EXHIBIT 1
RIGHTS AGREEMENT
between
NICOR INC.
and
XXXXXX TRUST AND SAVINGS BANK
Rights Agent
Dated as of September 9, 1997
TABLE OF CONTENTS
|| Page
Section 1. Certain Definitions . . . . . . . . . . . . . . .1
Section 2. Appointment of Rights Agent . . . . . . . . . . .4
Section 3. Issue of Right Certificates . . . . . . . . . . .5
Section 4. Form of Right Certificates. . . . . . . . . . . .6
Section 5. Countersignature and Registration . . . . . . . .7
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. . .8
Section 7. Exercise of Rights; Exercise Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . .9
Section 8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . 11
Section 9. Availability of Preference Shares . . . . . . . 11
Section 10. Preference Shares Record Date . . . . . . . . . 11
Section 11. Adjustment of Exercise Price, Number of Shares
or Number of Rights . . . . . . . . . . . . . 12
Section 12. Certificate of Adjusted Exercise Price or
Number of Shares . . . . . . . . . . . . . . . 17
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 18
Section 14. Fractional Rights and Fractional Shares . . . . 20
Section 15. Rights of Action. . . . . . . . . . . . . . . . 21
Section 16. Agreement of Right Holders. . . . . . . . . . . 21
Section 17. Right Certificate Holder Not Deemed a
Shareholder . . . . . . . . . . . . . . . . . . 22
Section 18. Concerning the Rights Agent . . . . . . . . . . 22
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . 23
Section 20. Duties of Rights Agent. . . . . . . . . . . . . 23
Section 21. Change of Rights Agent. . . . . . . . . . . . . 25
Section 22. Issuance of New Right Certificates. . . . . . . 26
Section 23. Redemption. . . . . . . . . . . . . . . . . . . 26
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . 27
Section 25. Notice of Certain Events. . . . . . . . . . . . 28
Section 26. Notices . . . . . . . . . . . . . . . . . . . . 29
Section 27. Supplements and Amendments. . . . . . . . . . . 30
Section 28. Successors. . . . . . . . . . . . . . . . . . . 30
Section 29. Benefits of this Agreement. . . . . . . . . . . 30
Section 30. Severability. . . . . . . . . . . . . . . . . . 30
Section 31. Governing Law . . . . . . . . . . . . . . . . . 30
Section 32. Counterparts. . . . . . . . . . . . . . . . . . 30
Section 33. Descriptive Headings. . . . . . . . . . . . . . 30
Section 34. Determinations and Actions by the Board of
Directors . . . . . . . . . . . . . . . . . . . 31
||
Exhibit A Resolution Designating the Rights, Preferences and Other
Terms of the Preference Stock
Exhibit B Form of Right Certificate
Exhibit C Summary of Shareholder Rights Plan
ii
RIGHTS AGREEMENT
Rights Agreement, dated as of September 9, 1997 (this
"Agreement"), between NICOR INC., an Illinois corporation (the "Company"),
and Xxxxxx Trust and Savings Bank (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one preference share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding as of
the close of business on September 30, 1997 (the "Record Date"), each Right
representing the right to purchase one one-hundredth of a Preference Share
(as hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of
one Right with respect to each Common Share that shall become outstanding
between the Record Date and the Expiration Date (as such term is
hereinafter defined);
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:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as such term is hereinafter defined) of 10% or more
of the Common Shares of the Company then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary (as such term is hereinafter defined)
of the Company, or (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company or any Person holding Common Shares for or
pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of (i) 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 10% or more of the Common Shares of
the Company then outstanding, or (ii) the acquisition by such Person of
newly-issued Common Shares directly from the Company (it being understood
that a purchase from an underwriter or other intermediary is not deemed for
purposes hereof to be a purchase directly from the Company); provided,
however, that if a Person shall become the Beneficial Owner of 10% or more
of the Common Shares of the Company then outstanding by reason of share
purchases by the Company or the receipt of newly-issued Common Shares
directly from the Company and shall, after such share purchases or direct
issuance by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person"; and provided, further, that any transferee from such
Person who becomes the Beneficial Owner of 10% or more of the Common Shares
of the Company then outstanding shall nevertheless be deemed to be an
"Acquiring Person". Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good
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faith that a Person who would otherwise be an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph, has become
such inadvertently, and such Person divests as promptly as practicable (and
in any event within ten business days after notification by the Company) a
sufficient number of Common Shares so that such Person would no longer be
an Acquiring Person, as defined pursuant to the foregoing provisions of
this paragraph, then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
"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.
A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to have "beneficial ownership" of or "beneficially own" any
securities:
(a) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (i) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether written or
oral (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; (ii) the sole or shared right to vote or dispose of
(including any such right pursuant to any agreement, arrangement or
understanding, whether written or oral); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or (iii) "beneficial ownership" (as determined pursuant to Rule
13d-3 (or any successor rule) of the General Rules and Regulations under
the Exchange Act); or
(c) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding, whether written or oral (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the
proviso to clause (ii) of subparagraph (b) of this definition) or disposing
of any securities of the Company.
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Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
"Board of Directors" and "Board of Directors of the Company" each
shall mean the members of the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in Illinois are authorized or
obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 P.M.,
Chicago time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Chicago time, on the next succeeding
Business Day.
"Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $2.50 per share (as such shares may
be constituted or designated, or as such par value may be changed, from
time to time during the term of this Agreement), of the Company. "Common
Shares" when used with reference to any Person other than the Company shall
mean the capital stock (or equity interest) with the greatest voting power
of such other Person or the equity securities or other equity interest
having power to control or direct the management of such other Person.
"Company" shall have the meaning set forth in the preamble hereto.
"current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
"Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
"equivalent preference shares" shall have the meaning set forth in
Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
"Exercise Price" shall have the meaning set forth in Section 4(a)
hereof.
"Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
"Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
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"Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preference Shares" shall mean shares of Series A Junior
Participating Preference Stock, with no par value per share, of the Company
having the rights and preferences set forth in the Resolution Designating
the Rights, Preferences and Other Terms of the Preference Stock attached to
this Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
"Record Date" shall have the meaning set forth in the preamble hereto.
"Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
"Right" shall have the meaning set forth in the preamble hereto.
"Rights Agent" shall have the meaning set forth in the preamble hereto.
"Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"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) promulgated
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
"Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
"Summary of Shareholder Rights Plan" shall have the meaning set
forth in Section 3(b) hereof.
"Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.
"Triggering Event" shall mean any event described in Section
11(a)(ii) or Section 13(a) hereof.
Any determination or interpretation required in connection with
any of the definitions contained in this Section 1 shall be made by the
Board of Directors of the Company in their good faith judgment, which
determination shall be final and binding on the Rights Agent.
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
4
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 Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth
day after the Shares Acquisition Date or (ii) the close of business on the
fifteenth Business Day (or such later date as may be determined by action
of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any entity holding Common
Shares for or pursuant to the terms of any such plan) to commence, a tender
or exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 10% or more of
the then outstanding Common Shares (including any such date which is after
the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the names of
the holders thereof (which certificates shall also be deemed to be
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 the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, at the expense of the Company send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the
close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially
the form of Exhibit B hereto (a "Right Certificate"), evidencing an
aggregate number of Rights equal to one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Shareholder Rights Plan, in
substantially the form of Exhibit C hereto (the "Summary of Shareholder
Rights Plan"), by first class, postage-prepaid mail to each record holder
of Common Shares as of the close of business on the Record Date (other than
any Acquiring Person or any Associate or Affiliate of any Acquiring
Person), at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof, together with
the Summary of Shareholder Rights Plan, and registered holders of Common
Shares shall also be the registered holders of the associated Rights. Until
the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the
5
transfer of any certificate for Common Shares outstanding on the Record
Date, with or without a copy of the Summary of Shareholder Rights Plan,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Rights shall be issued in respect of all Common Shares which
are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date.
Certificates representing such Common Shares shall also be deemed to be
certificates for Rights. Certificates representing both Common Shares and
Rights in accordance with this Section 3 which are executed and delivered
(whether the Common Shares represented thereby are originally issued,
delivered from the Company's treasury or are presented for transfer) by the
Company (including, without limitation, certificates representing
reacquired Common Shares referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the Distribution
Date, the Redemption Date or the Final Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them a legend
substantially equivalent to the following:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between NICOR
Inc. (the "Company") and Xxxxxx Trust and Savings Bank, dated as
of September 9, 1997 (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 Company. 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 Company 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 an 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, shall become null and void.
Until the Distribution Date, the Rights associated with the Common Shares
shall be evidenced by the certificates representing the associated Common
Shares alone, and the transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. If the Company purchases or acquires any Common Shares
after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled 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 Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preference Shares and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or
6
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 promulgated pursuant thereto
or with any rule or regulation of any stock exchange or quotation service
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
Right Certificates shall entitle the holders thereof to purchase such
number of one one-hundredths of a Preference Share as shall be set forth
therein at the price per one one-hundredth of a Preference Share set forth
therein (the "Exercise Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Exercise Price thereof
shall be subject to adjustment as provided herein.
(b) Any Right 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 such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes an Acquiring
Person, or (iii) a transferee of an Acquiring Person (or 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 agreement, arrangement or
understanding, whether written or oral, regarding the transferred Rights or
(B) a transfer which is part of a plan, arrangement or understanding,
whether written or oral, which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence,
shall contain (to the extent feasible and otherwise reasonably identifiable
as such) the following legend:
The Rights represented by this Right 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
Right Certificate and the Rights represented hereby may become
void in the circumstances specified in Section 7(e) of such
Agreement.
The provisions of Section 7(e) shall apply whether or not any Right
Certificate actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by its Chairman of
the Board, President or any Vice President, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested by the Secretary, an Assistant Secretary,
the Treasurer or an Assistant Treasurer of the Company, either manually or
by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and
7
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), 14 and 24
hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earlier of the Redemption
Date or the Final Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Preference Shares (or, following a
Triggering Event, Common Shares, other securities or property, as the case
may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the office 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 Right Certificate until the registered
holder shall have completed and signed the certificate contained in the
form of assignment on the reverse side of such Right Certificate and the
Company shall have been provided with 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 Sections 4 and 7 hereof, countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right 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 Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new
8
Right Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered holder in lieu of the Right Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date
of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Exercise Price with respect to each
surrendered Right for the total number of Preference Shares (or other
securities or property, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on
September 30, 2007 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date") (the earlier of (i) and (ii) being herein referred to as the
"Expiration Date") or (iii) the time at which such Rights are exchanged by
the Company as provided in Section 24 hereof.
(b) The Exercise Price for each one one-hundredth of a Preference
Share pursuant to the exercise of a Right shall initially be $105, shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate on the
reverse side of the Right Certificate duly executed, accompanied by payment
of the Exercise Price for the shares (or other securities or property, as
the case may be) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check, cashier's check or
money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the
Preference Shares (or make available, if the Rights Agent is the transfer
agent of the Preference Shares) certificates for the number of Preference
Shares to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the Preference Shares issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-hundredths of
a Preference Share as are to be purchased (in which case certificates for
the Preference Shares represented by such receipts shall be deposited by
the transfer agent therefor with the depositary agent) and the Company
shall direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt, deliver such cash
referred to in clause (ii) above to or upon the order of the registered
holder of such Right Certificate. If 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)
9
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or property are available for distribution by the
Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Right Certificate or to his duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an 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 an Acquiring Person, or (iii) a transferee of an Acquiring
Person (or such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming an Acquiring Person 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 agreement, arrangement or understanding, whether written or
oral, regarding the transferred Rights or (B) a transfer which the Board of
Directors otherwise concludes in good faith is part of a plan, arrangement
or understanding (whether written or oral) 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 any holder of such Rights shall thereupon
have no rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise, from and after the occurrence of
a Triggering Event. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) hereof are complied with, but
shall have no liability to any holder of Rights with respect to any
determinations regarding an Acquiring Person or its Affiliates, Associates
or transferees hereunder or any failure to make any such determination.
(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 the certificate
contained in the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise shall have been
completed and signed by the registered holder thereof and the Company shall
have been provided with 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.
(g) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preference
Shares (and, following the occurrence of a Triggering Event, Common Shares
and/or other securities) or any Preference Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
held in its treasury, the number of Preference Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.
10
(h) Notwithstanding any statement to the contrary contained in
this Agreement or in any Right Certificate, if either the Distribution Date
or the Shares Acquisition Date shall occur prior to the Record Date, the
provisions of this Agreement, including (without limitation) Sections 3 and
11(a)(ii), shall be applicable to the Rights upon their issuance to the
same extent such provisions would have been applicable if the Record Date
were the date of this Agreement.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Right Certificates upon the expiration of
any retention period required by the Securities and Exchange Commission
with respect to such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preference Shares. The Company
covenants and agrees that it will take all such action as may be necessary
to ensure that all Preference Shares (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 Preference Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities), subject to payment of the
Exercise Price, be duly and validly authorized and issued and fully paid
and nonassessable shares.
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 Right
Certificates or of any Preference Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts for the Preference Shares (or Common Shares and/or
other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered
for exercise or to issue or to deliver any certificates or depositary
receipts for Preference Shares (or Common Shares and/or other securities,
as the case may be) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is
due.
Section 10. Preference Shares Record Date. Each person in whose name
any certificate for Preference Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have
11
become the holder of record of the shares or securities represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the Preference Shares (or Common Shares and/or other securities, as
the case may be) transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares or
securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preference Shares (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
Right Certificate shall not be entitled to any rights of a holder of
Preference Shares (or Common Shares and/or other securities, as the case
may be) 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 Exercise Price, Number of Shares or
Number of Rights. The Exercise 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) If the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preference Shares payable in
Preference Shares, (B) subdivide the outstanding Preference Shares, (C)
combine the outstanding Preference Shares into a smaller number of
Preference Shares or (D) issue any shares of its capital stock in a
reclassification of the Preference Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Exercise Price
in effect immediately prior to the record date for such dividend or the
effective date of such subdivision, combination or reclassification, as
applicable, and the number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the aggregate
number and kind of shares of capital stock which he would have owned upon
such exercise and been entitled to receive as a result of such dividend,
subdivision, combination or reclassification if such Right had been
exercised immediately prior to such date and at a time when the Preference
Shares transfer books of the Company were open; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, if any
Person becomes an Acquiring Person, each holder of a Right, except as
provided below and in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof at a price equal to the then current
Exercise Price multiplied by the number of one one-hundredths of a
Preference
12
Share for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of Preference Shares, such number of Common
Shares of the Company as shall equal the result obtained by (x) multiplying
the then current Exercise Price by the number of one one-hundredths of a
Preference Share for which a Right is then exercisable and (y) dividing
that product by 50% of the then current per share market price of the
Company's Common Shares (determined pursuant to Section 11(d) hereof) on
the date of the occurrence of such event. If any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
(iii) In lieu of issuing Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company may, in the sole
discretion of the Board of Directors, elect to, and, if the Board of
Directors has not exercised the exchange right contained in Section 24
hereof and there are not sufficient issued but not outstanding and
authorized but unissued Common Shares to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii), the Company shall, take all
such action as may be necessary to authorize, issue or pay, upon the
exercise of Rights, cash (including by way of a reduction of the Exercise
Price), property, or other securities or any combination of the foregoing,
having an aggregate value equal to the value of the Common Shares of the
Company which otherwise would have been issuable pursuant to Section
11(a)(ii), which aggregate value shall be determined by a majority of the
Board of Directors. For purposes of the preceding sentence, the value of
the Common Shares shall be determined pursuant to Section 11(d) hereof and
the value of any equity securities which a majority of the Board of
Directors determines to be a "common stock equivalent" (including the
Preference Shares, in such ratio as the Board of Directors shall determine)
shall be deemed to have the same value as the Common Shares. Any such
election by the Board of Directors must be made and publicly announced
within 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred. Following the occurrence of the event
described in Section 11(a)(ii), a majority of the Board of Directors then
in office may suspend the exercisability of the Rights for a period of up
to 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred to the extent that such directors have not
determined whether to exercise the Company's right of election under this
Section 11(a)(iii). In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preference Shares
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Preference Shares (or shares
having the same rights, privileges and preferences as the Preference Shares
("equivalent preference shares")) or securities convertible into Preference
Shares or equivalent preference shares at a price per Preference Share or
equivalent preference share (or having a conversion price per share, if a
security convertible into Preference Shares or equivalent preference
shares) less than the then current per share market price of the Preference
Shares (as defined in Section 11(d)) on such record date, the Exercise
Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of
Preference Shares outstanding on such record date plus the number of
13
Preference Shares which the aggregate offering price of the total number of
Preference Shares and/or equivalent preference 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 Preference Shares
outstanding on such record date plus the number of additional Preference
Shares and/or equivalent preference shares to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in
a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the
Rights Agent. Preference 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 if such rights, options or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preference Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preference Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Exercise Price
to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price of the Preference Shares on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable
to one Preference Share and the denominator of which shall be such current
per share market price of the Preference Shares; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and if such
distribution is not so made, the Exercise Price shall again be adjusted to
be the Exercise Price which would then be in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
under Section 11(a)(iii) hereof, the "current per share market price" of
any security (a "Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for the purpose of
any computation under Section 11(a)(iii) hereof, the "current per share
market price" of a Security on any date shall be deemed to be the average
of the daily closing prices per share of such Security for thirty (30)
consecutive Trading Days immediately following such date;
14
provided, however, that if the current per share market price of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such
shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex- dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then,
and in each such case, the "current per share market price" shall be
appropriately adjusted to reflect the current market price per share
equivalent (ex-dividend) of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a
market in the Security selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Security, the
fair value of such Security on such date (as determined in good faith by
the Board of Directors of the Company) shall be used. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preference Shares shall be
determined in accordance with the method set forth in Section 11(d)(i). If
the Preference Shares are not publicly traded, the "current per share
market price" of the Preference Shares shall be conclusively deemed to be
the current per share market price of the Common Shares of the Company as
determined pursuant to Section 11(d)(i) (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the
date hereof), multiplied by one hundred If neither the Common Shares of the
Company nor the Preference Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Exercise 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-millionth of a
Preference Share or one ten- thousandth of any other share or security, as
the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise
any Rights.
(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 shares of capital stock of the Company other
than Preference Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preference Shares contained in this
Section 11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Preference 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 Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths
of a Preference Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of one one-hundredths of a Preference Share (calculated to the
nearest one- millionth of a Preference Share) obtained by (i) multiplying
(x) the number of one-hundredths of a share covered by a Right immediately
prior to this adjustment by (y) the Exercise Price in effect immediately
prior to such adjustment of the Exercise Price and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment
of the Exercise Price to adjust the number of Rights, in substitution for
any adjustment in the number of one-hundredths of a Preference Share
purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one-hundredths of a Preference Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of
the Exercise Price by the Exercise Price in effect immediately after
adjustment of the Exercise Price. The Company shall make a public
announcement 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
Exercise Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right 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
15
to holders of record of Right Certificates on such record date Right
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 Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one-hundredths of a Preference Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Exercise Price and the number of
one-hundredths of a Preference Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Exercise Price below one one-hundredth of the then par value,
if any, of the Preference Shares 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 Preference Shares at such adjusted
Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise 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 issuing to the holder of any Right exercised after such
record date of the Preference Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the
Preference Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise on the basis of the Exercise 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 upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the
Preference Shares, issuance wholly for cash of any Preference Shares at
less than the current market price, issuance wholly for cash of Preference
Shares or securities which by their terms are convertible into or
exchangeable for Preference Shares, dividends on Preference Shares payable
in Preference Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of
its Preference Shares shall not be taxable to such shareholders.
16
(n) If at any time after the date of this Agreement and prior to
the Distribution Date, the Company shall (i) declare or pay any dividend on
the Common Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (i) the number of
one-hundredths of a Preference Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number
of one-hundredths of a Preference Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common
Shares outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately after such
event, and (ii) each Common Share outstanding immediately after such event
shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
(o) So long as the shares issuable upon the exercise of the Rights
may be listed on any national securities exchange or quotation service, the
Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to be
listed on such exchange or quotation service upon official notice of
issuance upon such exercise.
(p) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, a
registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing and (iii) cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the date of the expiration of the
Rights. The Company will also take such action with respect thereto as may
be appropriate under the blue sky laws of the various states. The Company
may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file such registration
statement or in order to comply with such blue sky laws. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
Section 12. Certificate of Adjusted Exercise Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preference Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained, and shall not be obligated or responsible for calculating any
adjustment, and may assume that no adjustment has been made unless and
until it shall have received such certificate.
17
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) If after the Shares Acquisition Date, directly or indirectly,
(x) the Company shall consolidate with, or merge with and into, any other
Person, (y) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) 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 or more
transactions, assets or earning power aggregating 50% or more 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 one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Exercise Price
multiplied by the number of one-hundredths of a Preference Share for which
a Right is then exercisable, in accordance with the terms of this Agreement
and in lieu of Preference Shares, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable Common Shares of
the Principal Party (as hereinafter defined), free and clear of all liens,
rights of call or first refusal, encumbrances or other adverse claims, as
shall equal the result obtained by (A) multiplying the then current
Exercise Price by the number of one-hundredths of a Preference Share for
which a Right is then exercisable (or, if such Right is not then
exercisable for a number of one-hundredths of a Preference Share, the
number of such fractional shares for which it was exercisable immediately
prior to an event described under Section 11(a)(ii) hereof) and dividing
that product by (B) 50% of the then current per share market price of the
Common Shares of such Principal Party (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, or
otherwise, 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; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of
its Common Shares in accordance with Section 9 hereof) in connection with
such consummation as may be necessary to assure 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.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (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 surviving entity of such merger or consolidation
(including the Company if applicable); and
18
(ii) in the case of any transaction described in (z) of
the first sentence in Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case described in clauses (b)(i) and
(b)(ii): (1) if the Common Shares of such Person are not at such time and
have not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such other
Person; (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Shares of two or more of which are and
have been so registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Shares having the greatest aggregate
market value; and (3) in case such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (1) and
(2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all
of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have sufficient
Common Shares authorized to permit the full exercise of the Rights and
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 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) 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; and
(iii) take such actions as may be necessary or
appropriate under the blue sky laws of the various states. The provisions
of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. If one of the transactions
described in Section 13(a) hereof shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
19
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there may be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preference Shares (other than fractions which are integral multiples of one
one-hundredth of a Preference Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preference Shares (other
than fractions which are integral multiples of one one-hundredth of a
Preference Share). Fractions of Preference Shares in integral multiples of
one one-hundredth of a Preference Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preference Shares represented
by such depositary receipts. In lieu of fractional Preference Shares that
are not integral multiples of one one-hundredth of a Preference Share, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a
Preference Share. For the purposes of this Section 14(b), the current
market value of one one-hundredth of a Preference Share shall be one
one-hundredth of the closing price of a Preference Share (as determined
pursuant to the second sentence of Section 11(d)(i) 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 Right Certificates at the time such Rights
20
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 one Common Share (as determined pursuant to the second
sentence of 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 Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
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 Right
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 Right Certificate in the manner provided in such Right 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with
appropriate forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary; and
21
(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 any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preference
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim
of liability in the premises. The indemnification provided for hereunder
shall survive the expiration of the Rights, the termination of this
Agreement and the resignation or removal of the Rights Agent. The costs and
expenses of enforcing this right of indemnification shall also be paid by
the Company.
The Rights Agent may conclusively rely upon and shall be protected
and shall incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for the
Preference Shares or 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 the advice of counsel as set forth in
Section 20 hereof. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special,
indirect or consequential loss or damage of any kind
22
whatsoever (including, but not limited to, lost profits) even if the Rights
Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto; provided, that
such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in
the Right 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, and no implied duties or obligations shall be read
into this Agreement against the Rights Agent, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall
be bound:
(a) Before the Rights Agent acts or refrains from acting, the
Rights Agent may consult with legal counsel (who may be legal counsel for
the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman
of the Board, 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 to the
23
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right 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 Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 7(e) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after receipt of a certificate
furnished pursuant to Section 12 describing a change or adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preference Shares or
Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preference Shares or Common Shares will,
when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, President, any Vice President, the
Treasurer or the Secretary of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered 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 or omitted by
the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be
less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have
consented in writing to an
24
earlier date) unless, prior to taking 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 omitted.
(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 its Subsidiaries or become pecuniarily
interested in any transaction in which the Company or its Subsidiaries may
be interested, or contract with or lend money to the Company or its
Subsidiaries 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 its Subsidiaries
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 reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting
with the Company.
(k) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including,
without limitation, any dates or events defined in this Agreement or the
designation of any Person as an Acquiring Person, Affiliate or Associate)
under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Company of such fact, event or
determination.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preference Shares by registered
or certified mail, and, at the expense of the Company, to the holders of
the Right Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Shares or Preference Shares by
registered or certified mail, and to the holders of the Right 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
25
the Rights Agent. If the Company shall fail to make such appointment within
a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning
or incapacitated Rights Agent or by the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right 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 corporation or bank organized and doing business
under the laws of the United States or of any other state of the United
States, 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, at the time of its appointment as
Rights Agent, (a) has a combined capital and surplus of at least
$100,000,000 or (b) is an affiliate of an entity having a combined capital
and surplus of at least $100,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preference Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Exercise Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, 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 in cash, Common Shares (based on the current per share market price
of the Common Shares at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors. The redemption
of the Rights by the Board of Directors may be made effective at such time
on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. If redemption of the Rights is to be
effective as of a future date, the Rights shall continue to be exercisable,
subject to Section 7 hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude the Board of
Directors from
26
subsequently causing the Rights to be redeemed at a date earlier than the
scheduled effective date of the redemption.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at the effective time of
such redemption established by the Board of Directors of the Company
pursuant to paragraph (a) of this Section 23), and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights or, if later, the effectiveness of
the redemption of the Rights pursuant to the last sentence of paragraph
(a), the Company shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. The Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights, (ii) depositing with a
bank or trust company having a capital and surplus of at least
$100,000,000, funds necessary for such redemption, in trust, to be applied
to the redemption of the Rights so called for redemption and (iii)
arranging for the mailing of the Redemption Price to the registered holders
of the Rights. Upon such action, all outstanding Right Certificates shall
be null and void without further action by the Company. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23, in Section 24 hereof, or in connection with the
purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Company may, at its option, at any time after a Triggering
Event, upon resolution of a majority of the Board of Directors, 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
7(e) hereof) for Common Shares 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 the "Exchange Ratio"). Notwithstanding the foregoing, the Company
shall not effect such an exchange at any time after any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) becomes the
Beneficial Owner of 50% or more of the then outstanding Common Shares.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and
27
the only right thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of any
such exchange to all of the holders of such Rights at their last addresses
as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preference Shares (or equivalent preference
shares, as such term is defined in Section 11(b) hereof) for Common Shares
exchangeable for Rights, at the initial rate of one-hundredth of a
Preference Share (or equivalent preference share) for each Common Share, as
appropriately adjusted to reflect adjustments in the Preference Shares
pursuant to the terms thereof.
(d) If there shall not be sufficient Common Shares or Preference
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional Common Shares or Preference Shares for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Common
Share. For the purposes of this paragraph (e), the current market value of
a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to
the holders of its Preference Shares or to make any other distribution to
the holders of its Preference Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Preference Shares rights or
warrants to subscribe for or to purchase any additional Preference Shares
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Preference Shares (other than a
reclassification involving only the subdivision of outstanding Preference
Shares), (iv) to effect any consolidation or merger into or with, or to
effect any
28
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common
Shares), then, in each such case, the Company shall give to each holder of
a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or the date on
which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preference
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 10
days prior to the record date for determining holders of the Preference
Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common
Shares and/or Preference Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right 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:
NICOR Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sent by
registered or certified mail, deemed given upon receipt and addressed
(until another address is filed in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust,
Administrator - NICOR Inc.
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if
29
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.
Notices or demands sent by mail shall be deemed given or made three
Business Days after the date on which they are sent.
Section 27. Supplements and Amendments. The Company may from time
to time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary
or desirable, any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that from
and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect
the interests of the holders of Rights. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment that changes the
rights and duties of the Rights Agent under this Agreement shall be
effective without the written consent of the Rights Agent.
Section 28. 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 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, 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 and each Right
Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Illinois and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 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.
30
Section 34. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors 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, interpretations and determinations
(including, for purpose of clause (ii) below, all omissions with respect to
the foregoing) which are done or made by the Board of Directors in good
faith, shall (i) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Right Certificates and all other parties,
and (ii) not subject the Board of Directors to any liability to the holders
of the Right Certificates.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested, all as of the day and year first above
written.
Attest: NICOR INC.
By: /s/ Xxxxxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Secretary Title: Senior Vice President
Attest: XXXXXX TRUST AND SAVINGS BANK,
as Rights Agent
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxx Name: Xxxxx X. Xxxxxxx
Title: Trust Officer Title: Vice President
32
Exhibit A
RESOLUTION DESIGNATING
THE RIGHTS, PREFERENCES AND OTHER TERMS
OF THE
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
of
NICOR Inc.
Pursuant to Section 6.10 of the Illinois Business Corporation Act of 1983
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Articles of Incorporation, as amended, a series of preference stock, with
no par value per share, of the Corporation (such preference stock being
herein referred to as "Preference Stock," which term shall include any
additional shares of preference stock of the same class heretofore or
hereafter authorized to be issued by the Corporation), consisting of
800,000 shares is hereby created, and the voting powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, are as follows:
Section 1. Designation and Amount. There shall be a series of
Preference Stock of the Corporation which shall be designated as "Series A
Junior Participating Preference Stock," with no par value per share
(hereinafter called "Series A Junior Preference Stock"), and the number of
shares constituting such series shall be 800,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors of the
Corporation and by the filing of a statement pursuant to the provisions of
the Illinois Business Corporation Act of 1983 stating that such increase or
reduction has been so authorized; provided, however, that no decrease shall
reduce the number of shares of Series A Junior Preference Stock to a number
less than that of the shares then outstanding plus the number of shares of
Series A Junior Preference Stock issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities
issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preference Stock ranking prior and superior to
the shares of Series A Junior Preference Stock with respect to dividends,
the holders of shares of Series A Junior Preference Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation out of funds legally available for such purpose, quarterly
dividends payable in cash to holders of record on the last business 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 Preference Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$1.00
1
and (b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common
Stock (hereinafter defined) or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the common
stock, par value $2.50 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Preference
Stock. If the Corporation shall at any time following September 9, 1997 (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of Series A Junior Preference
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying each such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Preference Stock as provided in paragraph (A) above at
the time it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock).
(C) No dividend or distribution (other than a dividend payable
in shares of Common Stock) shall be paid or payable to the holders of
shares of Common Stock unless, prior thereto, all accrued but unpaid
dividends to the date of such dividend or distribution shall have been paid
to the holders of shares of Series A Junior Preference Stock.
(D) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Preference Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Junior Preference Stock, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Preference Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Junior Preference Stock 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 of the Corporation may fix a
record date for the determination of holders of shares of Series A Junior
Preference Stock 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.
2
Section 3. Voting Rights. The holders of shares of Series A Junior
Preference Stock shall have the following voting rights:
(A) Each share of Series A Junior Preference Stock shall entitle
the holder thereof to one vote on all matters submitted to a vote of the
shareholders of the Corporation.
(B) Except as otherwise provided herein or in the Articles of
Incorporation of the Corporation or by law, the holders of shares of Series
A Junior Preference Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(C) Except as set forth herein or in the Articles of
Incorporation of the Corporation, holders of Series A Junior Preference
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock and other capital stock of the Corporation 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 Preference Stock as provided
in Section 2 hereof are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Preference Stock 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
Preference Stock;
(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 Preference Stock, except dividends paid ratably on the Series A
Junior Preference Stock 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 Preference Stock, 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 Preference Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Junior Preference Stock, except in accordance with a
purchase offer made in writing or
3
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 direct or indirect
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, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Preference Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preference Stock and may be reissued as
part of a new series of Preference Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein and in the Articles of
Incorporation of the Corporation.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary liquidation, 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 Preference Stock unless, prior thereto, the holders of
shares of Series A Junior Preference Stock shall have received $.01 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 shares of Series A Junior Preference Stock
unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by
(ii) 100 (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 Stock) (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 shares of Series A Junior Preference Stock and Common Stock,
respectively, holders of Series A Junior Preference Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share
of the remaining assets to be distributed in the ratio, on a per share
basis, of the Adjustment Number to one with respect to such Preference
Stock and Common Stock, on a per share basis, respectively.
(B) If, however, 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 Preference Stock, if any,
which rank on a parity with the Series A Junior Preference Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.
4
(C) If the Corporation shall at any time following September 9,
1997 (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding shares of Common Stock or (iii)
combine the outstanding Common Stock 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 shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. If the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Junior Preference Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 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 share
of Common Stock is changed or exchanged. If the Corporation shall at any
time (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock 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 shares of Series A Junior Preference Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series A Junior Preference
Stock shall not be redeemable by the Corporation. The preceding sentence
shall not limit the ability of the Corporation to purchase or otherwise
deal in such shares of stock to the extent permitted by law.
Section 9. Ranking. The Series A Junior Preference Stock shall
rank junior to all other series of the Corporation's preference stock
(whether with or without par value) 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 amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Junior
Preference Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of
Series A Junior Preference Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Preference Stock
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 Preference Stock.
5
Exhibit B
Form of Right Certificate
Certificate No. R- ______Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2007 OR EARLIER IF THE RIGHTS
EXPIRE UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS 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
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]*/
Right Certificate
NICOR Inc.
This certifies that __________________________, or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms, provisions
and conditions of the Rights Agreement, dated as of September 9, 1997 (the
"Rights Agreement"), between NICOR Inc., an Illinois corporation (the
"Company"), and Xxxxxx Trust and Savings Bank (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 p.m. (Chicago
time) on September 30, 2007, or notice of redemption or exchange at the
office of the Rights Agent (or its successors as Rights Agent) designated
for such purpose, one one-hundredth of a fully paid non-assessable share of
Series A Junior Participating Preference Stock, with no par value per share
(the "Preference Shares") of the Company at an exercise price of $105 per
one one-hundredth of a share (the "Exercise Price") upon presentation and
surrender of this Right Certificate with the appropriate Form of Election
to Purchase and related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
--------------
*/ The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
1
purchased upon exercise thereof) set forth above, and the Exercise Price
per share set forth above, are the number and Exercise Price as of
__________, 199_, based on the Preference Shares as constituted at such
date. Capitalized terms not defined in this Right Certificate that are
defined in the Rights Agreement shall have the meanings ascribed to them in
the Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights evidenced
by this Right Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) under certain circumstances
specified in the Rights Agreement, 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, 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 right with respect to such Rights from and after the
occurrence of any such Triggering Event.
As provided in the Rights Agreement, the Exercise Price and the
number and kind of Preference Shares or other securities which may be
purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening
of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under certain circumstances
specified in such Rights Agreement. Copies of the Rights Agreement are on
file at the principal corporate trust office of the Rights Agent and are
also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal corporate trust office of the Rights Agent,
may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of Preference Shares as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in
part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right 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 Company at its option
at a redemption price of $.01 per Right at any time prior to (i) the time
any Person becomes an Acquiring Person and (ii) the Final Expiration Date.
No fractional Preference Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a Preference Share, which may at
the election of the Company be evidenced by depository receipts), but in
lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, in such holder's capacity as
such, shall be entitled to vote or receive dividends or be deemed for any
purpose the holder of Preference 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, in such holder's capacity as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors of the Company or upon any matter submitted to
shareholders of the Company 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 of the Company (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right 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 _______________, 199_
ATTEST: (SEAL) NICOR INC.
---------------------------------- By: ---------------------------
Name: --------------------------- Name: ---------------------------
Title: --------------------------- Title: ---------------------------
Countersigned:
XXXXXX TRUST AND SAVINGS BANK
By: ______________________________
Authorized Signature
2
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________________________________
hereby sells, assigns and transfers unto __________________________________
---------------------------------------------------------------------------
(Please print name and address of transferee)
---------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint _______________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Date: _____________________, 19___
------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the Rights
Agreement)
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________, 19___
-----------------------------
Signature
3
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
4
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Right Certificate.)
To: Xxxxxx Trust and Savings Bank
The undersigned hereby irrevocably elects to exercise ____ Rights
represented by this Right Certificate to purchase the Preference 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:
Please insert social security
or other identifying number: _______________________________________
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(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________________
---------------------------------------------------------------------
(Please print name and address)
---------------------------------------------------------------------
---------------------------------------------------------------------
Dated: ____________________, 19___
-----------------------------
Signature
Signature Guaranteed:
5
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: _________________, 19___
----------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
6
Exhibit C
SUMMARY OF SHAREHOLDER RIGHTS PLAN
On September 9, 1997, the Board of Directors of NICOR Inc. (the
"Company") declared a dividend distribution of one Right for each
outstanding share of common stock, par value $2.50 per share (the "Common
Stock"), of the Company to shareholders of record at the close of business
on September 30, 1997 (the "Record Date"). Except as described below, each
Right, when exercisable, entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preference Stock, with no par value per share (the "Preference Stock"), at
a price of $105 per one one-hundredth share (the "Exercise Price"), subject
to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Xxxxxx Trust and
Savings Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following 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 10% or more of the outstanding
shares of Common Stock (the "Shares Acquisition Date") or (ii) 15 business
days (or such later date as may be determined by action of the Board of
Directors of the Company (the "Board of Directors") prior to the time that
any person becomes an Acquiring Person) following the commencement of (or a
public announcement of an intention to make) a tender or exchange offer if,
upon consummation thereof, such person or group would be the beneficial
owner of 10% or more of such outstanding shares of Common Stock (the
earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced by the Common Stock certificates together with a copy of
this Summary of Shareholder Rights Plan and not by separate certificates.
The Rights Agreement also provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Stock.
Until the Distribution Date (or earlier redemption, expiration or
termination of the Rights), the transfer of any certificates for Common
Stock, with or without a copy of this Summary of Shareholder Rights Plan,
will also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and
will expire at the earlier of (i) September 30, 2007 (the "Final Expiration
Date") and (ii) the redemption of the Rights by the Company as described
below.
1
If any person (other than the Company, its subsidiaries or any
person receiving newly-issued shares of Common Stock directly from the
Company) becomes the beneficial owner of 10% or more of the then
outstanding shares of Common Stock, each holder of a Right will thereafter
have the right to receive, upon exercise at the then current exercise price
of the Right, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the
exercise price of the Right. The Rights Agreement contains an exemption for
any issuance of Common Stock by the Company directly to any person (for
example, in a private placement or an acquisition by the Company in which
Common Stock is used as consideration), even if that person would become
the beneficial owner of 10% or more of the Common Stock, provided that such
person does not acquire any additional shares of Common Stock.
If, at any time following the Shares Acquisition Date, the Company
is acquired in a merger or other business combination transaction or 50% or
more of the Company's assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right
to receive, upon exercise at the then current exercise price of the Right,
common stock of the acquiring or surviving company having a value equal to
two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of
the events set forth in the preceding two paragraphs (the "Triggering
Events"), any Rights that are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by any Acquiring Person will
immediately become null and void.
The Exercise Price payable, and the number of shares of Preference
Stock or other securities or property issuable, upon exercise of the
Rights, are subject to adjustment from time to time to prevent dilution,
among other circumstances, in the event of a stock dividend on, or a
subdivision, split, combination, consolidation or reclassification of, the
Preference Stock or the Common Stock, or a reverse split of the outstanding
shares of the Preference Stock or the Common Stock.
With certain exceptions, no adjustment in the Exercise Price will
be required until cumulative adjustments require an adjustment of at least
1% in the Exercise Price. The Company will not be required to issue
fractional shares of Preference Stock or Common Stock (other than fractions
in multiples of one-hundredths of a share of Preference Stock) and, in lieu
thereof, an adjustment in cash may be made based on the market price of the
Preference Stock or Common Stock on the last trading date prior to the date
of exercise.
The Preference Stock is a new series of preference stock that is
nonredeemable and that ranks junior to other series of preference stock of
the Company that are currently issued or may be issued in the future. Each
share of Preference Stock will be entitled to a minimum preferential
quarterly dividend of $1.00 per share but will be entitled to an aggregate
dividend equal to 100 times the dividend declared per share of Common
Stock. In the event of liquidation, each share of Preference Stock will be
entitled to a minimum preferential liquidation payment of $.01 per share
but will be entitled to an aggregate payment of 100 times the payment made
per share of Common Stock. Each share of
2
Preference Stock will have one vote, voting together with the Common Stock
and other capital stock of the Company. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock
are exchanged, each share of Preference Stock will be entitled to receive
100 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions. Because of the nature of
the Preference Stock's dividend and liquidation rights, the value of the
one one-hundredth of a share of Preference Stock purchasable upon the
exercise of each Right should approximate the value of one share of Common
Stock.
At any time after the date of the Rights Agreement until the time
that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), which may (at the option of the Company) be paid
in cash, shares of Common Stock or other consideration deemed appropriate
by the Board of Directors. Upon the effectiveness of any action of the
Board of Directors 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.
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.
The Board of Directors of the Company is generally responsible for
administering, interpreting and making all decisions and taking all actions
with respect to the Rights Agreement, including, without limitation, the
decision to redeem or exchange the Rights or to amend the Rights Agreement.
The provisions of the Rights Agreement may be amended by the
Company, except that any amendment adopted after the time that a person
becomes an Acquiring Person may not adversely affect the interests of
holders of Rights.
As of August 31, 1997, there were 48,544,970 shares of Common
Stock outstanding and 4,073,582 shares of Common Stock reserved for
issuance under employee benefit plans. Each outstanding share of Common
Stock on September 30, 1997 will receive one Right. 800,000 shares of
Preference Stock will be reserved for issuance in the event of exercise of
the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire
the Company without conditioning the offer on the Rights being redeemed or
a substantial number of Rights being acquired, and under certain
circumstances the Rights beneficially owned by such a person or group will
become void. The Rights should not interfere with any merger or other
business combination approved by the Board of Directors because, if the
Rights would become exercisable as a result of such merger or business
combination, the Board of Directors may, at its option, at any time prior
to the time that any Person becomes an Acquiring Person, redeem all (but
not less than all) of the then outstanding Rights at the Redemption Price.
3
A copy of the Rights Agreement is being filed with the Securities
and Exchange Commission as an exhibit to a Registration Statement on Form
8-A. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
4
