
shares, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of Preferred Shares
or capital shares, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred
Shares (or other capital shares, as the case may be) transfer books of
the Company were open, the holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to any adjustment required pursuant
to Section 11(a)(ii) hereof.
(ii) In the event any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, any dividend reinvestment
plan of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan)
alone or together with its Affiliates and Associates, shall, at any time
after the date hereof, become an Acquiring Person, unless the event
causing such threshold to be crossed is a transaction set forth in
Section 13(a) hereof, or is an acquisition of Common Shares pursuant to a
tender offer or exchange offer for all outstanding Common Shares at a
price and on terms determined by at least a majority of the members of
the Board of Directors who are not officers of the Company and who are
not representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment banking firms,
to be (a) at a price which is fair to shareholders (taking into account
all factors which such members of the Board deem relevant including,
without limitation, the long-term prospects and value of the Company and
the prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value)
and (b) otherwise in the best interests of (1) the Company and its
shareholders (including the possibility that these interests may best be
served by the continued independence of the Company), (2) the Company's
employees, suppliers, creditors, customers and (3) the community in which
the Company operates, then, promptly following the first occurrence of
the event described in Section 11(a)(ii) hereof, proper provision shall
be made so that each holder of a Right (except as provided in Section
11(a)(iii), and in Section 7(e) hereof) shall thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of Pre-
ferred Share Fractions, such number of Common Shares of the Company as
shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of Preferred Share Fractions for which
a Right was exercisable by such holder immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(such product, following such first occurrence, shall thereafter be
referred to as the Purchase Price for each Right and for all purposes of
this Agreement) by 50% of the current market price (determined pursuant
to Section 11(d) hereof) per Common Share on the date of such first
occurrence (such number of Common Shares are herein called the
"Adjustment Shares").
(iii) In the event that the number of Common Shares which are
authorized but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient, or there shall
not have been received regulatory approvals necessary, in each case to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the applicable Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Shares or other equity securities of
the Company (including, without limitation, preferred shares, or
Preferred Share Fractions), which the Board of Directors has deemed to
have the same value as Common Shares (such shares, "common share
equivalents")), (4) debt securities of the Company, (5) other assets or
(6) any combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors; provided,
however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
first occurrence of (x) a Section 11(a)(ii) Event or (y) the date on
which the Company's right of redemption pursuant to Section 23(a) expires
(the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment
of the Purchase Price, Common Shares (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended by resolution of the
Board of Directors to the extent necessary, but not more than ninety (90)
days following the first occurrence of a Section 11(a)(ii) Trigger Date,
in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares, to take
any action to obtain any required regulatory approval and/or to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement and deliver to
the Rights Agent a written notice stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
and written notice to the Rights Agent at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iii), the value
of the Common Shares shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Common Share on the Section
11(a)(ii) Trigger Date and the value of any common share equivalents
shall be deemed to have the same value as the Common Shares on such date.
(iv) If the rules of the national securities exchange, registered as
such pursuant to Section 6 of the Exchange Act, or of the national
securities association, registered as such pursuant to Section 15A of the
Exchange Act, on which the Common Shares are principally traded would
prohibit such exchange or association from listing or continuing to list,
or from authorizing for or continuing quotation and/or transaction
reporting through an inter-dealer quotation system, the Common Shares or
other equity securities of the Company if the Rights were to be exercised
for Common Shares in accordance with subparagraph (ii) of this Section
11(a) because such issuance would nullify, restrict or disparately reduce
the per share voting rights of holders of Common Shares or for any other
reason, the Company shall: (A) determine the Spread and (B) with respect
to each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2)
equity securities of the Company, including, without limitation, "common
share equivalents," other than securities which would have the effect of
nullifying, restricting or disparately reducing the per share voting
rights of holders of Common Shares or otherwise cause the prohibition
described above, (3) debt securities of the Company, (4) other assets, or
(5) any combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined by the
Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors; provided,
however, if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following the
Section 11(a)(ii) Trigger Date, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, cash having an aggregate value equal to
the Spread. To the extent that the Company determines that an action
needs to be taken pursuant to the first sentence of this Section
11(a)(iv), the Company (x) shall provide, subject to Section 7(e), that
such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights, but not longer than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order to decide the
appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement and deliver to
the Rights Agent a written notice stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
and written notice to the Rights Agent at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iv), the value
of the Common Shares shall be the current market price (as determined
pursuant to Section 11(d) hereof) per Common Share on the Section
11(a)(ii) Trigger Date and the value of any "common share equivalent"
shall be deemed to have the same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of
Preferred Shares entitling them to subscribe for or purchase (for a period
expiring within forty-five (45) calendar days after such record date)
Preferred Shares (or shares having the same rights, privileges and preferences
as the Preferred Shares ("Equivalent Preferred Shares")), or securities
convertible into Preferred Shares or Equivalent Preferred Shares at a price
per share of Preferred Shares or Equivalent Preferred Shares (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Preferred Shares) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Shares on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or Equivalent Preferred Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date,
plus the number of additional Preferred Shares and/or Equivalent Preferred
Shares to be offered for subscription or purchase (or onto which the
convertible securities to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred Shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the con-
tinuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend paid out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred Shares, but in-
cluding any dividend payable in capital shares other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Shares on such record date, less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebtedness to be distributed or of such
subscription rights or warrants applicable to a share of Preferred Shares and
the denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Preferred Shares. Such
adjustments shall be made successively whenever such a record date is fixed,
and in the event that such distribution is not made, the Purchase Price shall
be adjusted to be the Purchase Price which would have been in effect if such
record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per Common Share on any date shall be deemed to be the
average of the daily closing price per Common Share for the thirty (30)
consecutive Trading Days immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the current
market price per Common Share on any date shall be deemed to be the
average of the daily closing price per Common Share for the ten (10)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the then current market price per Common
Share is determined during a period following the announcement by the
issuer of such Common Shares of (i) any dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible
into Common Shares (other than the Rights), (ii) any subdivision,
combination or reclassification of such Common Shares, and prior to the
expiration of the requisite thirty (30) Trading Day or ten (10) Trading
Day period, as set forth above, after the exdividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, in each such case, the current
market price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Common Shares are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common
Shares are listed or admitted to trading or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if on any such
date the Common Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a profes-
sional market maker making a market in the Common Shares selected by the
Board of Directors. If on any such date no market maker is making a
market in the Common Shares, the fair value of such shares on such date
as determined in good faith by the Board of Directors shall be used and
shall be conclusive for all purposes. If the Common Shares are not
publicly held or not so listed or traded, current market price per share
shall mean the fair value per share as determined in good faith by the
Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per Preferred Share shall be determined in the same manner
as set forth above for the Common Shares in Section 11(d)(i) (other than
the last sentence thereof). If the current market price per Preferred
Share cannot be determined in the manner provided above or if the
Preferred Shares are not publicly held or listed or traded in a manner
described in Section 11(d)(i), the "current market price" per Preferred
Share shall be conclusively deemed to be an amount equal to $100,000 (as
such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Shares occurring after the date of this Agreement) multiplied by the
current market price per Common Share. If neither the Common Shares nor
the Preferred Shares are publicly held or so listed or traded, "current
market price" per Preferred Share shall mean the fair value per share as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) to the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one ten-thousandth of a Common
Share or other share or one one-billionth of a Preferred Share, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any capital shares other than Preferred Shares,
thereafter the number of such other shares receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in Sections 11(a),
(b), (c), (e), (g), (h), (i), (j), (k), (m) and (q) hereof, and the provisions
of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Share
Fractions (or other consideration, as the case may be) purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediate-
ly prior to the making of such adjustment shall thereafter evidence the right
to purchase, at the adjusted Purchase Price, that number of Preferred Share
Fractions (calculated to the nearest one ten-thousandth) obtained by (i)
multiplying (x) the number of Preferred Share Fractions covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Share Fractions purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of Preferred Share
Fractions for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement and deliver to the Rights Agent a written notice of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Share Fractions issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per Preferred Share Fraction and the number of
Preferred Share Fractions which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of Preferred
Share Fractions issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Share Fractions at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record
date the number of Preferred Share Fractions and other capital shares or
securities of the Company, if any, issuable upon such exercise over and above
the number of Preferred Share Fractions and other capital shares and
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) of Common Shares and other capital shares or securi-
ties upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board of Directors shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that in their good faith judgment the Board of Directors
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of
Preferred Shares at less than the current market price, (iii) issuance wholly
for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holder of its Preferred Shares shall not be
taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than
a Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof) or
(iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding
Common Shares payable in Common Shares, (ii) subdivide the outstanding Common
Shares or (iii) combine the outstanding Common Shares into a smaller number of
shares, the number of Rights associated with each Common Share then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights
thereafter associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator
which shall be the total number of Common Shares outstanding immediately prior
to the occurrence of the event and the denominator of which shall be the total
number of Common Shares outstanding immediately following the occurrence of
such event.
(q)(i) The Board of Directors may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares of the Company at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors
shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any wholly owned Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary,
or any entity holding Common Shares for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(ii) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection (i) of this Section
11(q) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice and
written notice to the Rights Agent of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall promptly
mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other that Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held be each holder of Rights.
(iii) In any exchange pursuant to this Section 11(q), the Company,
at its option, may substitute Preferred Shares (or Equivalent Preferred
Shares as such term is defined in Section 11(b) hereof) for some or all
of the Common Shares exchangeable for Rights, at the initial rate of one
one-hundred thousandth of a Preferred Share (or such a fraction of an
Equivalent Preferred Share) for each Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred
Shares pursuant to the terms thereof, so that the fraction of a Preferred
Share delivered in lieu of each Common Share shall have the same voting
rights as one Common Share.
(iv) In the event that there shall not be sufficient Common Shares
or Preferred Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this
Section 11(q), the Company shall take all such action as may be necessary
to authorize additional Common Shares or Preferred Shares for issuance
upon exchange of the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Shares and the Common Shares, a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Shares) in accordance with Section 25 hereof.
Whenever any determination or calculation is made by the Company as provided
in Section 11 or Section 13 hereof or any action that is subject to
condition(s) or left to the discretion of the Company as provided in Section
11 or Section 13 hereof is taken by the Company, the Company shall promptly
provide written notice thereof to the Rights Agent in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any such
certificate or notice and on any adjustment, determination, calculation or
action therein contained and shall not be deemed to have knowledge of any such
adjustment, determination, calculation or action unless it shall have received
such certificate or notice.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Share Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding Common Shares shall be changed into or
exchanged for shares or other securities of any other Person or cash or any
other property, or (z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which complies
with Section 11(o) hereof), then, and in each such case and except as set
forth in Section 13(f) hereof, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable Common Shares of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of Preferred Share Fractions for which a
Right is exercisable by such holder immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the Section 13 Event, multiplying the Purchase Price in
effect immediately prior to the first occurrence of such Section
11(a)(ii) Event by the number of Preferred Share Fractions for which a
Right was exercisable immediately prior to such first occurrence) and
dividing that product (such product, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50% of the current
market price (determined pursuant to Section 11(d)(i) hereof with respect
to the Common Shares) per Common Share of such Principal Party on the
date of consummation of such Section 13 Event; provided, however, that
the Purchase Price (as theretofore adjusted in accordance with Section
11(a)(ii) hereof) and the number of Common Shares of such Principal Party
so receivable upon exercise of a Right shall be subject to further
adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the Common Shares of such
Principal Party after the occurrence of such consolidation, merger, sale
or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and
duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions
of Section 11 hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its
Common Shares) in connection with the consummation of any such
transaction as may be necessary to insure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Shares thereafter deliverable upon the exercise of
the Rights; provided, however, that, upon the subsequent occurrence of
any Section 13 Event in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right
and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of such
transaction, owned the Common Shares of the Principal Party receivable
upon the exercise of a Right pursuant to this Section 13(a), and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for
such cash, shares, rights, warrants and other property; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer of
any securities into which Common Shares of the Company are converted in
such merger or consolidation, and if no securities are so issued, the
Person that is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons as is the issuer of Common Shares having the
greatest aggregate market value of shares outstanding;
provided, however, that in any such case, (1) if the Common Shares of such
Person is not at such time and has not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act, and
such Person is a direct or indirect Subsidiary of another Person the Common
Shares of which is and has been so registered, "Principal Party" shall refer
to such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and (2) above shall
apply to each of the chains of ownership having an interest in such joint
venture as if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized Common Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section
13 and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense will:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the Blue Sky
laws of such jurisdictions as may be necessary or appropriate;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act;
(iv) use its best efforts, if the Common Shares of the Principal
Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock Exchange or
such other national securities exchange, or, if the Common Shares of the
Principal Party shall not be listed or admitted to trading on the New
York Stock Exchange or a national securities exchange, to cause the
Rights and the securities receivable upon exercise of the Rights to be
authorized for quotation on NASDAQ or on such other quotation system then
in use; and
(v) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Shares of the Principal Party subject to
purchase upon exercise of outstanding Rights.
In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) In case the Principal Party has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with or as a consequence
of, the consummation of a transaction referred to in this Section 13 Common
Shares of such Principal Party at less than the then current market price per
share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Shares of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax of similar provision in connection with the issuance of the
Common Shares of such Principal Party pursuant to the provisions of Section
13, then, in such event, the Company hereby agrees with and for the benefit of
each holder of Rights that it shall not consummate any such transaction unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal party shall have been cancelled,
waived or amended, or that the authorized securities shall be redeemed, so
that the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, and proper
provision shall be made so that the Principal Party shall not, at any time
after the Section 13 Event, enter into any transaction of the type described
in subparagraphs (x) and (y) of Section 13(a) hereof if (i) at the time of or
immediately after such Section 13 Event there are any rights, warrants or
other instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights, (ii) prior to, simultaneously with or immediately
after such Section 13 Event, the stockholders of the Person who constitutes,
or would constitute, the Principal Party for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such Person
or any of its Affiliates or Associates of (iii) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights.
(f) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a tender offer or exchange
offer for all outstanding Common Shares that complies with the provisions of
Section 11(a)(ii) hereof (or a wholly-owned Subsidiary of any such Person or
Persons), (ii) the price per Common Share offered in such transaction is not
less than the price per Common Share paid to all holders of Common Shares
whose shares were purchased pursuant to such tender offer or exchange and
(iii) the form of consideration being offered to the remaining holders of
Common Shares pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(f), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a),
the "current market value" of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of
the Rights for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights selected by the
Board of Directors. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined
in good faith by the Board of Directors shall be used and shall be conclusive
for all purposes.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than integral multiples of Preferred Share Fractions) upon
exercise of the Rights or to distribute certificates which evidence fractional
Preferred Shares (other than integral multiples of Preferred Share Fractions).
In lieu of fractional Preferred Shares that are not Preferred Share Fractions
or integral multiples thereof, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a Preferred Share. For purposes of this Section 14(b), the "current
market value" of one share of Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the "current market
value" of one Common Share. For purposes of this Section 14(c), the current
market value of one Common Share shall be the closing price of a Common Share
(as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except those rights of action vested in the Rights Agent pursuant
to Sections 18 through 20 inclusive, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement. Holders of
Rights shall be entitled to recover the reasonable costs and expenses,
including attorneys' fees, incurred by them in any action to enforce the
provisions of this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Shares;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Common Share certificate)
is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Share certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall, subject to the last sentence of
Section 7(e) hereof, be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Preferred
Share Fractions or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Sec-
tion 24 hereof), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compen-
sation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
defend and hold it harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and performance of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability to
anyone for or in respect of any action taken, suffered or omitted by it in
connection with its performance of this Agreement in reliance upon any Rights
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person
or Persons, or otherwise upon advice of counsel as set forth in Section 20
hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation or association into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation or association resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party or any
corporation or association succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such corporation or association would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of current market prices) be proved or established by the
Company prior to taking, omitting to take or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization and protection to the Rights Agent for any action taken, omitted
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall not be liable to anyone hereunder or in
connection herewith, except for its own gross negligence, bad faith or willful
misconduct, and, without limiting the generality of the foregoing, shall not
be liable for any error of judgment made by it.
(d) The Rights Agent shall not be liable to anyone for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the Rights or the validity or sufficiency of this Agreement or the execution
and delivery hereof (except the due execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual written notice of any such adjustment has been
received by the Rights Agent); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Common Shares or Preferred Shares to be issued pursuant to this Agreement
or any Rights Certificate or as to whether any Common Shares or Preferred
Shares will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept and
follow instructions with respect to the performance of its duties hereunder
from any of the Chairman of the Board, the President, any Vice President, the
Treasurer and the Secretary of the Company, and is hereby authorized to apply
to any of such officers for written advice or instructions in connection with
its rights and duties, and it shall be fully protected in relying on any such
advice or instructions and shall not be liable to anyone for any action taken,
omitted or suffered to be taken by it in good faith in accordance with
instructions of any such officer, or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken, suffered, or omitted by the
Rights Agent under this Agreement and the date on and/or after which such
action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable to anyone for any action taken, or suffered
by, or omission of, the Rights Agent in accordance with the proposal included
in any such application on or after the date specified in such application
(which date shall not be less than five (5) Business Days after the date of
such application unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or suffering any such action (or the
effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or suffered or omitted. The Rights Agent shall have no
duty to take or refrain from taking any action under or in connection with
this Agreement, except as expressly provided herein, and no implied duties or
obligations (including fiduciary duties) shall be read into this Agreement
against the Rights Agent.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided, however, reasonable care
was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur or risk any financial
liability in the performance of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for believing that repay-
ment of such funds or adequate indemnification against such risk or liability
is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse there-
of, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise of transfer
without written instructions from the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing to the Company. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares and Preferred
Shares, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by any registered
holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized, doing business and in good standing under the laws of the United
States or any State thereof, in good standing, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100,000,000 or (b) an affiliate of any such corporation described in
clause (a) above. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but upon
payment of all compensation, expenses and other amounts owing to it the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares and Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Rights Certificates or, prior to the
Distribution Date, the registered holders of Common Shares. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to Common Shares so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i)
no such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors may, at its option, at any time prior to the
earlier of (i) the date on which a Section 11(a)(ii) Event occurs or (ii) the
Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The Company may, at its
option, pay the Redemption Price either in Company securities (the value of
which shall be based (i) if such securities are Common Shares, on the "current
market value" determined in accordance with Section 11(d) hereof or (ii) if
such securities are not Common Shares, on a good faith determination by the
Board of Directors of the fair value thereof, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) or cash or both; provided that if the Company elects to pay
all or part of the Redemption Price in Common Shares, the Company shall not be
required to issue any fractional Common Shares and the number of Common Shares
issuable to each holder of Rights shall be rounded down to the next whole
share.
(b) Immediately upon the redemption of the Rights by the Board of
Directors in accordance with Section 23(a) hereof, evidence of which shall
have been filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of the Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall
give written notice of such redemption to the Rights Agent and the holders of
the outstanding Rights by mailing such notice to the Rights Agent and to all
such holders at each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Dis-
tribution Date, (i) to pay any dividend payable in shares of any class of
capital shares to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend paid out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or series of related transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to the Rights Agent and each holder
of a Rights Certificate, to the extent feasible, and in accordance with
Section 25 hereof, a written notice of such proposed action, which shall
specify the record date for the purposes of such share dividend, distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of
Preferred Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
the Preferred Shares, whichever shall be the earlier.
(b) Upon the occurrence of a Section 11(a)(ii) Event, (i) the Company
shall as soon as practicable thereafter give to the Rights Agent and each
holder of a Rights Certificate, to the extent feasible, in accordance with
Section 25 hereof, a written notice of the occurrence of such event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof
and (ii) all references in the preceding paragraph to Preferred Shares shall
be deemed thereafter to refer to Common Shares and/or, if appropriate, other
securities.
Section 25. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
The First American Financial Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or if
prior to the Distribution Date, to the holder of certificates representing
Common Shares) shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution
Date and except as provided for in this Section 26, the Company may, by
resolution of its Board of Directors and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing Common
Shares. From and after the Distribution Date and except as provided for in
this Section 26, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), or (iv) to shorten or lengthen any time
period hereunder; provided, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iv) of this sentence, (A) a time period
relative to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from
an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute such supplement or amendment, provided that
such supplement or amendment does not adversely affect the rights or
obligations of the Rights Agent under this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price, or the number of Preferred Share
Fractions for which a Right is exercisable. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Shares.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares of
which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect as of the date hereof. The Board of Directors shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations (including,
for purposes of Clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board of Directors to
any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the Dis-
tribution Date, registered holders of the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its officer thereunto duly authorized, all as of
the day and year first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By_____________________________________
President
WILMINGTON TRUST COMPANY,
as Rights Agent
By_____________________________________
Authorized Signatory
EXHIBIT A
FORM OF CERTIFICATE OF DETERMINATION OF
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
of
THE FIRST AMERICAN FINANCIAL CORPORATION
Pursuant to Section 401 of the California General Corporations Law
We, President, and Secretary, of The First American Financial
Corporation, a corporation organized and existing under the General
Corporation Law of the State of California, in accordance with the provisions
of Section 401 thereof, DO HEREBY CERTIFY:
(i) That pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation of the said Corporation, the
said Board of Directors on October 23, 1997 adopted the resolution set
forth below creating a series of preferred shares designated as Series A
Junior Participating Preferred Shares; and
(ii) That none of said shares has yet been issued.
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of Article Sixth of its
Articles of Incorporation, the Board of Directors hereby creates a series of
preferred shares of the Corporation, the amount, designation, rights,
preferences and privileges of which are as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Shares" and the
number of shares constituting such series shall initially be one thousand
(1,000), $1.00 par value, such number of shares to be subject to increase or
decrease by action of the Board of Directors as evidenced by a certificate of
determination.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of preferred shares ranking prior and superior to the
shares of Series A Junior Participating Preferred Shares with respect to
dividends, the holders of Series A Junior Participating Preferred Shares shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in
cash on the last day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Shares, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $10.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100,000 times the aggregate per share amount of all
cash dividends, and 100,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in Common Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the common shares, $1.00 par
value, of the Corporation (the "Common Shares") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first Quar-
terly Dividend Payment Date, since the first issuance of any share or fraction
of a share of Series A Junior Participating Preferred Shares. In the event
the Corporation shall at any time after October 23, 1997 (the "Rights
Declaration Date") (i) declare any dividend on Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the amount to which holders of Series A Junior Participating Preferred
Shares were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Shares as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the Common
Shares (other than a dividend payable in Common Shares); provided that, in the
event no dividend or distribution shall have been declared on the Common
Shares during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per
share on the Series A Junior Participating Preferred Shares shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
Series A Junior Participating Preferred Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such Series A Junior
Participating Preferred Shares, unless the date of issue of such share is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of Series A Junior Participating Preferred Shares entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the Series A Junior Participating
Preferred Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Series
A Junior Participating Preferred Shares entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Series A Junior
Participating Preferred Shares shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Series A Junior Participating Preferred Share shall entitle the holder thereof
to 100,000 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the number of votes per share to which holders of Series A Junior
Participating Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of Series
A Junior Participating Preferred Shares and the holders of Common Shares shall
vote together as one class on all matters submitted to a vote of shareholders
of the Corporation.
(C)(i) If at any time dividends on any Series A Junior
Participating Preferred Shares shall be in arrears in an amount equal to
six (6) quarterly dividends thereon, the occurrence of such contingency
shall xxxx the beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and unpaid dividends
for all previous quarterly dividend periods and for the current quarterly
dividend period on all Series A Junior Participating Preferred Shares
then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of preferred shares
(including holders of the Series A Junior Participating Preferred Shares)
(collectively, the "Preferred Shares") with dividends in arrears in an
amount equal to (6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two (2) directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Shares may be
exercised initially at a special meeting called pursuant to subparagraph
(iii) of this Section 3(C) or at any annual meeting of shareholders, and
thereafter at annual meetings of shareholders, provided that neither such
voting right nor the right of the holders of any other series of
Preferred Shares, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of ten percent
in number of Preferred Shares outstanding shall be present in person or
by proxy. The absence of a quorum of the holders of Common Shares shall
not affect the exercise by the holders of Preferred Shares of such voting
right. At any meeting at which the holders of Preferred Shares shall
exercise such voting right initially during an existing default period,
they shall have the right, voting as a class, to fill such vacancies, if
any, in the Board of Directors as may then exist up to two (2) Directors
or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the Preferred
Shares shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the
required number. After the holders of the Preferred Shares shall have
exercised their right to elect Directors in any default period and during
the continuance of such period, the number of Directors shall not be
increased or decreased except by vote of the holders of Preferred Shares
as herein provided or pursuant to the rights of any equity securities
ranking senior to or pari passu with the Series A Junior Participating
Preferred Shares.
(iii) Unless the holders of Preferred Shares shall, during
an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any shareholder or
shareholders owning in the aggregate not less than ten percent (10)% of
the total number of Preferred Shares outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Preferred
Shares, which meeting shall thereupon be called by the Chairman of the
Board, the President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Preferred Shares
are entitled to vote pursuant to this paragraph (C)(iii) shall be given
to each holder of record of Preferred Shares by mailing a copy of such
notice to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 10
days and not later than 60 days after such order or request, such meeting
may be called on similar notice by any shareholder or shareholders owning
in the aggregate not less than ten percent (10)% of the total number of
Preferred Shares outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called during the
period within 60 days immediately preceding the date fixed for the next
annual meeting of the shareholders.
(iv) In any default period, the holders of Common Shares, and
other classes of stock of the Corporation if applicable, shall continue
to be entitled to elect the whole number of Directors until the holders
of Preferred Shares shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x) the
Directors so elected by the holders of Preferred Shares shall continue in
office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the
Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class
of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Shares as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Shares as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in the
Articles of Incorporation or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such
number being subject, however, to change thereafter in any manner pro-
vided by law or in the Articles of Incorporation or by-laws). Any
vacancies in the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of Series A Junior Participating
Preferred Shares shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders
of Common Shares as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Shares as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on Series A Junior
Participating Preferred Shares outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Shares, except dividends paid ratably on
the Series A Junior Participating Preferred Shares and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Shares, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation
or winding up) to the Series A Junior Participating Preferred Shares; or
(iv) redeem or purchase or otherwise acquire for consideration
any Series A Junior Participating Preferred Shares, or any shares of
stock ranking on a parity with the Series A Junior Participating
Preferred Shares, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Series A Junior Participating
Preferred Shares purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares upon their cancellation become
authorized but unissued Preferred Shares and may be reissued as part of a new
series of Preferred Shares to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Shares unless, prior thereto, the holders of Series A Junior Participating
Preferred Shares shall have received $100,000 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of Series
A Junior Participating Preferred Shares unless, prior thereto, the holders of
Common Shares shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100,000 (as appropriately adjusted as set forth
in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Shares) (such
number in clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common Adjustment
in respect of all outstanding Series A Junior Participating Preferred Shares
and Common Shares, respectively, holders of Series A Junior Participating
Preferred Shares and holders of Common Shares shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Shares and Common
Shares, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating Preferred
Shares, then such remaining assets shall be distributed ratably to the holders
of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Shares.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of Common Shares outstanding immediately after such event
and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the Common Shares are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the Series A
Junior Participating Preferred Shares shall at the same time be similarly ex-
changed or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each Common Share is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Shares payable in Common
Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the
outstanding Common Shares into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of Series A Junior Participating Preferred Shares shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
Section 8. No Redemption. The Series A Junior Participating
Preferred Shares shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred
Shares shall rank junior to all other series of the Corporation's Preferred
Shares as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Junior Participating Preferred Shares so as to affect them adversely without
the affirmative vote of the holders of two-thirds (2/3) or more of the
outstanding Series A Junior Participating Preferred Shares, voting separately
as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Shares may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Shares.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and
do affirm the foregoing as true under the penalties of perjury this 23rd day
of October, 1997.
____________________________
Xxxxxx X. Xxxxxxx
President
Attest:
Xxxx X Xxxxxxx
Secretary
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
Rights Certificate
THE FIRST AMERICAN FINANCIAL CORPORATION
This certifies that , or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of October 23, 1997 (as it may be amended,
modified or supplemented from time to time, the "Rights Agreement"), between
The First American Financial Corporation, a California corporation (the
"Company"), and Wilmington Trust Company, a Delaware banking corporation (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 P.M.
(New York time) on the Expiration Date (as defined in the Rights Agreement),
which shall not be later than October 23, 2007 at the office or offices of the
Rights Agent designated for such purpose, or its successors as Rights Agent,
one one hundred-thousandth of a share of the Company's Series A Junior
Participating Preferred Shares, $1.00 par value (the "Preferred Shares"), at a
purchase price of $265 (the "Purchase Price") per one one hundred-thousandth
of a Preferred Share (such fraction, a "Preferred Share Fraction"), upon
presentation and surrender of this Rights Certificate with the Form of
Election to Purchase set forth on the reverse hereof and the Certificate
contained therein duly executed. Except as otherwise provided in Section
11(q) of the Rights Agreement, the Purchase Price shall be paid at the
election of the holder in cash or by certified bank check or money order
payable to the order of the Company. The number of Rights evidenced by this
Rights Certificate and the number of Preferred Share Fractions which may be
purchased upon exercise thereof and the Purchase Price per Preferred Share
Fraction, set forth above, are the number of Rights, number of Preferred Share
Fractions and Purchase Price as of _____________, 19__
Insert the Distribution Date., based on the Preferred Shares as
constituted at such date.
Except as otherwise provided in the Rights Agreement, upon the occurrence
of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or any Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of
a person who, concurrently with or after such transfer, became an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall
become null and void and no holder hereof shall have any rights with respect
to such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Preferred Shares or other securities, which may be purchased upon
the exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holder of the Rights Certificate, which
limitations of rights include the temporary suspension of the exercisability
of such Rights under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the office of the
Company as set forth in the Rights Agreement and are also available upon
written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Share Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Board of Directors of the Company
at its option at a redemption price of $.001 per Right at any time prior to
the earlier of (i) the date on which a Section 11(a)(ii) Event occurs and (ii)
the Final Expiration Date.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one hundred-thousandth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of __________, ____
ATTEST: THE FIRST AMERICAN FINANCIAL
CORPORATION
By:______________________ By:____________________________
Secretary President
WILMINGTON TRUST COMPANY,
as Rights Agent
By:____________________________
Authorized Signatory
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.)
FOR VALUE RECEIVED _______ hereby sells, assigns and transfers unto
_______________ (Please print name and address of transferee) this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ________________, Attorney, to
transfer the within Rights Certificate on the books of the within-named
Company with full power of substitution.
Dated:________________ ________________________
Signature
Signature Guaranteed:______________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [
] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_________________ _______________________
Signature Guaranteed:______________________________________
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights
represented by the Rights Certificate.)
To: THE FIRST AMERICAN FINANCIAL CORPORATION
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name
of and delivered to:
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Please insert social security or other identifying number: __________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number:____________________
Dated:________ _______________________________________________________
Signature
Signature Guaranteed: ________________________________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [
] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:______________________ _______________________________________________
Signature
Signature Guaranteed:_________________________________________________________
NOTICE
The signatures to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On October 23, 1997, the Board of Directors of The First American
Financial Corporation, a California corporation (the "Company"), declared a
dividend distribution of one Right for each outstanding share of common stock,
$1.00 par value (the "Common Shares") of the Company, to shareholders of
record at the close of business on November 15, 1997 (the "Record Date").
Each Right entitles the record holder to purchase from the Company one one
hundred-thousandth of a share ("Preferred Share Fraction") of the Company's
Series A Junior Participating Preferred Shares, $1.00 par value (the
"Preferred Shares") at a price of $265 (the "Purchase Price"), subject to
adjustment in certain circumstances. Except as otherwise provided in the
Rights Agreement, the Purchase Price may be paid, at the election of the
registered holder, in cash or by certified bank check or money order payable
to the order of the Company. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of October 23, 1997 (as it may be
amended, modified or supplemented from time to time, the "Rights Agreement"),
between the Company and Wilmington Trust Company, as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding Common Shares, and no Rights Certificates will be distributed.
The Rights will separate from the Common Shares and a "Distribution Date" will
occur upon the earlier of (i) the close of business on the tenth day after the
date (the "Share Acquisition Date") of a 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 15% or
more of the outstanding Common Shares, or (ii) the close of business on the
tenth Business Day (or such later date as may be determined by the Company's
Board of Directors prior to such time as any person becomes an Acquiring
Person) after the commencement of a tender offer or exchange offer if, upon
consummation thereof, the person or group making such offer would be the
beneficial owner of 15% or more of the outstanding Common Shares. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Share
certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
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. As soon as practicable
following 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, such separate Rights Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on October 23, 2007 unless earlier redeemed by
the Company as described below.
Except in the circumstances described below, after the Distribution Date
each Right will be exercisable into 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 fractions of Preferred Shares
(other than fractions which are integral multiples of Preferred Share
Fractions), the Company may pay cash in accordance with the Rights Agreement.
In the event that, at any time following the Distribution Date, a Person
becomes an Acquiring Person (other than pursuant to an offer for all
outstanding Common Shares at a price and on terms which the majority of the
independent Directors determine to be fair to, and otherwise in the best
interests of, shareholders), the Rights Agreement provides that proper
provision shall be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof, Common Shares (or, in certain
circumstances, cash, property or other securities, including Preferred Share
Fractions, of the Company) having a value equal to two (2) 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 provide that
each Right be exchanged for one Common Share (or cash, property or other
securities, as the case may be). The only right of a holder of Rights
following the Company's election to provide for such exchange shall be to
receive the above described securities. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person shall immediately
become null and void.
For example, at an exercise price of $265 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following an event set
forth in the preceding paragraph would entitle its holder to purchase $530
worth of Common Shares (or other equivalent securities, as noted above) for
$265. Assuming that the Common Shares had a per share value of $132.50 at
such time, the holder of each valid Right would be entitled to purchase four
Common Shares (or other equivalent securities, as noted above) for $265.
Alternatively, the Company could permit the holder to surrender each Right in
exchange for one Common Share (with a value of $132.50) without the payment of
any consideration other than the surrender of the Right.
In the event that, at any time following the Share Acquisition Date, (i)
the Company engages in a merger or consolidation in which the Company is not
the surviving corporation, (ii) the Company engages in a merger or con-
solidation with another person in which the Company is the surviving
corporation, but in which all or part of its Common Shares are changed or
exchanged, or (iii) 50% or more of the Company's assets or earning power is
sold or transferred (except with respect to clauses (i) and (ii), a merger or
consolidation (a) which follows an offer described in the second preceding
paragraph and (b) in which the amount and form of consideration is the same as
was paid in such offer), the Rights Agreement provides that proper provision
shall be made so that each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right to
receive, upon the exercise thereof, common stock of the acquiring company
having a value equal to two (2) times the exercise price of the Right. 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 Preferred Share Fractions
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 the Preferred Shares or other capital shares, or a
subdivision, combination or reclassification of the Preferred Shares, (ii)
upon the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for Preferred Shares or securities convertible into
Preferred Shares 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 cash
dividends or dividends payable in Preferred Shares) 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 require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares (other than fractions
which are integral multiples of Preferred Share Fractions) will be issued upon
exercise of the Rights and, in lieu thereof, a cash payment 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 prior to the earlier of (i) the date on which a person
becomes an Acquiring Person and (ii) the Final Expiration Date, the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right, payable in cash or securities or both (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
Issuance of Common Shares upon exercise of Rights is subject to
regulatory approval. Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to shareholders or to the Company,
shareholders may, depending upon the circumstances, recognize taxable income
in the event that the Rights become exercisable for Common Shares (or other
consideration) of the Company or for common stock of the acquiring company as
set forth above.
Any of the provisions of the Rights Agreement, other than certain
provisions relating to the principal economic terms of the Rights, may be
amended by the Board of Directors of the Company prior to the Distribution
Date. Thereafter, the provisions, other than certain provisions relating to
the principal economic terms of the Rights, of the Rights Agreement may be
amended by the Board in order: to cure any ambiguity, defect or
inconsistency; to shorten or lengthen any time period under the Rights
Agreement; or in any other respect that will not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person); provided 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 will be filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement of the Company
on Form 8-A. A copy of the Rights Agreement is available free of charge from
the Company upon written request therefor. 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.
