1
Exhibit 8
RIGHTS AGREEMENT
__________________________________
SHOREWOOD PACKAGING CORPORATION
AND
THE BANK OF NEW YORK
RIGHTS AGENT
__________________________________
DATED AS OF JUNE 12, 1995
2
INDEX
Page
----
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8. Cancellation and Destruction of Right
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 9. Reservation and Availability of Shares of
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 17. Right Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(i)
3
Page
----
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 23. Redemption and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 25. Notice of Proposed Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 29. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Exhibit A - Form of Articles Supplementary for
Series A Junior Participating
Preferred Stock
Exhibit B - Form of Right Certificate
(ii)
4
RIGHTS AGREEMENT
This Agreement, dated as of June 12, 1995 is entered into
between SHOREWOOD PACKAGING CORPORATION, a Delaware corporation (the "Company")
and THE BANK OF NEW YORK, a New York banking corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on May 4, 1995 the Board of Directors of the Company
authorized and declared a dividend distribution of one right (hereinafter
referred to as a "Right") for each share of Common Stock, par value $.01 per
share, of the Company outstanding at the close of business on June 14, 1995
(the "Record Date"), (other than shares of such Common Stock held in the
Company's treasury on such date) and has authorized the issuance of one Right
in respect of each share of Common Stock of the Company issued between the
Record Date (whether originally issued or issued from the Company's treasury)
and the Distribution Date (as such term is defined in Section 3 hereof), each
Right representing the right to purchase one one-hundredth of a share of Series
B Junior Participating Preferred Stock of the Company having the rights, powers
and preferences set forth in the form of Certificate of Designation attached
hereto as Exhibit A, upon the terms and subject to the conditions hereinafter
set forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to
act as provided herein, and the Rights Agent is willing to so act;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as
hereinafter defined) who or which, together with all Affiliates (as hereinafter
defined) and Associates (as hereinafter defined) of such Person, (i) without
the prior written approval of a majority of the Board of Directors, shall be
the Beneficial Owner (as hereinafter defined) of securities of the Company
constituting 25% or more of the Voting Power (as hereinafter defined) of the
Company or was such a Beneficial Owner at any time after the date hereof,
whether or not such Person continues to be the Beneficial Owner of securities
representing 25% or more of the Voting Power of the Company, or (ii) who with
the prior written approval of the Board of Directors shall be the Beneficial
Owner (as hereinafter defined) of securities of the Company constituting 25% or
more of the Voting Power (as hereinafter defined) of the Company, and who
without the prior written approval of the Company acquires additional Voting
Power of the Company in an amount equal to 1% or more; but an Acquiring Person
shall not include (i) the Company, any Subsidiary
5
of the Company, any employee benefit plan or compensation arrangement of the
Company or any Subsidiary of the Company, or any entity holding securities of
the Company to the extent organized, appointed or established by the Company or
any Subsidiary of the Company for or pursuant to the terms of any such employee
benefit plan or compensation arrangement or (ii) any Person who or which,
together with all Affiliates and Associates of such Person, inadvertently may
become the Beneficial Owner of securities of the Company representing 25% or
more of the Voting Power of the Company or otherwise becomes such a Beneficial
Owner without a plan or intention to acquire control of the Company, so long as
such Person, individually or together with the Affiliates and Associates of such
Person, promptly enters into an irrevocable commitment promptly to divest, and
thereafter promptly divests (without exercising or retaining any power,
including voting, with respect to such securities), sufficient securities of the
Company so that such Person, together with all Affiliates and Associates of such
Person, ceases to be the Beneficial Owner of 25% or more of the Voting Power of
the Company. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of voting securities of the
Company by the Company which, by reducing the amount of such securities
outstanding, increases the proportionate voting power of such securities
beneficially owned by such Person to 25% or more of the Voting Power; provided,
however, that if a Person becomes the Beneficial Owner of securities
constituting 25% or more of the Voting Power by reason of purchases by the
Company and shall, after such purchases by the Company, become the Beneficial
Owner of any additional voting securities of the Company without the prior
written approval of a majority of the Board of Directors, then such Person shall
be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly as
determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of
-2-
6
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 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 payment or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding, provided, however,
that a Person shall not be deemed the "Beneficial Owner" of any security under
this clause (B) if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given in response
to a public proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations under the Exchange Act and (2) is
not also then reportable by such person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (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 pursuant to a revocable proxy or
consent as described in clause (B) of subparagraph (ii) of this paragraph (c))
or disposing of any securities of the Company.
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.
(d) "Board of Directors" shall mean the Board of
Directors of the Company as constituted from time to time.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value
$.01 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock
with the greatest Voting Power of such Person or the equity securities or other
equity interest having
-3-
7
power to control or direct the management of such Person or, if such Person is
a Subsidiary (as hereinafter defined) of another Person, of the Person (other
than an individual or group of individuals) which ultimately controls such
first-mentioned Person and which has issued and outstanding such capital stock,
equity securities or equity interests.
(h) "Distribution Date" shall have the meaning set forth
in Section 3 hereof.
(i) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(j) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(k) "Person" shall mean any individual, firm,
corporation, partnership, limited partnership, limited liability company,
trust, or other entity, and shall include any successor (by merger or
otherwise) of any such entity.
(l) "Preferred Stock" shall mean the Series B Junior
Participating Preferred Stock, par value $10.00 per share, of the Company.
(m) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(n) "Redemption Price" shall have the meaning set forth
in Section 23(a) hereof.
(o) "Section 11(b) Event" shall have the meaning set
forth in Section 11(b) hereof.
(p) "Section 13 Event" shall mean an event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(q) "Stock Acquisition Date" shall mean the earlier of
(i) the first date of public announcement by the Company or an Acquiring Person
that an Acquiring Person has become an Acquiring Person, or (ii) the date on
which the Company first has notice, direct or indirect, or otherwise determines
that a Person has become an Acquiring Person.
(r) "Subsidiary" shall mean, with respect to any Person,
any other Person of which securities or other ownership interests having
ordinary Voting Power, in the absence of contingencies, to elect a majority of
the board of directors (or other persons performing similar functions) of such
other Person are at the time directly or indirectly owned by such Person or one
or more of such Person's Subsidiaries, except that "Subsidiary" when used with
reference to the Company shall mean any Person of which either a majority of
the Voting Power of the voting equity securities or a
-4-
8
majority of the equity interests is owned, directly or indirectly, by the
Company.
(s) "Voting Power" shall mean the voting power of all
securities of a Person then outstanding generally entitled to vote for the
election of directors of the Person (or, where appropriate, for the election of
persons performing similar functions).
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company 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 upon ten (10) days' prior written notice
to the Rights Agent. The Rights Agent shall have no duty to supervise, and
shall in no event be liable for, the acts or omissions of any such Co-Rights
Agent. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the close of business on the
tenth Business Day after the Stock Acquisition Date or (ii) the close of
business on the tenth Business Day (or such later date as may be determined by
action of the Board of Directors but in no event later than such time as any
Person becomes an Acquiring Person) after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or compensation arrangement of the Company or of any
Subsidiary of the Company, or any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any Subsidiary
of the Company for or pursuant to the terms of any such employee benefit plan
or compensation arrangement) is first published or sent or given within the
meaning of Rule l4d-2(a) of the General Rules and Regulations under the
Exchange Act, without the prior written approval of a majority of the Board of
Directors, which tender or exchange offer would result in any Person becoming
the Beneficial Owner of Voting Power aggregating 25% or more of the outstanding
Voting Power (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"), (A) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
Right Certificates) and not by separate Right Certificates, as more fully set
forth below, and (B) the Rights (and the right to receive certificates
therefor) will be transferable only in connection with the transfer of the
underlying shares of Common Stock, as more fully set forth below. As soon as
practicable after the Company has notified the Rights Agent of the occurrence
of the Distribution Date, the Company shall
-5-
9
prepare and execute, and the Rights Agent shall countersign and send, at the
Company's expense by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock 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 (the "Right
Certificate"), evidencing one Right for each share of Common Stock so held. As
of and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the Rights will be
evidenced by such certificates for the Common Stock registered in the names of
the holders of the Common Stock and the registered holders of the Common Stock
shall also be registered holders of the associated Rights. Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the surrender for transfer of any of the certificates for the Common
Stock outstanding in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Certificates for the Common Stock issued after the
Record Date but prior to the earlier of the Distribution Date or the
redemption, expiration or termination of the Rights shall be deemed also to be
certificates for Rights and shall have impressed, printed or written on, or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Shorewood Packaging Corporation (the "Company") and The Bank
of New York (the "Rights Agreement"), as it may from time to
time be supplemented or amended, the terms of which are
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, expire, exchanged or be evidenced
by separate certificates and no longer be evidenced by this
certificate. The Company will mail to the holder of record of
this certificate a copy of the Rights Agreement without charge
within five days after receipt of a written request therefor.
Under certain circumstances, Rights issued to or held by
Acquiring Persons or their Affiliates or Associates (as
defined in the Rights Agreement) and any subsequent holder of
such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration
-6-
10
or termination of the Rights), the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
In the event that the Company purchases or acquires any Common
Stock after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed cancelled and retired so that
the Company shall not be entitled to exercise any Rights associated with shares
of Common Stock which are no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall
be in substantially the same form as Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
customary usage. The Right Certificates shall be in a machine printable format
and in a form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 11 and Section 22 hereof, the Right Certificates,
whenever issued, shall be dated as of the Record Date, shall show the date of
countersignature, and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price per one one-hundredth of a share as set
forth therein (the "Purchase Price"), but the number and identity of such
shares and the Purchase Price shall be and remain subject to adjustment as
provided in Sections 11, 13 and 22 hereof.
(b) Any Right Certificate issued pursuant to Section 3(a)
hereof that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof and any Right Certificate issued at any time
upon the transfer of any Rights to an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Right Certificate issued pursuant to Section 6 hereof,
Section 11 hereof or Section 22 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued
to a Person who was an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person. This Right Certificate and
the Rights represented hereby are
-7-
11
void in the circumstances specified in Section 7(e) of the
Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof. The Company shall
instruct the Rights Agent in writing of the Rights which should be so legended
and shall supply the Rights Agent with such legended Right Certificates.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned manually or by
facsimile signature by an authorized signatory of the Rights Agent, Co-Rights
Agent or the registrar of the Company (the "Registrar"), which need not be the
same authorized signatory for all of the Right Certificates, and shall not be
valid for any purpose unless so countersigned. In case any officer of the
Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent or the Registrar and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent or the Registrar, issued and delivered 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. 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 Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its 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, the certificate number of 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.
Subject to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date (as such term is defined in Section 7(a) hereof), any Right
Certificate
-8-
12
or Right Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 7(e) hereof) 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 shares of
Preferred Stock 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 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. Thereupon, the Rights Agent shall
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 by the holder of a Right Certificate 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.
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 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 Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) 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 Purchase Price for
each one-one hundredth of a share of Preferred Stock as to which the Rights are
exercised, at or prior to the close of business on the Expiration Date. The
"Expiration Date", as used in this Agreement, shall be the earliest of (i) the
Final Expiration Date (as defined below), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof. The "Final Expiration
Date", as used in this Agreement, shall be June 14, 2005.
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
$17.00, shall be subject to adjustment from time to
-9-
13
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, with the form of
election to purchase duly executed, accompanied by payment of the Purchase
Price for each one one-hundredth of a share of Preferred Stock to be purchased
and an amount equal to any applicable transfer tax required to be paid by the
holder of the Rights pursuant hereto in accordance with Section 9 hereof by
certified check, bank draft or money order payable to the order of the Company
or the Rights Agent, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) either (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the shares of Preferred Stock issuable upon
exercise of the Rights hereunder into a depositary, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a share of Preferred Stock as are to be purchased (in which
case certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company will direct the depositary agent to comply with all such
requests, (ii) promptly 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, (iii) 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, (iv) after receipt of any such cash,
promptly deliver such cash to or upon the order of the registered holder of
such Right Certificate, (v) when appropriate, requisition from the Company the
amount of cash or securities issuable upon exercise of a Right pursuant to the
adjustment provisions of Section 11 or the exchange provisions of Section 24,
and (vi) after receipt of any such cash or securities, promptly deliver such
cash or securities to or upon the order of the registered holder of such Right
Certificate, of any such cash or securities.
(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 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, upon the first occurrence of a Section 11(b) Event or a
-10-
14
Section 13 Event, any Rights that are or were at any time on or after the
earlier of the Stock Acquisition Date or the Distribution Date beneficially
owned by an Acquiring Person or any Associate or Affiliate of an Acquiring
Person shall become void with respect to the rights provided under Section
11(b), Section 13(a) and Section 24 hereof and any holder of such Rights shall
thereafter have no right to exercise such Rights under the provisions of
Section 11(b) and Section 13(a) hereof, or to receive any Common Stock in
exchange therefor pursuant to the provisions of Section 24 hereof.
(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 appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed 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.
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 cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled 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 cancelled Right
Certificates to the Company.
Section 9. Reservation and Availability of Shares of
Preferred Stock.
(a) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient
to permit the exercise in full of all outstanding Rights and, after the
occurrence of a Section 11(b) Event or a Section 13 Event, shall so reserve and
keep available a sufficient number of shares of Preferred Stock, Common Stock
and/or other securities which may be required to permit the exercise in full of
the Rights pursuant to this Agreement.
-11-
15
(b) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of Preferred
Stock and/or other securities delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares or securities.
(c) The Company shall use its best efforts to (i) file,
as soon as practicable following the first occurrence of an event which would
establish the Distribution Date, a registration statement under the Securities
Act of 1933, as amended (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 Expiration Date. The Company will also take such action as may be
appropriate under the securities offering and "Blue Sky" Laws of the various
states. The Rights Agent may assume that any Right exercised is permitted to
be exercised under applicable law and shall have no liability for acting in
reliance upon such assumption.
(d) 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 shares of Preferred Stock and/or other securities
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 involved
in the transfer or delivery of Right Certificates or the issuance or delivery
of certificates or depositary receipts for Preferred Stock and/or other
securities in a name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, nor shall the Company
be required to issue or deliver any certificates or depositary receipts for
shares of Preferred Stock and/or other securities 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 satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person (other
than the Company) in whose name any certificate for shares of Preferred Stock
(or other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Preferred Stock
(or other 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 Purchase 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
-12-
16
Preferred Stock (or other securities) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or other securities) 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 stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and identity 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) In the event the Company shall at any time after the
date of this Agreement (i) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (ii) subdivide the outstanding Preferred Stock,
(iii) combine the outstanding Preferred Stock into a smaller number of shares
or (iv) issue any shares of its capital stock in a reclassification of the
Preferred Stock (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, the Purchase
Price in effect at the time of the record date for such dividend or the time of
the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock, including Preferred Stock,
issuable upon exercise of a Right, shall be proportionately adjusted so that
the holder of any Right exercised after such time, upon payment of the
aggregate consideration such holder would have had to pay to exercise such
Right prior to such time, shall be entitled to receive the aggregate number and
kind of shares of capital stock, including Preferred Stock, which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.
(b) In the event any Person shall become an Acquiring
Person ("Section 11(b) Event"), then proper provision shall be made so that
each holder of a Right, subject to Section 7(e) and Section 24 hereof and
except as provided below, shall after the later of the occurrence of such event
and the effective date of an appropriate registration statement pursuant to
Section 9 hereof, have a right to receive, upon exercise thereof at the then
current Purchase Price, multiplied by the then number of one- one hundredths of
a share of Preferred Stock for which a Right is then
-13-
17
exercisable, in accordance with the terms of this Agreement, in lieu of shares
of Preferred Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (A) multiplying the then-current Purchase
Price by the then number of one one-hundredths of a share of Preferred Stock
for which a Right is then exercisable and dividing that product by (B) 25% of
the current market price per one share of Common Stock (determined pursuant to
Section 11(f) hereof on the date of the occurrence of the Section 11(b) Event)
(such number of shares being referred to as the "number of Adjustment Shares").
(c) In the event that there shall not be sufficient
Treasury shares or authorized but unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with the foregoing Section 11(b),
and the Rights become so exercisable, notwithstanding any other provision of
this Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price, multiplied by the then number of one-one
hundredths of a share of Preferred Stock for which a Right is then exercisable,
in accordance with the terms of this Agreement, a number of shares, or units of
shares, of (A) Common Stock, and (B) preferred stock (or other equity
securities) of the Company, including, but not limited to Preferred Stock, or
fractional shares of preferred stock of the Company equal in the aggregate to
the number of Adjustment Shares where the Board of Directors shall have in good
faith deemed such shares or units, other than the shares of Common Stock, to
have at least the same value and voting rights as the Common Stock (a "Common
Stock Equivalent"); provided, however, if there are unavailable (solely as a
result of an insufficient number having been authorized, and not as a result of
a delay in issuance, registration or otherwise) sufficient shares (or fractions
of shares) of Common Stock and/or Common Stock Equivalents, then the Company
shall take all such action as may be necessary to authorize additional shares
of Common Stock or Common Stock Equivalents for issuance upon exercise of the
Rights, including the calling of a meeting of shareholders; and provided,
further, that if the Company is unable to cause sufficient shares of Common
Stock and/or Common Stock Equivalents to be available for issuance upon
exercise in full of the Rights, then the Company, to the extent necessary and
permitted by applicable law and any agreements or instruments in effect on the
date thereof to which it is a party, shall make provision to pay an amount in
cash equal to the Cash Equivalent Amount, as defined below, in lieu of issuing
shares of Common Stock and/or Common Stock Equivalents. To the extent that the
Company determines that some action needs to be taken pursuant to this Section
11(c), a majority of the Board of Directors may suspend the exercisability of
the Rights for a period of up to sixty (60) days following the date on which
the Section 11(b) Event shall have occurred, in order to decide the appropriate
form of distribution to be made pursuant to this Section 11(c) and to determine
the value thereof. In the
-14-
18
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended.
The Board of Directors may, but shall not be required to, establish procedures
to allocate the right to receive Common Stock and Common Stock Equivalents upon
exercise of the Rights among holders of Rights, which such allocation may be,
but is not required to be, pro-rata. For purposes hereof the Cash Equivalent
Amount shall be an amount equal to the fair market value of the Common Stock
which would be deliverable pursuant to Section 11(b) (if such shares were
available), determined by multiplying the current market price (determined as
set forth in Section 11(f) hereof) of the Common Stock as of the Business Day
next immediately preceding Distribution Date by the number of shares so
deliverable, less the amount of the exercise price therefor which would be paid
in accordance with Section 11(b) hereof.
(d) If the Company shall fix a record date for the
issuance of rights or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 90 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having the same or
more favorable rights, privileges and preferences as the Preferred Stock
("Equivalent Preferred Stock")) or securities convertible into Preferred Stock
or Equivalent Preferred Stock, at a price per share of Preferred Stock or per
share of Equivalent Preferred Stock or having a conversion or exercise price
per share, as the case may be, less than the current market price per share of
Preferred Stock (as defined in Section 11(f) hereof) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such date by a
fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares of
Preferred Stock or Equivalent Preferred Stock 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 shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible).
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 a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
-15-
19
(e) If the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (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, cash (other than a regular periodic cash dividend out of earnings
or retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11(d) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the current market price for one share of
Preferred Stock (as defined in Section 11(f) hereof) on such record date less
the fair market value (as determined in good faith by a majority of the Board
of Directors, 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 convertible securities, subscription rights or
warrants applicable to one share of Preferred Stock, and the denominator of
which shall be such current market price for one share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(f) (i) For the purpose of any computation hereunder, the
"current market price" of any security (a "Security" for purposes of this
Section 11(f)(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 hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current market price per share of such 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 shares of such Security 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 market price" shall
be appropriately adjusted to reflect the current market price per share
equivalent 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
-16-
20
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, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") National Market System, or if the Security is not
listed or admitted to trading on any national securities exchange or included
in the NASDAQ National Market System, 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 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 a majority of the Board of Directors. 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 a majority of the Board of
Directors 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 day
on which the NASDAQ National Market System is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange or included in the NASDAQ National Market System,
a Business Day. If the Security is not publicly held or not so listed or
traded, "current market price" shall mean the fair value as determined in good
faith by a majority of the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder,
the "current market price" per share (or one one-hundredth of a share) of
Preferred Stock shall be determined in the same manner as set forth above for
the Common Stock in clause (i) of this Section 11(f) (other than the last
sentence thereof). If the current market price per share (or one one-hundredth
of a share) of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(f), the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Stock and the "current market
price" per one one-hundredth of a share of Preferred Stock shall be equal to
the current market price per share of the Common Stock (as appropriately
adjusted). If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "current market price" per share shall mean the
fair value per share as determined in good faith by the Board of Directors,
whose
-17-
21
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(g) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments which
by reason of this Section 11(g) 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
ten-thousandth of a share, as the case may be. Notwithstanding the first
sentence of this Section 11(g), 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 mandates such adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 11(a) or (b) hereof, the holder of any
Right shall be entitled to receive upon exercise of such Right any shares of
capital stock of the Company other than shares of Preferred Stock, 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 shares
contained in Section 11(a) through (e) hereof, inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the shares of Preferred
Stock shall apply on like terms to any such other shares.
(i) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock or other capital stock of the
Company purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election
as provided in Section 11(k) hereof, upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(d) and (e) hereof, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a share of Preferred Stock (calculated to the
nearest ten-thousandth) obtained by (i) multiplying (A) the number of one
one-hundredths of a share of Preferred Stock covered by a Right immediately
prior to the adjustment by (B) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
-18-
22
(k) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred Stock
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 one-hundredths of a share of Preferred Stock for which such 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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the 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(k), the Company shall, as promptly as practicable, cause to be
distributed 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 may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of shares
which were expressed in the initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
shares of Common Stock or other securities and below one one-hundredth of the
then par value, if any, of the Preferred Stock, 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 shares of such Preferred Stock, Common
-19-
23
Stock or other securities at such adjusted Purchase Price. If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock
and Common Stock Equivalents, a portion of the consideration paid upon such
exercise, equal to at least the then par value of a share of Common Stock of
the Company, shall be allocated as the payment for each share of Common Stock
of the Company so received.
(n) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(o) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment a majority
of the Board of Directors shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any Preferred Stock at less than the then current market price, (iii)
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable for Preferred Stock, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to the holders of its Preferred
Stock, shall not be taxable to such stockholders.
(p) In the event that 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 (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the
number of one one-hundredths of a Preferred 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 (B) each Common Share outstanding immediately after such event
-20-
24
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(p) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
(q) The Company covenants and agrees that it shall not,
at any time after the Distribution Date and so long as the Rights have not been
redeemed pursuant to Section 23 hereof or exchanged pursuant to Section 24
hereof, (i) consolidate with, (ii) merge with or into, or (iii) sell or
transfer, in one or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, if at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(r) The Company covenants and agrees that, after the
Stock Acquisition Date, it will not, except as permitted by Sections 23 and 24
hereof, take any action the purpose or effect of which is to diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate in accordance with
Section 26 hereof, or prior to the Distribution Date, disclose a brief summary
in a filing under the Securities Exchange Act of 1934, as amended. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustments therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, directly or indirectly, following
the Distribution Date, (A) the Company shall consolidate with, or merge with
and into, any other Person, (B) any Person shall consolidate with 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 Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (C) the
Company shall sell, or otherwise transfer (or one or more
-21-
25
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
other Person other than to 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, subject to Section 7(e) hereof, shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price multiplied by the then applicable number of one-one
hundredths of a share of Preferred Stock for which a Right is then exercisable
(or if a Section 11(b) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one one-hundredths of a share
for which a Right was exercisable immediately prior to the first occurrence of
a Section 11(b) Event by the Purchase Price in effect immediately prior to such
first occurrence) in accordance with the terms of this Agreement, in lieu of
Preferred Stock, such number of shares of freely tradeable Common Stock of the
Principal Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall be equal
to the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-hundredths of a share of Preferred Stock for which a
Right is then exercisable (or if a Section 11(b) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one
one-hundredths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(b) Event by the Purchase Price in
effect immediately prior to such first occurrence), and dividing that product
by (B) 25% of the current market price per share of the Common Stock of such
Principal Party (determined in the manner described in Section 11(f) hereof) on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
the Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof, except for the provisions of
11(b), shall apply to such Principal Party; and (iv) such Principal Party shall
take such steps (including, but not limited to, the authorization and
reservation of a sufficient number of shares of its Common Stock to permit
exercise of all outstanding Rights in accordance with this Section 13(a)) 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 the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (A) or (B) of the first sentence of Section 13(a) hereof, the Person
that is the issuer of any securities into which shares
-22-
26
of Common Stock of the Company are converted in such merger or consolidation,
and if no securities are so issued, the Person, including the Company, that is
the other party to the merger or consolidation; and
(ii) in the case of any transaction described in
clause (C) of the first sentence of Section 13(a) hereof, 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 case described in clause (i) or (ii) in this Section 13(b), (A) if
the Common Stock of such Person is not at such time and has 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 or
Affiliate of another Person, the Common Stock of which has been so registered,
"Principal Party" shall refer to such other Person; (B) in case such Person is
a Subsidiary, directly or indirectly, or Affiliate of more than one Person, the
Common Stock of all of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the Common Stock
having the greatest market value, and (C) in case such Person is, or is owned
directly or indirectly by, a partnership or joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (A) and (B) 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 prior thereto the Company and
each Principal Party and each other Person who may become a Principal Party as
a result of such consolidation, merger, sale or transfer 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, sale or transfer 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, will use its
best efforts to cause such registration statement to become effective as soon
as practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date;
-23-
27
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or appropriate; and
(iii) will 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.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(b) Event, the Rights which have not theretofore been exercised shall
thereafter also become exercisable in the manner described in Section 13(a)
hereof.
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 shall 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 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, as reported by the NASDAQ National
Market System or, if the Rights are not listed or admitted to trading on any
national securities exchange or included in the NASDAQ National Market System,
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 a majority of the Board of Directors. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by a majority of the Board of Directors shall
be used. Notwithstanding the foregoing, however, the Company shall not be
obligated to make any such payments in respect of fractional rights unless and
until a Distribution Date shall have occurred.
-24-
28
(b) The Company shall not be required to issue fractions
of shares of Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock). Fractions of shares of Preferred Stock in
integral multiples of one one-hundredth of a share of Preferred Stock 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 shares of Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of Preferred
Stock, the Company may pay to the registered holders of Right Certificates at
the time such Right Certificates are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of one
one-hundredths of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one one-hundredth of a share of Preferred
Stock shall be one one-hundredth of the closing price of a share of Preferred
Stock (as determined pursuant to Section 11(f)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions
or events specified in Section 11 hereof giving rise to the right to receive
Common Stock Equivalents (other than Preferred Stock) or other securities upon
the exercise of a Right, the Company shall not be required to issue fractions
of shares or units of such Common Stock Equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of such Common Stock Equivalents or other securities. In lieu of
fractional shares or units of such Common Stock Equivalents or other
securities, 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 a share or unit of
such Common Stock Equivalent or other securities. For purposes of this Section
14(c), the current market value shall be determined in the manner set forth in
Section 11(f) hereof for the Trading Day immediately prior to the date of such
exercise and, if such Common Stock Equivalent is not traded, each such Common
Stock Equivalent shall have the value of one one-hundredth of a share of
Preferred Stock.
(d) Except as otherwise expressly provided in this
Section 14, the holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional share upon
exercise of Rights.
-25-
29
Section 15. Rights of Action. All rights of action in
respect of this Agreement, except for rights of action given to the Rights
Agent under Section 18 or Section 20 hereof, are vested in the respective
registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of Common Stock); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock),
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 Stock), 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. Holders of Rights shall be entitled
to recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Agreement.
Section 16. Agreement of 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 Common Stock;
(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, duly endorsed or accompanied by a proper
instrument of transfer;
(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 Stock 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 Stock 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
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent
-26-
30
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
Stockholder. No holder, as such, of any Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Preferred
Stock, Common Stock 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
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (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 such compensation as shall be agreed to in writing
between the Company and the Rights Agent 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 gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including, without
limitation, the costs and expenses of defending against any claim of liability.
The provisions of this Section 18 shall survive the expiration of the Rights
and the termination of this Agreement.
The Rights Agent 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 Preferred Stock, Common Stock 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 and executed by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
-27-
31
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 corporate trust business or stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided 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 expressly imposed by this Agreement, and
no implied duties or obligations shall be read into this Agreement against the
Rights Agent, upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel of
its selection (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
-28-
32
and established by a certificate signed by the Chairman of the Board, the
President or any Vice President and by the Treasurer or any Assistant Treasurer
or the Secretary or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the 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 only for
its own gross 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 adjustment required
under the provisions of Sections 11 or 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice to the
Rights Agent of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or other securities 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 the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer 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
-29-
33
to be taken by it in good faith in accordance with instructions of any such
officer or for any delay in acting while waiting for those instructions. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken 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 such
application on or after the date specified in such application (which date
shall not be less than three Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any 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 become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection thereof.
(j) 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.
(k) If, with respect to any Rights 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, clause 2 and/or, in the case of the certificate attached to the form
of election to purchase, clause 3 thereof, the Rights Agent shall not take any
-30-
34
further action with respect to such requested exercise of transfer without
first consulting with the Company.
(l) In addition to the foregoing, the Rights Agent shall
be protected and shall incur no liability for, or in respect of, any action
taken or omitted by it in connection with its administration of this Agreement
if such acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of
assignment and the form of election to purchase attached hereto unless the
Rights Agent shall have actual knowledge that, as executed, such certification
is untrue, or (ii) the non-execution of such certification including, without
limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt
written notice of any event or ownership which would prohibit the exercise or
transfer of the Right Certificates.
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. 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. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within a period of
30 days after 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 Rights Agent or the
registered holder of any Right may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any
state, in good standing, having an office in the States of New York or
Delaware, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $25,000,000, or (b) an affiliate of
a corporation described in clause (a) of this sentence. 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
-31-
35
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 Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Right Certificates or, prior to the Distribution
Date, through any filing made by the Company pursuant to the Securities
Exchange Act of 1934, as amended. Failure to give any notice provided for
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 a majority of the Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement.
Section 23. Redemption and Termination.
(a) A majority of the Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth Business Day following the Stock Acquisition Date or (ii)
the Final Expiration Date, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of 1c. per Right, as
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"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(b) Event until such time
as the Company's right of redemption hereunder has expired. 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.
(b) Immediately upon the action of a majority of the
Board of Directors electing to redeem the Rights, evidence of which shall be
promptly filed with the Rights Agent, or, when appropriate, immediately upon
the time or satisfaction of such conditions as the Board of Directors may have
established, 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 disclosure of any such redemption; provided, however, that
the failure to give, or any defect in, any such disclosure shall not affect the
validity of such redemption. Within 10 days after the action of the Board of
-32-
36
Directors ordering the redemption of the Rights, the Company shall give notice
of such redemption to the holders of the then outstanding Rights by mailing
such notice to all such holders 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 Stock. 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.
(c) 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, Section
24 hereof and other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
for Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan or compensation arrangement of the
Company or any such Subsidiary, or any entity holding securities of the Company
to the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Voting Power of the
Company.
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give notice to the Rights Agent and
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
-33-
37
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 Common Stock 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 Preferred Stock (or Equivalent Preferred
Stock, as such term is defined in Section 11(d) hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-hundredth of a share of
Preferred Stock (or Equivalent Preferred Stock) for each share of Common Stock,
as appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to the terms thereof, so that the fraction of a share
of Preferred Stock delivered in lieu of each share of Common Stock shall have
the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient
shares of Common Stock or Preferred Stock (or Equivalent Preferred Stock)
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 shares of
Common Stock or Preferred Stock (or Equivalent Preferred Stock) for issuance
upon exchange of the Rights.
(e) The Company shall not be required to issue fractions
of Common Stock or to distribute certificates which evidence fractional shares
of Common Stock. In lieu of such fractional shares of Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph
(e), the current market value of a whole share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(f)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the holders
of its Preferred Stock (other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), or (b) to offer to the holders
of its Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or shares of stock of any
-34-
38
other class or any other securities, rights or options, or (c) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or
(d) to effect any consolidation or merger into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sales 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, or (e) to effect the liquidation, dissolution or winding
up of the Company, or (f) to declare or pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to the Rights Agent and each holder of a Right, 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, 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 Stock and/or
Preferred Stock, if any such date is to be fixed. Such notice shall be so
given in the case of any action covered by clauses (a) or (b) above at least
ten days prior to the record date for determining holders of the Preferred
Stock for purposes of such action, and in the case of any such other action, at
least ten days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever
shall be the earlier. The failure to give notice required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
In case a Section 11(b) Event shall occur, then the Company
shall as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice
of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(b) 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:
Shorewood Packaging Corporation
00 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Attention: Secretary
-35-
39
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 sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Vice President
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 sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 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
or amendments hereto 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; provided further that the Company shall have the right to make any
changes unilaterally necessary to facilitate the appointment of a successor
Rights Agent, which such changes shall be set forth in a writing by the Company
or by the Company and such successor Rights Agent. Without limiting the
foregoing, the Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds set forth in
Sections 1(a) and 3(a) hereof from 25% to not less than the greater of (i) any
percentage greater than the largest percentage of the Voting Power of the
Company then known by the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, or any employee benefit plan
or compensation arrangement of the Company or any Subsidiary of the Company,
and any entity holding securities of the Company to the extent organized,
appointed or established by the Company or any such Subsidiary for or pursuant
to the terms of any such employee benefit plan or compensation arrangement),
other than a person holding Voting Power of the Company in excess of the
then-existing thresholds pursuant to the written permission of the Board of
Directors of the Company together with all Affiliates or Associates of such
Person and (ii) 10%. Upon the delivery of a certificate from an appropriate
officer of the Company which states
-36-
40
that the proposed supplement or amendment is in compliance with the terms of
this Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 27
which alters the Rights Agent's rights or duties.
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 Stock) 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 Stock).
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.
It is the intent of the parties hereto to enforce the remainder of the terms,
provisions, covenants and restrictions to the maximum extent permitted by law.
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 Delaware 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, provided, however, that the
rights and obligations of the Rights Agent shall be governed by and construed
in accordance with the laws of the State of New York.
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.
-37-
41
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
Attest: SHOREWOOD PACKAGING CORPORATION
By: /s/Xxxx Xxxxxxx By: /s/Xxxxxx X. Xxxxxxx
-------------------------- ----------------------------
Name: Xxxx Xxxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: Executive Vice President
Attest: THE BANK OF NEW YORK, as Rights Agent
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxxxx
-------------------------- ----------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxxxx Xxxxxxxx
Title: Assistant Vice President Title: Vice President
-38-
42
Exhibit A
SHOREWOOD PACKAGING CORPORATION
FORM OF CERTIFICATE OF DESIGNATIONS
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
(Pursuant to Section 151.180 of the
Delaware General and Corporation Law)
Shorewood Packaging Corporation (the "Company"), a corporation
organized and existing under the General and Business Corporation Law of the
State of Delaware, in accordance with Section 351.180 thereof, hereby
certifies:
That the Board of Directors of the Company, at a meeting duly
convened and held on May 4, 1995, pursuant to authority expressly vested in the
Board of Directors by the Company's Certificate of Incorporation, adopted the
following resolution creating a series of Five Hundred Thousand (500,000)
shares of the Company's Preferred Stock, par value $10.00 per share, designated
as Series B Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors (the "Board") by the Company's Certificate of
Incorporation, the Board hereby creates a series of the Preferred Stock, par
value $10.00 per share, of the Company (the "Preferred Stock") and hereby
states that the designation and number of shares thereof, and the relative,
participating, optional and other rights of the shares of such series and the
qualifications, limitations or restrictions thereof, are as follows:
Section 1. Designation and Amount.
There shall be a series of the Preferred Stock which shall be
designated as the "Series B Junior Participating Preferred Stock," par value
$10.00 per share, and the number of shares constituting such series shall be
Five Hundred Thousand (500,000). Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series B Junior Participating Preferred
Stock to a number less than that of the shares then outstanding plus the number
of shares issuable upon exercise of outstanding rights, options or warrants or
upon conversion of outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of preferred stock of the Company ranking prior and
-1-
43
superior to the Series B Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series B Junior Participating Preferred
Stock, in preference to the holders of shares of Common Stock, par value $.01
per share of the Company (the "Common Stock"), and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on any regular quarterly dividend payment date as shall be
established by the Board of Directors (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 B Junior Participating Preferred Stock, in an amount per share,
if any, (rounded to the nearest cent) equal to the greater of (a) $l.00 or (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 or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on 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 B Junior Participating Preferred Stock. In the event the
Company shall at any time after June 14, 1995 (the "Rights Declaration Date")
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series B Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of 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 Company shall declare a dividend or distribution
on the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Series B Junior Participating Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
-2-
44
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares, 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 B Junior
Participating Preferred 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 B Junior Participating Preferred 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 may, in
accordance with applicable law, fix a record date for the determination of
holders of shares of Series B Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than such number of days prior to the date fixed for the
payment thereof as may be allowed by applicable law.
Section 3. Voting Rights.
The holders of shares of Series B Junior Participating
Preferred Stock shall have the following voting rights:
(A) Each share of Series B Junior Participating Preferred
Stock shall entitle the holder thereof to 100 votes on all matters submitted to
a vote of the stockholders of the Company. In the event the Company shall at
any time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes to which holders of shares of Series B Junior
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence 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.
(B) Except as otherwise provided herein, in the Company's
Certificate of Incorporation or by law, the holders of shares of Series B
Junior Participating Preferred Stock, the holders of shares of Common Stock,
and the holders of shares of any
-3-
45
other capital stock of the Company having general voting rights, shall vote
together as one class on all matters submitted to a vote of stockholders of the
Company.
(C) Except as otherwise set forth herein or in the
Company's Articles of Restatement, and except as otherwise provided by law,
holders of Series B Junior Participating Preferred 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 as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the
Series B Junior Participating Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Company 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 B Junior Participating Preferred 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 B Junior Participating Preferred Stock, except dividends paid
ratably on the Series B Junior Participating Preferred 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) except as permitted in Section 4(A)(iv)
below, 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 B Junior
Participating Preferred Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series B Junior Participating Preferred Stock; and
(iv) purchase or otherwise acquire for
consideration any shares of Series B Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series B
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
-4-
46
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 Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
Any shares of Series B Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. The Company
shall cause all such shares upon their cancellation to be authorized but
unissued shares of Preferred Stock which may be reissued as part of a new
series of Preferred Stock, subject to the conditions and restrictions on
issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Company, 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 B Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series B Junior
Participating Preferred Stock shall have received $100.00 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 B Liquidation
Preference"). Following the payment of the full amount of the Series B
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series B Junior Participating Preferred 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 B Liquidation Preference by (ii) 100 (as appropriately
adjusted as set forth in subparagraph C below to reflect such events as stock
dividends, and subdivisions, combinations and consolidations with respect to
the Common Stock) (such number in clause (ii) being referred to as the
"Adjustment Number"). Following the payment of the full amount of the Series B
Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series B Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series B Junior Participating Preferred Stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the
-5-
47
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Series B Junior Participating Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets
available to permit payment in full of the Series B Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series B Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event there are not sufficient assets available to permit payment in full
of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Company shall at any time after the
Rights Declaration Date declare or pay any dividend on Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, 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.
In case the Company 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 B Junior
Participating Preferred 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.
In the event the Company shall at any time after the Rights Declaration Date
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series B Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
-6-
48
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that are outstanding immediately prior to
such event.
Section 8. Redemption.
The shares of Series B Junior Participating Preferred Stock
shall not be redeemable.
Section 9. Ranking.
The Series B Junior Participating Preferred Stock shall rank
junior to all other series of the Company's Preferred Stock as to the payment
of dividends and the distribution of assets, unless the terms of any such
series shall provide otherwise.
Section 10. Fractional Shares.
Series B Junior Participating Preferred 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 B Junior Participating Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its Vice President and attested by its
Secretary this day of June, 1995.
WITNESS: Shorewood Packaging Corporation
-------------------------- ------------------------------
Name: Name:
Title: Secretary Title:
-7-
49
STATE OF NEW YORK )
) SS.
CITY OF NEW YORK )
On this ______ day of ________, 1995, before me,
_______________________, a Notary Public in and for the State of New York,
personally appeared [ ] and [ ], the [ ] and
[ ] of Shorewood Packaging Corporation respectively, known to
me to be the persons who executed the foregoing Certificate of Designations and
acknowledged to me that they executed the same pursuant to authority given by
the Board of Directors of such corporation as their free and voluntary act, and
as the free and voluntary act and deed of such corporation, for the uses and
purposes therein set forth.
___________________________
My commission expires:
______________________
-8-
50
Exhibit B
[Form of Right Certificate]
Certificate No. R-______________ _______ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE.
AT THE OPTION OF THE COMPANY, THE RIGHTS ARE SUBJECT
TO REDEMPTION AT 1c. PER RIGHT OR EXCHANGE FOR
COMMON STOCK, UNDER THE CIRCUMSTANCES AND
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY ARE VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.
Right Certificate
SHOREWOOD PACKAGING CORPORATION
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 June __, 1995 (the "Rights Agreement") between
Shorewood Packaging Corporation, a Delaware corporation (the "Company"), and
The Bank of New York, a New York banking corporation (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. New York City time
on the Expiration Date, as that term is defined in the Rights Agreement, at the
office of the Rights Agent, or its successor as Rights Agent, one one-hundredth
of a fully paid, nonassessable share of the Series B Junior Participating
Preferred Stock, par value $10.00 per share ("Preferred Stock"), of the
Company, at a purchase price of $17.00 per one one-hundredth of a share (the
"Purchase Price") upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise of each Right) and the Purchase Price set forth above,
are the number and Purchase Price as of June 14, 1995 based on the shares of
Preferred Stock of the Company as constituted at such date.
The Purchase Price and the number of shares of Preferred Stock
which may be purchased upon the exercise of each of the Rights evidenced by
this Right Certificate are subject to
-1-
51
modification and adjustment upon the happening of certain events as provided in
the Rights Agreement.
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. Copies of the Rights Agreement are on file at the Company and
the above-mentioned office of the Rights Agent and are also available upon
written request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the 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 shares of Preferred Stock 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 1c. per Right on or prior to the Stock Acquisition Date (as
defined in the Rights Agreement). In addition, subject to the provisions of
the Rights Agreement, the Rights evidenced by this Certificate may be exchanged
by the Company at its option for one share of Common Stock following the Stock
Acquisition Date and prior to the time an Acquiring Person, as that term is
defined in the Rights Agreement, owns 50% or more of the Voting Power, as that
term is defined in the Rights Agreement, of the Company.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts). In
lieu of fractions of a share, a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to
-2-
52
vote for the election of directors or upon any matter submitted to shareholders
at any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the 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 an authorized signatory
of the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______ , 199_.
SHOREWOOD PACKAGING CORPORATION
By By
----------------------- ---------------------------------
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By
-----------------------
Authorized signatory
Date of countersignature:
-3-
53
[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.
Dated: ____________, 19__
__________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Rights Agent, which requirements
include membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Rights Agent in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.
-4-
54
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
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
-5-
55
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Shorewood Packaging Corporation:
The undersigned hereby irrevocably elects to exercise
____________________________ Rights represented by this Right Certificate to
purchase the shares of Preferred Stock issuable upon the exercise of such
Rights and requests that certificates for such shares be issued in the name of:
Name: _________________________
Address: ______________________
______________________
Social security
or taxpayer identification
number: _______________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name: _________________________
Address: ______________________
______________________
Social security
or taxpayer identification
number: _______________________
Dated: ___________, 19__
___________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this Right
Certificate)
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Rights Agent, which requirements
include membership or participation in STAMP or such other "signature guarantee
program" as may be determined by the Rights Agent in addition to, or in
substitution for, STAMP, ass in accordance with the Securities Exchange Act of
1934, as amended.
-6-
56
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) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(3) 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
(Signature must conform in all respects to
name of holder as specified on the face of
this Right Certificate)
NOTICE
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the form of
Assignment or the form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
-7-
