EXHIBIT 99.1
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HYDRIL COMPANY
AND
MELLON INVESTOR SERVICES LLC,
RIGHTS AGENT
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RIGHTS AGREEMENT
DATED AS OF APRIL 9, 2002
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TABLE OF CONTENTS
Section 1. Certain Definitions..........................................................1
Section 2. Appointment of Rights Agent..................................................9
Section 3. Issue of Rights Certificates.................................................9
Section 4. Form of Rights Certificates.................................................10
Section 5. Countersignature and Registration...........................................11
Section 6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates....................12
Section 7. Exercise of Rights; Purchase Price..........................................13
Section 8. Cancellation and Destruction of Rights Certificates.........................14
Section 9. Reservation and Availability of Capital Stock...............................15
Section 10. Preferred Stock Record Date.................................................16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights......................................................................17
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..................24
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning
Power.......................................................................24
Section 14. Fractional Rights and Fractional Shares.....................................26
Section 15. Rights of Action............................................................27
Section 16. Agreement of Rights Holders.................................................28
Section 17. Rights Certificate Holder Not Deemed a Stockholder..........................28
Section 18. Concerning the Rights Agent.................................................29
Section 19. Merger or Consolidation or Change of Name of Rights Agent...................29
Section 20. Duties of Rights Agent......................................................30
Section 21. Change of Rights Agent......................................................32
Section 22. Issuance of New Rights Certificates.........................................33
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Section 23. Redemption and Termination..................................................33
Section 24. Exchange....................................................................34
Section 25. Notice of Certain Events....................................................35
Section 26. Notices.....................................................................36
Section 27. Supplements and Amendments..................................................36
Section 28. Successors..................................................................37
Section 29. Determinations and Actions by the Board of Directors, etc...................37
Section 30. Benefits of this Agreement..................................................38
Section 31. Severability................................................................38
Section 32. Governing Law...............................................................38
Section 33. Counterparts................................................................38
Section 34. Descriptive Headings........................................................38
Exhibit A - Form of Certificate of Designations of Series A Junior Participating
Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights
-ii-
RIGHTS AGREEMENT
This
Rights Agreement, dated as of April 9, 2002 (the
"Agreement"), between
Hydril Company, a Delaware corporation (the "Company"),
and Mellon Investor Services LLC, a New Jersey limited liability company (the
"Rights Agent"),
WITNESSETH:
WHEREAS, on April 9, 2002 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a dividend
of one Right (as hereinafter defined) for each share of Common Stock (as
hereinafter defined) and Class B Common Stock (as hereinafter defined), of the
Company outstanding at the Close of Business on April 12, 2002 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock and Class B Common Stock of the Company issued
(whether originally issued or delivered from the Company's treasury) between the
Record Date and the earlier of the Distribution Date (as hereinafter defined)
and the Expiration Date (as hereinafter defined), and, in certain circumstances
provided for in Section 22 hereof, after the Distribution Date, each Right
initially representing the right to purchase one Fractional Share (as
hereinafter defined) of Series A Junior Participating Preferred Stock of the
Company, upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
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 shall have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of (i) 15% or more of the shares of Common Stock then
outstanding, or (ii) Common Shares that have the right to cast 15% or more of
the votes that may be cast by all outstanding Common Shares for the election of
directors of the Company, but shall not include any Exempt Person; provided,
however, that a Person shall not be or become an Acquiring Person if such
Person, together with its Affiliates and Associates, shall become the Beneficial
Owner of shares such that such Person meets the thresholds set forth in (i) or
(ii) above as a result of (a) a reduction in the number of shares of Common
Shares outstanding due to the repurchase of Common Shares by the Company or (b)
the conversion by stockholders of the Company (including such Person) of any or
all outstanding shares of Class B Common Stock into shares of Common Stock,
unless and until (in the case of both (a) and (b)) such time, after becoming
aware that such Person has become the Beneficial Owner of shares that meet the
thresholds set forth in (i) or (ii) above (and without regard to which of (i) or
(ii) has been met), (x) as such Person shall purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock constituting 1% or more of
the then outstanding shares of Common Stock or any other Person (or Persons) who
is (or collectively are) the Beneficial Owner of shares of Common Stock
constituting 1% or more of the then outstanding shares of Common Stock shall
become an Affiliate or Associate of such Person, or (y) as such Person shall
purchase or otherwise become the Beneficial Owner of
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additional Common Shares which have the right to cast 1% or more of the votes
that may be cast by all outstanding Common Shares for the election of directors
of the Company, or any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of Common Shares which have the right to cast 1% or more of
the votes that may be cast by all outstanding Common Shares for the election of
directors of the Company shall become an Affiliate or Associate of such Person;
and provided, further, that an Inadvertent Acquiring Person shall not be deemed
to be or to have become an "Acquiring Person" for any purposes of this
Agreement.
Notwithstanding anything in this definition of "Acquiring
Person" to the contrary, if, as of the date hereof, any Person (other than a
Xxxxxx Holder), together with all Affiliates or Associates of such Person, is
the Beneficial Owner of a number of Common Shares that would otherwise cause
such Person to be an Acquiring Person, such Person shall not be or become an
Acquiring Person unless and until (x) such Person shall purchase or otherwise
become the Beneficial Owner of additional shares of Common Stock constituting 1%
or more of the then outstanding shares of Common Stock or any other Person (or
Persons) who is (or collectively are) the Beneficial Owner of shares of Common
Stock constituting 1% or more of the then outstanding shares of Common Stock
shall become an Affiliate or Associate of such Person, or (y) such Person shall
purchase or otherwise become the Beneficial Owner of additional Common Shares
which have the right to cast 1% or more of the votes that may be cast by all
outstanding Common Shares for the election of directors of the Company, or any
other Person (or Persons) who is (or collectively are) the Beneficial Owner of
Common Shares which have the right to cast 1% or more of the votes that may be
cast by all outstanding Common Shares for the election of directors of the
Company shall become an Affiliate or Associate of such Person.
At any time that the Rights are redeemable, the Board of
Directors may, generally or with respect to any specified Person or Persons,
determine to increase to a specified percentage or amount greater than that set
forth herein or decrease to a specified percentage or amount lower than that set
forth herein or determine a number of shares to be (but in no event less than or
equal to the percentage or number of Common Shares then beneficially owned by
such Person), the level of Beneficial Ownership of Common Shares at which a
Person or such Person or Persons becomes an Acquiring Person.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
"Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement.
"Associate" shall mean, with reference to any Person, (i) any
corporation, firm, partnership, association, unincorporated organization or
other entity (other than the Company or a Subsidiary of the Company) of which
such Person is an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial Owner of 10% or
more of any class of equity securities, (ii) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity and (iii) any relative or
spouse of such Person, or any relative of such spouse, who has the same home as
such Person.
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A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, is the "beneficial owner" of (as
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement) or
otherwise has the right to vote or dispose of, including pursuant to
any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (i) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy or consent
given in response to a public (i.e., not including a solicitation
exempted by Rule 14a-2(b)(2) of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement) proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act , (B) is not then reportable by such Person on Schedule
13D under the Exchange Act (or any comparable or successor report) and
(C) does not constitute a trust, proxy, power of attorney or other
device with the purpose or effect of allowing two or more persons,
acting in concert, to avoid being deemed "beneficial owners" of such
security or otherwise avoid the status of "Acquiring Person" under the
terms of this Agreement or as part of a plan or scheme to evade the
reporting requirements under Schedule 13D or Sections 13(d) or 13(g) of
the Exchange Act;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right or obligation to
acquire (whether such right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, other rights, warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," (A) securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) or (p) hereof in
connection with an adjustment made with respect to any Original Rights;
or
(iii) that are beneficially owned, directly or indirectly, by
(A) any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy or consent as described in the proviso to subparagraph
(i) of this definition) or disposing of any voting securities of the
Company or (B) any group (as that term is used
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in Rule 13d-5(b) of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement) of which such
Person is a member;
provided, however, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting (including,
without limitation, securities acquired pursuant to stabilizing transactions to
facilitate a public offering in accordance with Regulation M promulgated under
the Exchange Act, or to cover overallotments created in connection with a public
offering) until the expiration of forty days after the date of such acquisition.
For purposes of this Agreement, "voting" a security shall include voting,
granting a proxy, acting by consent, making a request or demand relating to
corporate action (including, without limitation, calling a stockholder meeting),
entering into a voting trust or voting agreement or otherwise giving an
authorization (within the meaning of Section 14(a) of the Exchange Act, as in
effect on the date of this Agreement) in respect of such security.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of
New York or New
Jersey are authorized or obligated by law or executive order to close.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $.50 per share, of the Company.
"Close of Business" on any given date shall mean 5:00 p.m.,
New York,
New York time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 p.m.,
New York,
New York time, on the
next succeeding Business Day.
"Closing Price" of a security for any day shall mean the last
sales price, regular way, on such day or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, on such
day, in either case as reported in the principal transaction reporting system
with respect to securities listed or admitted to trading on the
New York Stock
Exchange, or, if such security is not listed or admitted to trading on the
New
York Stock Exchange, on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by NASDAQ or such other
self-regulatory organization or registered securities information processor (as
such terms are used under the Exchange Act) that then reports information
concerning such security, or, if sales price information is not so reported, the
average of the high bid and low asked prices in the over-the-counter market on
such day, as reported by NASDAQ or such other entity, or, if on such day such
security is not quoted by any such entity, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in such
security selected by the Board of Directors of the Company. If on such day no
market maker is making a market in such security, the fair value of such
security on such day as determined in good faith by the Board of Directors of
the Company shall be used.
"Common Shares" shall mean shares of the Common Stock of the
Company and the Class B Common Stock of the Company.
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"Common Stock" shall mean the common stock, par value $.50 per
share, of the Company, except that "Common Stock" when used with reference to
equity interests issued by any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
"Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Company" shall mean the Person named as the "Company" in the
preamble of this Agreement until a successor Person shall have become such or
until a Principal Party shall assume, and thereafter be liable for, all
obligations and duties of the Company hereunder, pursuant to the applicable
provisions of this Agreement, and thereafter "Company" shall mean such successor
Person or Principal Party.
"Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
"Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Distribution Date" shall mean the earlier of (i) the Close of
Business on the tenth day after the Stock Acquisition Date (or, if the tenth day
after the Stock Acquisition Date occurs before the Record Date, the Close of
Business on the Record Date) or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by the Company's Board of Directors
as set forth below before the Distribution Date occurs) after the date that a
tender offer or exchange offer by any Person (other than any Exempt Person) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act as then in effect, if upon
consummation thereof, such Person would be an Acquiring Person. The Board of
Directors of the Company may, to the extent set forth in the preceding sentence,
defer the date set forth in clause (i) or (ii) of the preceding sentence to a
specified later date or to an unspecified later date to be determined by a
subsequent action or event (but in no event to a date later than the Close of
Business on the tenth day after the first occurrence of a Triggering Event).
"Equivalent Preferred Stock" shall have the meaning set forth
in Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Ratio" shall have the meaning set forth in Section
24 hereof.
"Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan or for
the purpose of funding any such plan or funding other employee benefits for
employees of the Company or any Subsidiary of the Company, and (v) any Xxxxxx
Holder.
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"Expiration Date" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof, and (iii) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the Close of Business on
April 9, 2012.
"Flip-In Event" shall mean an event described in Section
11(a)(ii) hereof.
"Flip-In Trigger Date" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Flip-Over Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) hereof.
"Fractional Share" with respect to the Preferred Stock shall
mean one one-hundredth of a share of Preferred Stock.
"Inadvertent Acquiring Person" shall mean a Person that would
otherwise be an "Acquiring Person" because of such Person's beneficial ownership
of Common Shares, if either:
(i) (a) such Person has reported or is required to report
ownership of Common Shares on Schedule 13G under the Exchange Act (or
any comparable or successor report) or on Schedule 13D under the
Exchange Act (or any comparable or successor report), which Schedule
13D, or any amendment thereto, does not state any intention to or
reserve the right to control or influence the management or policies of
the Company or engage in any of the actions specified in Item 4 of
Schedule 13D (other than the disposition of the Common Shares), (b)
such Person is not the Beneficial Owner of (x) 20% or more of the
shares of Common Stock then outstanding or (y) Common Shares that have
the right to cast 20% or more of the votes that may be cast by all
outstanding Common Shares for the election of directors of the Company,
and (c) after becoming aware that such Person has become the Beneficial
Owner of (A) 15% or more of the shares of Common Stock then outstanding
or (B) Common Shares that have the right to cast 15% or more of the
votes that may be cast by all outstanding Common Shares for the
election of directors of the Company (without regard to which of (A) or
(B) has met), such Person thereafter, while the Beneficial Owner of (A)
15% or more of the shares of Common Stock then outstanding or (B)
Common Shares that have the right to cast 15% or more of the votes that
may be cast by all outstanding Common Shares for the election of
directors of the Company, does not purchase or otherwise become the
Beneficial Owner of additional Common Shares or become an Affiliate or
Associate of any other Person (or Persons) who is (or collectively are)
the Beneficial Owner of Common Shares; or
(ii) the Board of Directors, with the concurrence of a
majority of the members of the Board of Directors who are not, and are
not representatives, nominees, Affiliates or Associates of, such Person
or an Acquiring Person, determines in good faith that such Person that
would otherwise be an "Acquiring Person" has become such inadvertently
(including, without limitation, because (a) such Person was unaware
that it beneficially owned Common Shares that would otherwise cause
such Person to be an "Acquiring
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Person" or (b) such Person was aware of the extent of its Beneficial
Ownership of Common Shares but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the
Company, and such Person as promptly as practicable divested or divests
itself of Beneficial Ownership of a sufficient number of Common Shares
so that such Person would no longer be an "Acquiring Person."
"NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
"Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner."
"Person" shall mean any individual, firm, corporation,
partnership, limited liability company, association, trust, unincorporated
organization or other entity or any group of Persons acting in concert.
"Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company having
the rights, powers and preferences set forth in the form of Certificate of
Designations attached hereto as Exhibit A and, to the extent that there is not a
sufficient number of shares of Series A Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, par value $1.00 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.
"Principal Party" shall have the meaning set forth in Section
13(b) hereof.
"Purchase Price" shall have the meaning set forth in Section
4(a) hereof.
"Record Date" shall have the meaning set forth in the recitals
clause at the beginning of this Agreement.
"Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
"Rights" shall have the meaning set forth in the recitals
clause at the beginning of this Agreement.
"Rights Agent" shall mean the Person named as the "Rights
Agent" in the preamble of this Agreement until a successor Rights Agent shall
have become such pursuant to the applicable provisions hereof, and thereafter
"Rights Agent" shall mean such successor Rights Agent. If at any time there is
more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
"Rights Certificates" shall mean the certificates evidencing
the Rights.
"Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals clause at the beginning of this Agreement.
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"Xxxxxx Holder" shall mean any of (i) (a) the Trust under
Paragraph VIII of the Will of Xxxxx X. Xxxxxx, Deceased, (b) any trustee thereof
that would not otherwise be or become an Acquiring Person except as a result of
such Person being deemed to beneficially own the Common Shares held by the
Trust, and (c) any beneficiary of the Trust that would not otherwise be or
become an Acquiring Person except as a result of such Person (x) being deemed to
beneficially own the Common Shares held by the Trust or (y) becoming a
Beneficial Owner of Common Shares as a result of receiving a distribution of
Common Shares pursuant to the terms of the Trust; (ii) (a) the Xxxxxxx Xxxxx
Xxxxxx Endowment for Xxxxx X. Xxxxxx College dated August 27, 1982, (b) any
trustee thereof that would not otherwise be or become an Acquiring Person except
as a result of such Person being deemed to beneficially own the Common Shares
held by the Endowment, and (c) any beneficiary of the Endowment that would not
otherwise be or become an Acquiring Person except as a result of such Person (x)
being deemed to beneficially own the Common Shares held by the Endowment or (y)
becoming a Beneficial Owner of Common Shares as a result of receiving a
distribution of Common Shares pursuant to the terms of the Endowment; (iii) (a)
the Xxxxxxx X. Xxxxxx Living Trust, (b) any trustee thereof that would not
otherwise be or become an Acquiring Person except as a result of such Person
being deemed to beneficially own the Common Shares held by the Trust, and (c)
any beneficiary of the Trust that would not otherwise be or become an Acquiring
Person except as a result of such Person (x) being deemed to beneficially own
the Common Shares held by the Trust or (y) becoming a Beneficial Owner of Common
Shares as a result of receiving a distribution of Common Shares pursuant to the
terms of the Trust; (iv) Xxxxxxx X. Xxxxxx, his estate and any executor,
administrator or personal representative of his estate; (v) Victoria Xxxxxx
Xxxx; (vi) Xxxxxxxxxxx X. Xxxxxx; (vii) Xxxxxx Xxxxxx; (viii) Xxxxxxx X. Xxxxxx;
and (ix) R. Xxxxxxx Xxxxxx.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
"Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition and Section 23, shall
include, without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Subsidiary" shall mean, with reference to any Person, any
corporation or other Person of which an amount of voting securities sufficient
to elect at least a majority of the directors or other persons performing
similar functions is beneficially owned, directly or indirectly, by such Person,
or otherwise controlled by such Person.
"Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights sent
pursuant to Section 3(b) hereof.
"Trading Day" with respect to a security shall mean a day on
which the principal national securities exchange on which such security is
listed or admitted to trading is open for the transaction of business, or, if
such security is not listed or admitted to trading on any national
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securities exchange but is quoted by NASDAQ, a day on which NASDAQ reports
trades, or, if such security is not so quoted, a Business Day.
"Triggering Event" shall mean any Flip-In Event or any
Flip-Over Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to (i) act as agent for the Company and (ii) to take
certain actions in respect of the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the holders of
the Common Stock) (although it is expressly agreed that the Rights Agent shall
not act as agent for such holders) 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. The Rights Agent shall have no duty to supervise any Co-Rights Agent
and shall in no event be liable for the acts or omissions of any Co-Rights
Agent.
Section 3. Issue of Rights Certificates.
(a) Until the Distribution Date, (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section 3) by the
certificates for Common Shares registered in the names of the holders of the
Common Shares and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Company). As soon as practicable after the
Distribution Date, the Company will promptly notify the Rights Agent thereof,
and the Rights Agent, if provided with a stockholder list and all other relevant
information, will send by first-class, insured, postage prepaid mail, to each
record holder of the Common Shares as of the Close of Business on the
Distribution Date (other than any Person referred to in the first sentence of
Section 7(e)), at the address of such holder shown on the records of the
Company, one or more Rights Certificates, evidencing one Right for each share of
Common Shares so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Shares has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit C, by first-class, postage prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Record Date,
at the address of such holder shown on the records of the Company. With respect
to certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date or the earlier surrender for transfer thereof or the
Expiration Date, the Rights associated with the shares of Common Shares
represented by such certificates shall be evidenced by such certificates for
Common Shares together with the Summary of Rights, and the registered holders of
the Common Shares shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any of the certificates for Common Shares outstanding on the Record Date,
with or without a copy of the
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Summary of Rights, shall also constitute the transfer of the Rights associated
with the Common Shares represented by such certificates.
(c) Rights shall be issued in respect of all Common Shares
that are issued (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date or, in certain circumstances provided in Section 22
hereof, after the Distribution Date. Certificates issued representing such
shares of Common Shares that shall so become outstanding or shall be transferred
or exchanged after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date shall also be deemed to be certificates for Rights,
and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the
Rights Agreement between
Hydril
Company (the "Company") and Mellon Investor Services LLC (the "Rights
Agent") dated as of April 9, 2002 as it may from time to time be
supplemented or amended (the "
Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of the Company. Under certain
circumstances, as set forth in the
Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire or may be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS BENEFICIALLY
OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS
ARE DEFINED IN THE
RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF,
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights associated
with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and registered holders of Common Shares shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Shares represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof), when, as and
if issued, shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate (but which
do not affect the rights, duties or responsibilities of the Rights Agent) and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
quotation system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 11 and Section
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22 hereof, the Rights Certificates, whenever issued, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to purchase such
number of Fractional Shares of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per Fractional Share (or, as
set forth in this Agreement, for other securities), the "Purchase Price"), but
the amount and type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by a Person
described in the first sentence of Section 7(e), and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any such Rights, shall contain (to the extent
feasible and to the extent the Rights Agent has been notified thereof) the
following legend, modified as applicable to apply to such Person:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the
Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby [will] [have] become null and void in
the circumstances and with the effect specified in Section 7(e) of such
Agreement.
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificate. The
Company shall give notice to the Rights Agent promptly after it becomes aware of
the existence of any Acquiring Person or any Associate or Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or 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 Rights Certificates shall be countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date and receipt by the Rights
Agent of all necessary information, the Rights Agent will keep or cause to be
kept, at its office designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for
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registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 14 and Section 24 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may be transferred, split
up, combined or exchanged for another Rights Certificate or Rights Certificates,
entitling the registered holder to purchase a like number of Fractional Shares
of Preferred Stock (or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Rights Certificates surrendered then entitled such holder (or former holder
in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have properly
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof or of the Affiliates or Associates thereof as the Company or the Rights
Agent shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e), Section 14 and Section 24 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment by the holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Rights Certificates. The Rights Agent shall have no
duty or obligation to take any action under any Section of this Agreement which
requires the payment by any holder of Rights of applicable taxes and
governmental charges unless and until the Rights Agent is satisfied that all
such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of 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 Rights
Certificate if mutilated, the Company will, subject to Section 4(b), Section
7(e), Section 14 and Section 24, execute and deliver a new Rights Certificate of
like tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
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Section 7. Exercise of Rights; Purchase Price.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly completed and executed, to the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of Fractional Shares of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Fractional Share of Preferred
Stock pursuant to the exercise of a Right shall initially be $100, and shall be
subject to adjustment from time to time as provided in Sections 11 and 13(a)
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per Fractional Share of Preferred
Stock (or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable tax or
charge, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i)(A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of Fractional 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 with a depositary agent,
requisition from the depositary agent depositary receipts representing interests
in such number of Fractional Shares 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 such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified check, cashier's or official bank
check or bank draft payable to the order of the Company or the Rights Agent. In
the event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property pursuant
to Section 11(a) or Section 13(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when necessary to comply
with this Agreement. The Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
-13-
(d) In case the registered holder of any Rights Certificate
shall exercise fewer than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Sections 6 and
14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by or transferred to (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a direct or indirect transferee of
such Rights from such Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after such Triggering Event or (iii) a direct or indirect
transferee of such Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with such Triggering Event and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from such Acquiring Person (or such Affiliate or Associate) to
holders of equity interests in such Acquiring Person (or such Affiliate or
Associate) or to any Person with whom such Acquiring Person (or such Affiliate
or Associate) has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that the Board of Directors
of the Company determines is part of an agreement, arrangement or understanding
that has as a primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action, no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise, and such Rights shall not be
transferable. The Company shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) duly and properly completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of
the Rights Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split-up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights
-14-
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares, or out of
its authorized and issued shares held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.
(b) So long as any shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights are listed on any
national securities exchange or quoted on any trading system, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange, or quoted on such system, upon official notice of issuance upon such
exercise. Following the occurrence of a Triggering Event, the Company will use
its best efforts to list (or continue the listing of) the Rights and the
securities issuable and deliverable upon the exercise of the Rights on one or
more national securities exchanges or to cause the Rights and the securities
purchasable upon exercise of the Rights to be reported by NASDAQ or such other
transaction reporting system then in use.
(c) The Company shall use its best efforts to (i) prepare and
file, as soon as practicable following the first occurrence of a Flip-In Event
or, if applicable, as soon as practicable following the earliest date after the
first occurrence of a Flip-In Event on which the consideration to be delivered
by the Company upon exercise of the Rights has been determined pursuant to this
Agreement (including in accordance with Section 11(a)(iii) hereof), a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (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 earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. In addition, if the Company shall determine that the Securities Act
requires an effective registration statement under the Securities Act following
the Distribution Date, the Company may temporarily suspend the exercisability of
the Rights until such time as such a registration statement has been declared
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as
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the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall not have
been obtained, the exercise thereof shall not be permitted under applicable law
or any required registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Fractional Shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of Fractional Shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any tax or charge that may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of Fractional Shares
of Preferred Stock (or Common Stock and/or other securities, as the case may be)
in respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of Fractional Shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a name other than that of
the registered holder upon the exercise of any Rights until such tax or charge
shall have been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax or charge is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for a number of Fractional Shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such shares (fractional or otherwise) of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable taxes and charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate, as such, 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.
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Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares or
other securities subject to purchase upon exercise of each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the
Rights Dividend Declaration Date (A) declare a dividend on the
outstanding shares of Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a smaller number
of shares or (D) otherwise reclassify the outstanding shares of
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(a) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind
of shares of Preferred Stock or capital stock or other securities, as
the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of Preferred Stock
or capital stock or other securities, as the case may be, 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.
If an event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this Agreement, in the
event any Person shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing
such Person to become an Acquiring Person is a Flip-Over Event, then
(x) the Purchase Price shall be adjusted to be the Purchase Price
immediately prior to the first occurrence of a Flip-In Event multiplied
by the number of Fractional Shares of Preferred Stock for which a Right
was exercisable immediately prior to such first occurrence and (y) each
holder of a Right (except as provided below in Section 11(a)(iii) and
in Section 7(e) hereof) shall thereafter have the right to receive,
upon exercise thereof at a price equal to the Purchase Price in
accordance with the terms of this Agreement, in lieu of the shares of
Preferred Stock otherwise purchasable thereunder, such number of shares
of Common Stock of the Company as shall equal the result obtained by
dividing the Purchase Price by 50% of the Current Market Price per
share of Common Stock on the date of such first occurrence (such number
of shares, the "Adjustment Shares"); provided that the Purchase Price
and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after the
date of such first occurrence.
(iii) In the event that the number of shares of Common Stock
that are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit
-17-
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall, to the
extent permitted by applicable law and regulation, (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the Current Market Price used to
determine the number of Adjustment Shares) (the "Current Value") over
(2) the Purchase Price (such excess is herein referred to as the
"Spread"), and (B) with respect to each Right, make adequate provision
to substitute for the Adjustment Shares, upon the exercise of the
Rights and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock (including, without limitation, the
Preferred Stock) that the Board of Directors of the Company has
determined to have the same value as shares of Common Stock (such
shares of preferred stock are herein referred to as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets or
(6) any combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been determined by
the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B)
above within 30 days following the date of the occurrence of a Flip-In
Event (the "Flip-In Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days after the Flip-In Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company or the Board of
Directors determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Market
Price per share of the Common Stock on the Flip-In Trigger Date and the
value of any Common Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Preferred Stock (or shares having
substantially the same rights, privileges and preferences as the shares of
Preferred Stock
-18-
("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 price per share, if
a security convertible into Preferred Stock or Equivalent Preferred Stock) less
than the Current Market Price per share of Preferred Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares of Preferred
Stock that the aggregate offering price of the total number of shares of
Preferred Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator of
which shall be the number of 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 by delivery of consideration, part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights.
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 that would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred 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 quarterly cash dividend out of the 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
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the Current Market
Price per share of Preferred Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent) of the portion of the cash,
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Preferred Stock and the denominator
of which shall be such Current Market Price per 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 be
adjusted to be the Purchase Price that would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the "Current
Market Price" per share of Common Stock of a Person on any date shall be deemed
to be the average of the daily Closing Prices per share of such Common Stock for
the 30 consecutive Trading Days immediately prior
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to, but not including, such date, and for purposes of computations made pursuant
to Section 11(a)(iii) hereof, the "Current Market Price" per share of Common
Stock on any date shall be deemed to be the average of the daily Closing Prices
per share of such Common Stock for the 10 consecutive Trading Days immediately
following, but not including, such date; provided, however, that in the event
that the Current Market Price per share of Common Stock is determined during a
period following the announcement of (A) a dividend or distribution on such
Common Stock other than a regular quarterly cash dividend or the dividend of the
Rights, or (B) any subdivision, combination or reclassification of such Common
Stock, and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, shall not have
occurred prior to the commencement of the requisite 30 Trading Day or 10 Trading
Day period, as set forth above, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account ex-dividend trading. If
the Common Stock is not publicly held or not so listed or traded, "Current
Market Price" per share shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation hereunder, the
"Current Market Price" per share (or Fractional 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(d) (other than the last sentence thereof). If the
Current Market Price per share (or Fractional 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(d), 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 . If neither the Common Stock nor the Preferred Stock is publicly held or
so listed or traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of a Fractional Share of
Preferred Stock shall be equal to the Current Market Price of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments that by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or to the nearest ten-thousandth of a Fractional Share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive
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in respect of such Right any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (f), (g), (h), (i), (j), (k) and (m) hereof, and the provisions of
Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Fractional Shares of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) 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
Fractional Shares of Preferred Stock (calculated to the nearest one
ten-thousandth of a Fractional Share) obtained by (i) multiplying (x) the number
of Fractional Shares of Preferred Stock covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights in lieu of any
adjustment in the number of Fractional Shares of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Fractional Shares of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest 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, and shall promptly give the
Rights Agent a copy of such announcement. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed
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and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Fractional Shares of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Fractional Share and the
number of Fractional Shares that were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, or the stated
capital of the number of Fractional Shares of Preferred Stock or of the number
of shares of Common Stock or other securities issuable upon exercise of a Right,
the Company shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of Fractional Shares of Preferred Stock
or such number of shares of Common Stock or other securities at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer (and shall give prompt written
notice of such election to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date the
number of Fractional Shares of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Fractional 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
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or securities that
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11 hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time that there is an Acquiring Person, (i) consolidate with any other Person,
(ii) merge with or into any other Person or (iii) sell, lease or transfer (or
permit one or more Subsidiaries to sell, lease or transfer), in one transaction
or a series of related transactions, assets, earning power or cash flow
aggregating more than 50% of the assets, earning power or cash flow of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons,
if (x) at the time of or
-22-
immediately after such consolidation, merger, sale, lease or transfer there are
any rights, warrants or other instruments or securities of the Company or any
other Person outstanding or agreements, arrangements or understandings in effect
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (y) prior to, simultaneously with or immediately
after such consolidation, merger, sale, lease or transfer, the stockholders or
other equity owners of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates, or (z) the identity, form or nature of organization of the
Principal Party (including, without limitation, the selection of the Person that
will be the Principal Party as a result of the Company's entering into one or
more consolidations, mergers, sales, leases or transfers with more than one
party) would preclude or limit the exercise of Rights or otherwise diminish
substantially or eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if the
purpose of such action is to, or if at the time such action is taken it is
reasonably foreseeable that such action will, diminish substantially or
eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding Section 3(c) hereof or any other provision
of this Agreement to the contrary, in the event that the Company shall at any
time after the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Shares payable
in shares of Common Shares, (ii) subdivide the outstanding shares of Common
Shares, (iii) combine the outstanding shares of Common Shares into a smaller
number of shares or (iv) otherwise reclassify the outstanding shares of Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Shares then outstanding,
or issued or delivered thereafter with Rights, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share of Common
Shares following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Shares immediately
prior to such event by a fraction (the "Adjustment Fraction"), the numerator of
which shall be the total number of shares of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Shares outstanding immediately
following the occurrence of such event. In lieu of such adjustment in the number
of Rights associated with one share of Common Shares, the Company may elect to
adjust the number of Fractional Shares of Preferred Stock purchasable upon the
exercise of one Right and the Purchase Price. If the Company makes such
election, the number of Rights associated with one share of Common Shares shall
remain unchanged, and the number of Fractional Shares of Preferred Stock
purchasable upon exercise of one Right and the Purchase Price shall be
proportionately adjusted so that (i) the number of Fractional Shares of
Preferred Stock purchasable upon exercise of a Right following such adjustment
shall equal the product of the number of Fractional Shares of Preferred Stock
purchasable upon exercise of a Right immediately prior to such adjustment
multiplied by the Adjustment Fraction and (ii) the Purchase Price following such
adjustment shall equal the product of the Purchase Price immediately prior to
such adjustment multiplied by the Adjustment Fraction.
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Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 and/or
Section 13 hereof, the Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts and computations
accounting for such adjustment, (b) promptly file with the Rights Agent, and
with each transfer agent for the Preferred Stock and the Common Shares, a copy
of such certificate and (c) mail a brief summary thereof to each registered
holder of a Rights Certificate (or, if prior to the Distribution Date, to each
registered holder of a certificate representing shares of Common Shares) in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets, Cash Flow or Earning Power.
(a) In the event that, from and after the time an Acquiring
Person has become such, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger, and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Shares shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (z) the Company shall sell, lease or
otherwise transfer (or one or more of its Subsidiaries shall sell, lease or
otherwise transfer), in one transaction or a series of related transactions,
assets, cash flow or earning power aggregating more than 50% of the assets, cash
flow or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons (other than the Company or any wholly owned Subsidiary of
the Company or any combination thereof in one or more transactions each of which
complies (and all of which together comply) with Section 11(o) hereof), then,
and in each such case, proper provision shall be made so that: (i) the Purchase
Price shall be adjusted to be the Purchase Price immediately prior to the first
occurrence of a Triggering Event multiplied by the number of Fractional Shares
of Preferred Stock for which a Right was exercisable immediately prior to such
first occurrence; (ii) on and after the Distribution Date, each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price in accordance
with the terms of this Agreement, in lieu of shares of Preferred Stock or Common
Stock of the Company, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal Party
(as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by dividing the Purchase Price by 50% of the Current Market Price per
share of the Common Stock of such Principal Party on the date of consummation of
such Flip-Over Event; provided that the Purchase Price and the number of shares
of Common Stock of such Principal Party issuable upon exercise of each Right
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such first occurrence of a Triggering Event or after
the date of such Flip-Over Event, as applicable; (iii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Flip-Over
Event, all the obligations and duties of the Company pursuant to this Agreement;
(iv) the term "Company"
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shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply only
to such Principal Party following the first occurrence of a Flip-Over Event; (v)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (vi) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the occurrence of any Flip-Over Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or, if there is
more than one such issuer, the issuer the Common Stock of which has the
greatest aggregate market value, or (B) if no securities are so issued,
(x) the Person that survives such consolidation or is the other party
to the merger and survives such merger, or, if there is more than one
such Person, the Person the Common Stock of which has the greatest
aggregate market value or (y) if the Person that is the other party to
the merger does not survive the merger, the Person that does survive
the merger (including the Company if it survives); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power so transferred, or if the
Person receiving the greatest portion of the assets or earning power
cannot be determined, the Person the Common Stock of which has the
greatest aggregate market value;
provided, however, that in any such case described in the foregoing clauses
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time and
has not been continuously over the preceding twelve-month period registered
under Section 12 of the Exchange Act, and if (1) such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has been
so registered, "Principal Party" shall refer to such other Person; (2) such
Person is a Subsidiary, directly or indirectly, 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 aggregate market value; and (3) such Person is owned,
directly or indirectly, by a joint venture formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of both or
all of such joint venturers and the Principal Parties in each such chain shall
bear the obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any Flip-Over Event
unless each Principal Party (or Person that may become a Principal Party as a
result of such Flip-Over Event)
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shall have a sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and each such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of such Flip-Over Event, the Principal Party at its
own expense will
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
"blue sky" laws of such jurisdictions as may be necessary or
appropriate;
(iii) use its best efforts, if the Common Stock of the
Principal Party is or shall become listed on a national securities
exchange, to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be
listed on a national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be reported by
NASDAQ or such other transaction reporting system then in use; and
(iv) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
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 Flip-Over Event
shall occur at any time after the occurrence of a Flip-In Event, the Rights that
have not theretofore been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates or scrip evidencing fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Closing Price of one Right for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than, except as provided in Section 7(c)
hereof, fractions that are integral multiples of a Fractional Share of Preferred
Stock) upon exercise of the Rights or to distribute
-26-
certificates or scrip evidencing fractional shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that are integral
multiples of a Fractional Share of Preferred Stock). Interests in fractions of
shares of Preferred Stock in integral multiples of a Fractional Share of
Preferred Stock may, at the election of the Company in its sole discretion, 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 a
Fractional Share of Preferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of one one-hundredth of
the Closing Price of a share of Preferred Stock for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates or scrip evidencing
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the Closing Price of one share of Common Stock for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
(e) Whenever a payment for fractional Rights or Fractional
Shares is to be made by the Rights Agent, the Company shall (i) promptly prepare
and deliver to the Rights Agent a certificate setting forth in reasonable detail
the facts related to such payments and the prices and/or formulas utilized in
calculating such payments, and (ii) provide sufficient monies to the Rights
Agent in the form of fully collected funds to make such payments. The Rights
Agent shall be fully protected in relying upon such a certificate and shall have
no duty with respect to, and shall not be deemed to have knowledge of any
payment for fractional Rights or Fractional Shares under any Section of this
Agreement relating to the payment of fractional Rights or Fractional Shares
unless and until the Rights Agent shall have received such a certificate and
sufficient monies.
Section 15. Rights of Action. All rights of action in respect
of this Agreement, other than rights of action vested in the Rights Agent
pursuant to Section 18 hereof, are vested in the respective registered holders
of the Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares) and, where applicable, the Company; and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement.
-27-
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the obligations hereunder of
any Person subject to this Agreement. After a Triggering Event, holders of
Rights shall be entitled to recover the reasonable costs and expenses, including
attorneys' fees, incurred by them in any action to enforce the provisions of
this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will not be
evidenced by Rights Certificates and will be transferable only in connection
with the transfer of Common Shares;
(b) after the Distribution Date, the Rights Certificates will
be transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof and the
certificate contained therein duly completed and fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the number of
Fractional Shares of Preferred Stock or any other securities of the Company that
may at any time be issuable upon the exercise of the Rights represented thereby,
nor shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a 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
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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 Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the preparation,
administration, execution, delivery and amendment 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, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith or willful misconduct
(each as determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction) on the part of the Rights Agent, for any
action taken, suffered 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 in the
premises. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company unless it is determined by a final,
non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction that the Rights Agent is not entitled to indemnification due to the
Rights Agent's gross negligence, bad faith or willful misconduct. The provisions
of this Section 18 and Section 20 hereof shall survive the termination of this
Agreement, the exercise or expiration of the Rights and the resignation or
removal of the Rights Agent.
(b) The Rights Agent shall be authorized and protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its acceptance and administration of this
Agreement in reliance upon any Rights Certificate or certificate for Common
Shares or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document believed by it, after
proper inquiry or examination, to be genuine and to be signed, executed and,
where necessary, guaranteed, verified or acknowledged, by the proper Person or
Persons, or otherwise upon the advise of counsel as set forth in Section 20
hereof. The Rights Agent shall not be deemed to have knowledge of any event of
which it was supposed to receive notice thereof hereunder, and the Rights Agent
shall be fully protected and shall incur no liability for failing to take any
action in connection therewith, unless and until it has received such notice in
writing.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto;
-29-
provided, however, that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes only the duties and obligations expressly imposed by this Agreement
(and no implied duties and obligations) upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the advice or 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 accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "Current Market Price") be proved or established by the
Company prior to taking, suffering or omitting to take any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent for
any action taken, suffered or omitted 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 (each as determined by a
final, non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction). Anything to the contrary notwithstanding, in no event shall the
Rights Agent be liable for special, punitive, indirect, consequential or
incidental loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage
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and regardless of the form of action. Any liability of the Rights Agent under
this Agreement will be limited to the amount of fees paid by the Company to the
Rights Agent.
(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
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility or
have any liability 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 Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights, a transfer to any Acquiring Person or any
adjustment required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after receipt of actual knowledge 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 Common Shares
or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or Common Shares or
other securities will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept 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 such instructions shall be full authorization and protection to the
Rights Agent, and the Rights Agent shall not be liable for any action taken or
suffered to be taken by it in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, Affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, omission,
-31-
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, omission, default, neglect or
misconduct, absent gross negligence, bad faith or willful misconduct (each as
determined by a final, non-appealable order, judgment, decree or ruling of a
court of competent jurisdiction) in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes 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 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Common Shares and the Preferred Stock, by registered or
certified mail, and to the registered holders, if any, of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares and the Preferred Stock, by registered
or certified mail, and to the registered holders of the Rights Certificates, if
any, by first-class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. Notwithstanding the foregoing provisions of this
Section 21, in no event shall the resignation or removal of a Rights Agent be
effective until a successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the registered holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a Person organized and doing business
under the laws of the United States or of the State of
New York (or of any other
state of the United States so long as such corporation or limited liability
company is authorized to conduct a stock transfer or corporate trust business in
the State of
New York), in good standing, which 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
$50,000,000 or (b) an affiliate of a Person 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
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the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and the Preferred Stock, and mail a
notice thereof in writing to the registered holders, if any, of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date, the Company
(a) shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement granted or
awarded on or prior to the Distribution Date, or upon the exercise, conversion
or exchange of securities issued by the Company on or prior to the Distribution
Date, and (b) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the Company or
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the time a Person becomes an Acquiring Person, cause the
Company to redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately
adjusted, if necessary, to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such
redemption price being hereinafter referred to as the "Redemption Price"). The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the redemption of the Rights (the
effectiveness of which action may be conditioned on the occurrence of one or
more events or on the existence of one or more facts or may be effective at some
future time), evidence of which shall be filed with the Rights Agent and without
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the
effectiveness of the action of the Board of Directors
-33-
ordering the redemption of the Rights, the Company shall give prompt written
notice of such redemption to the Rights Agent and the registered holders of the
then outstanding Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Company for the
Common Shares. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time and from time to time after the occurrence of a Flip-In Event,
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 shares of Common Stock or Common Stock Equivalents or any
combination thereof, at an exchange ratio of one share of Common Stock , or such
number of Common Stock Equivalents or units representing fractions thereof as
would be deemed to have the same value as one share of Common Stock , per Right,
appropriately adjusted, if necessary, to reflect any stock split, stock dividend
or similar transaction occurring after the Rights Dividend Declaration Date
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors may not effect such
exchange at any time after (i) any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding
or (ii) the occurrence of a Flip-Over Event.
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to and in accordance with subsection (a) of this Section 24 (the effectiveness
of which action may be conditioned on the occurrence of one or more events or on
the existence of one or more facts or may be effective at some future time) 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 and/or Common Stock
Equivalents equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such
exchange (with prompt written notice thereof to the Rights Agent); 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 registered holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock and/or
Common Stock Equivalents for Rights will be effected and, in the event of any
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected as nearly pro rata as possible based on the number of
Rights (other than Rights that have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock
that are authorized by the Company's certificate of incorporation but not
outstanding or reserved for
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issuance for purposes other than upon exercise of the Rights is not sufficient
to permit an exchange of Rights as contemplated in accordance with this Section
24, the Company may, at its option, take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon exchange of the
Rights.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates or scrip evidencing
fractional shares of Common Stock upon exchange of the Rights. In lieu of such
fractional shares of Common Stock , the Company shall pay to the registered
holders of Rights 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
value of a whole share of Common Stock . For purposes of this Section 24, the
value of a whole share of Common Stock shall be the Closing Price per share of
Common Stock for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24, and the value of any Common Stock Equivalent shall
be deemed to have the same value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a wholly owned Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof), or to
effect any sale, lease or other transfer of all or substantially all the
Company's assets, cash flow or earning power to any other Person or Persons
(other than a wholly owned Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and to each holder of record of a Rights
Certificate, to the extent feasible and 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, lease, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the shares of Preferred Stock for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares 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.
(b) In case any Flip-In Event or Flip-Over Event shall occur,
then (i) the Company shall as soon as practicable thereafter give to the Rights
Agent and to each registered
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holder of a Rights Certificate (or if occurring prior to the Distribution Date,
the registered holders of Common Shares), 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(a)(ii) or
Section 13(a) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Shares and/or, if
appropriate, other securities.
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 Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) or by facsimile transmission as follows:
Hydril Company
0000 Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) or by facsimile transmission as follows:
Mellon Investor Services LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Relationship Manager
Facsimile No.: (000) 000-0000
with a copy to:
Mellon Investor Services LLC
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Shares) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Except as provided in
the last sentence of this Section 27, at any time when the Rights are then
redeemable, the Company may in its sole and absolute discretion and, subject to
the other provisions of this Section 27, the
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Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or holders of Common Shares. At any time when the Rights are not redeemable,
except as provided in the last sentence of this Section 27, the Company may and
subject to the other provisions of this Section 27, the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
that the Company may deem necessary or desirable; provided that no such
amendment or supplement shall materially adversely affect the interests of the
holders of Rights (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); and further provided that this Agreement may not be
supplemented or amended pursuant to this sentence to lengthen (A) a time period
relating to when the Rights may be redeemed or (B) any other time period unless
the lengthening of such other time period is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights (other than any Acquiring Person and its Affiliates and Associates). Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment;
provided, however, that the Rights Agent may, but shall not be obligated to,
enter into any such supplement or amendment that affects the Rights Agent's own
rights, duties, liabilities or immunities under this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made that decreases the Redemption Price.
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. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of the
number of shares of Common Shares outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Common Shares of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (or, as set forth herein,
certain specified members thereof) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights. The Rights
Agent shall always be entitled to assume that the Company's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
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Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shares).
Section 31. 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.
Without limiting the foregoing, if any provision requiring that a determination
be made by less than the entire Board of Directors of the Company is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the entire Board of
Directors of the Company.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
Section 33. 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 34. 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.
-38-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
HYDRIL COMPANY
By
-----------------------------------
Xxxxxxx X. Xxxxxxx
Chief Financial Officer and
Vice President - Administration
MELLON INVESTOR SERVICES LLC
By
-----------------------------------
Name:
Title:
-39-
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
HYDRIL COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
HYDRIL COMPANY, a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated Certificate of
Incorporation of the said Corporation, the said Board of Directors on April 9,
2002 adopted the following resolution creating a series of 1,070,000 shares of
Preferred Stock designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of
the Restated Certificate of Incorporation, a series of Preferred Stock,
par value $1.00 per share, of the Corporation be and hereby is created,
and that the designation and number of shares thereof and the voting
and other powers, preferences and relative, participating, optional or
other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. There shall be a series of
Preferred Stock that shall be designated as "Series A Junior Participating
Preferred Stock,"and the number of shares constituting such series shall be
1,070,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to less than
the number of shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock, in preference to the holders of shares of any class or series of stock of
the Corporation ranking junior to the Series A Junior Participating Preferred
Stock, shall be entitled
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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 March
31, June 30, September 30 and December 31 in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) the Adjustment Number (as defined below) times the aggregate per share
amount of all cash dividends, and the Adjustment Number 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, par value $.50 per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The "Adjustment Number" shall initially be 100. In the event
the Corporation shall at any time after April 9, 2002 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the 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.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in paragraph
(A) above 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 A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior 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 A 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 fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend
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or distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of Series A Junior
Participating Preferred Stock, the holders of shares of any other class or
series entitled to vote with the Common Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six
quarterly dividends thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period") that shall extend until
such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, the
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) upon which these or like voting rights have been
conferred and are exercisable (the "Voting Preferred Stock") with dividends in
arrears in an amount equal to six quarterly dividends thereon, voting as a
class, irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that such voting right shall not be exercised
unless the holders of at least one-third in number of the shares of Voting
Preferred Stock outstanding shall be present in person or by proxy. The absence
of a quorum of the holders of Common Stock shall not affect the exercise by the
holders of Voting Preferred Stock of such voting right. At any meeting at which
the holders of Voting Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancies, if any, in the Board of Directors as
may then exist up to two Directors or, if such right is exercised at an annual
meeting, to elect two Directors. If the number that may be so elected at any
special meeting does not amount to the required number, the holders of the
Voting Preferred Stock shall, to the extent not inconsistent with the Restated
Certificate of Incorporation, have the right to make such increase in the number
of Directors as shall be necessary to permit the election by them of the
required number. After the holders of the Voting Preferred Stock shall have
exercised their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Voting Preferred Stock as herein
A-3
provided or pursuant to the rights of any equity securities ranking senior to or
pari passu with the Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent of the total
number of shares of Voting Preferred Stock outstanding, irrespective of series,
may request, the calling of a special meeting of the holders of Voting Preferred
Stock, which meeting shall thereupon be called by the Chairman of the Board, the
President, a Vice President or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of Voting Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be given to each
holder of record of Voting Preferred Stock by mailing a copy of such notice to
him at his last address as the same appears on the books of the Corporation.
Such meeting shall be called for a time not earlier than 20 days and not later
than 60 days after such order or request or, in default of the calling of such
meeting within 60 days after such order or request, such meeting may be called
on similar notice by any stockholder or stockholders owning in the aggregate not
less than ten percent of the total number of shares of Voting Preferred Stock
outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting
Preferred Stock shall have exercised their right to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred Stock
shall continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class or
classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors shall
be such number as may be provided for in the Restated Certificate of
Incorporation or By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the Restated
Certificate of Incorporation or By-Laws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred 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.
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4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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
A Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Junior 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 A Junior Participating Preferred Stock, except dividends paid
ratably on the Series A 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; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of Series A Junior Participating
Preferred Stock, or to all such holders and the holders of any such
shares ranking on a parity therewith, upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to any conditions and restrictions on issuance
set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
A-5
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Junior Participating Preferred Stock Liquidation
Preference"). Following the payment of the full amount of the Series A Junior
Participating Preferred Stock Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A 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 A Junior Participating
Preferred Stock Liquidation Preference by (ii) the Adjustment Number. Following
the payment of the full amount of the Series A Junior Participating Preferred
Stock Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series A Junior Participating Preferred Stock
and holders of shares of Common Stock shall, subject to the prior rights of all
other series of Preferred Stock, if any, ranking prior thereto, receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Series A Junior
Participating Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Junior Participating
Preferred Stock Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, that rank on a parity with the Series A
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, however, that there are not
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of Common
Stock.
(C) Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger or consolidation of any other
corporation into or with the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
6, but the sale, lease or conveyance of all or substantially all the
Corporation's assets shall be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this Section 6.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share equal to the Adjustment
Number 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.
8. Redemption. (A) The Corporation, at its option, may redeem
shares of the Series A Junior Participating Preferred Stock in whole at any time
and in part from time to time, at a redemption price equal to the Adjustment
Number times the current per share market price (as such term is hereinafter
defined) of the Common Stock on the date of the mailing of the
A-6
notice of redemption, together with unpaid accumulated dividends to the date of
such redemption. The "current per share market price" on any date shall be
deemed to be the average of the closing price per share of such Common Stock for
the ten consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Common Stock is determined during a period
following the announcement of (A) a dividend or distribution on the Common Stock
other than a regular quarterly cash dividend or (B) any subdivision, combination
or reclassification of such Common Stock and the ex-dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, shall not have occurred prior to the commencement of such
ten Trading Day period, then, and in each such case, the current per share
market price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sales 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 transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange, or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange but sales price information is
reported for such security, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
self-regulatory organization or registered securities information processor (as
such terms are used under the Securities Exchange Act of 1934, as amended) that
then reports information concerning the Common Stock, or, if sales price
information is not so reported, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by NASDAQ or such other
entity, or, if on any such date the Common Stock is not quoted by any such
entity, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected by the
Board of Directors of the Corporation. If on any such date no such market maker
is making a market in the Common Stock, the fair value of the Common Stock on
such date as determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Stock is listed or
admitted to trading is open for the transaction of business, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
but is quoted by NASDAQ, a day on which NASDAQ reports trades, or, if the Common
Stock is not so quoted, a Monday, Tuesday, Wednesday, Thursday or Friday on
which banking institutions in the State of New York are not authorized or
obligated by law or executive order to close.
(B) In the event that fewer than all the outstanding shares of
the Series A Junior Participating Preferred Stock are to be redeemed, the number
of shares to be redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be determined by lot or pro rata as may be
determined by the Board of Directors or by any other method that may be
determined by the Board of Directors in its sole discretion to be equitable.
(C) Notice of any such redemption shall be given by mailing to
the holders of the shares of Series A Junior Participating Preferred Stock to be
redeemed a notice of such redemption, first class postage prepaid, not later
than the fifteenth day and not earlier than the sixtieth day before the date
fixed for redemption, at their last address as the same shall appear upon the
books of the Corporation. Each such notice shall state: (i) the redemption date;
(ii) the
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number of shares to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on the
Close of Business on such redemption date. Any notice that is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the stockholder received such notice, and failure duly to give
such notice by mail, or any defect in such notice, to any holder of Series A
Junior Participating Preferred Stock shall not affect the validity of the
proceedings for the redemption of any other shares of Series A Junior
Participating Preferred Stock that are to be redeemed. On or after the date
fixed for redemption as stated in such notice, each holder of the shares called
for redemption shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the redemption price. If fewer than all the
shares represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
The shares of Series A Junior Participating Preferred Stock shall not be subject
to the operation of any purchase, retirement or sinking fund.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise, and shall rank senior to the Common Stock
as to such matters.
10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of two-thirds or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate and does affirm the foregoing as true this ___ day of _______, 200_.
HYDRIL COMPANY
Date: April 9, 2002 By:
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Financial Officer and
Vice President - Administration
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Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
---------
NOT EXERCISABLE AFTER APRIL 9, 2012 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO
LONGER BE TRANSFERABLE.
RIGHTS CERTIFICATE
HYDRIL COMPANY
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 April 9, 2002 as it may from
time to time be supplemented or amended (the "Rights Agreement"), between
Hydril
Company, a Delaware corporation (the "Company"), and Mellon Investor Services
LLC, a New Jersey limited liability company (the "Rights Agent"), to purchase
from the Company at any time prior to 5:00 p.m. (New York, New York time) on
April 9, 2012 at the principal office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one one-hundredth of a
fully paid, nonassessable share (a "Fractional Share") of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), of the Company, at a purchase price of $100 per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate set
forth on the reverse hereof duly executed. The Purchase Price may be paid in
cash or by certified check, cashier's or official bank check or bank draft
payable to the order of the Company or the Rights Agent. The number of Rights
evidenced by this Rights Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
Fractional Share set forth above, are the number and Purchase Price as of April
9, 2002, based on the Preferred Stock as constituted at such date. The Company
reserves the right to require prior to the occurrence of a Triggering Event (as
such term is defined in the Rights Agreement) that a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.
From and after the first occurrence of a Triggering Event (as
such term is defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by or transferred to (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain circumstances specified
in the
B-1
Rights Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, such Rights shall, with certain exceptions, become null and
void in the circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such Rights from and
after the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities or assets
that may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file with the Company
and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Fractional Shares of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.01 per Right, payable, at the election of the
Company, in cash or shares of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of the Close
of Business on (a) the tenth day following the first public announcement of the
occurrence of a Flip-In Event (as such time period may be extended or shortened
pursuant to the Rights Agreement) and (b) the Expiration Date (as such term is
defined in the Rights Agreement) or (ii) may be exchanged in whole or in part
for shares of Common Stock and/or other equity securities of the Company deemed
to have the same value as shares of Common Stock, at any time prior to a
person's becoming the beneficial owner of 50% or more of the shares of Common
Stock outstanding or the occurrence of a Flip-Over Event.
No fractional shares of Preferred Stock are required to be
issued upon the exercise of any Right or Rights evidenced hereby (other than,
except as set forth above, fractions that are integral multiples of a Fractional
Share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
B-2
No holder of this Rights Certificate, as such, 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 that 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 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of April 12, 2002
ATTEST: HYDRIL COMPANY
By:
------------------------------- -------------------------------
Secretary Xxxxxxx X. Xxxxxxx
Chief Financial Officer and
Vice President - Administration
Countersigned:
MELLON INVESTOR SERVICES LLC
By
-----------------------------
Authorized Signature
B-3
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer any Rights evidenced by the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________ hereby sells,
assigns and transfers unto ____________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the said Rights on the books of the
within-named Company, with full power of substitution.
Dated: _________________, 200__
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined 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 Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or who is a direct or
indirect transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: _____________, 200__
--------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-5
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: HYDRIL COMPANY
The undersigned hereby irrevocably elects to exercise
_________ Rights represented by this Rights Certificate to purchase the shares
of Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person that may be issuable upon the
exercise of the Rights) and requests that certificates for such shares (or other
securities) be issued in the name of and delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: ____________, 200__
----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
B-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined 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 Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate of an
Acquiring Person.
Dated: _____________, 200__
----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank or trust company having an office or correspondent in the United
States or another eligible guarantor institution (as defined pursuant to Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended).
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
B-7
Exhibit C
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT), AND CERTAIN TRANSFEREES THEREOF, WILL BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS
On April 9, 2002, the Board of Directors of Hydril Company
(the "Company") declared a dividend of one right ("Right") for each outstanding
share of the Company's Common Stock, par value $.50 per share ("Common Stock"),
and Class B Common Stock, par value $.50 per share ("Class B Common Stock" and,
together with the Common Stock, the "Common Shares") to stockholders of record
at the Close of Business on April 12, 2002. Each Right entitles the registered
holder to purchase from the Company a unit consisting of one one-hundredth of a
share (a "Fractional Share") of Series A Junior Participating Preferred Stock,
par value $1.00 per share (the "Preferred Stock"), at a purchase price of $100
per Fractional Share, subject to adjustment (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights Agreement dated as
of April 9, 2002 as it may from time to time be supplemented or amended (the
"Rights Agreement") between the Company and Mellon Investor Services LLC, as
Rights Agent.
Initially, the Rights will be attached to all certificates
representing outstanding shares of Common Stock and Class B Common Stock, and no
separate certificates for the Rights ("Rights Certificates") will be
distributed. The Rights will separate from the Common Stock and Class B Common
Stock and a "Distribution Date" will occur, with certain exceptions, upon the
earlier of (i) ten days following a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of (a) 15% or more of the
outstanding shares of Common Stock or (b) Common Shares that have the right to
cast 15% or more of the votes that may be cast by all outstanding Common Shares
for the election of directors of the Company (the date of the announcement being
the "Stock Acquisition Date"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person's
becoming an Acquiring Person. In certain circumstances, the Distribution Date
may be deferred by the Board of Directors. Certain inadvertent acquisitions will
not result in a person's becoming an Acquiring Person. The Company, its
subsidiaries, its employee benefit plans and related entities and certain
persons enumerated in the Rights Agreement that currently hold in excess of 15%
of the Company's Class B Common Stock or are related to such holders of in
excess of 15% of the Company's Class B Common Stock are exempted from the
definition of Acquiring Person. No other person or group of affiliated or
associated persons that is the beneficial owner of (a) 15% or more of the
outstanding shares of Common Stock or (b) Common Shares that have the right to
cast 15% or more of the votes that may be cast by all outstanding Common Shares
for the election of directors of the Company at the time of the adoption of the
Rights Agreement, will become an Acquiring Person unless and until certain
increases in such person's beneficial ownership occur or are deemed to occur.
Until the Distribution Date, (a) the Rights will be evidenced by the Common
Share certificates (together with a copy of this Summary of Rights or bearing
the notation referred to below) and will be transferred with and only with such
Common
C-1
Share certificates, (b) new Common Share certificates issued after April 12,
2002 will contain a notation incorporating the Rights Agreement by reference and
(c) the surrender for transfer of any certificate for Common Shares (with or
without a copy of this Summary of Rights) will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date and
will expire at the Close of Business on April 9, 2012, unless earlier redeemed
or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Common Shares as of the
Close of Business on the Distribution Date and, from and after the Distribution
Date, the separate Rights Certificates alone will represent the Rights. All
Common Shares issued prior to the Distribution Date will be issued with Rights.
Common Shares issued after the Distribution Date in connection with certain
employee benefit plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the Board of Directors, no other
Common Shares issued after the Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes an
Acquiring Person, each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, a number of shares of Common Stock (or, in
certain circumstances, cash, property or other securities of the Company) having
a Current Market Price (as defined in the Rights Agreement) equal to two times
the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of any Triggering Event, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by or
transferred to an Acquiring Person (or by certain related parties) will be null
and void in the circumstances set forth in the Rights Agreement.
In the event (a "Flip-Over Event") that, at any time from and
after the time an Acquiring Person becomes such, (i) the Company is acquired in
a merger or other business combination transaction, or (ii) 50% or more of the
Company's assets, cash flow or earning power is sold or transferred, each holder
of a Right (except Rights that are voided as set forth above) shall thereafter
have the right to receive, upon exercise, a number of shares of common stock of
the acquiring company having a Current Market Price equal to two times the
exercise price of the Right. Flip-In Events and Flip-Over Events are
collectively referred to as "Triggering Events."
The number of outstanding Rights associated with a Common
Shares, or the number of Fractional Shares of Preferred Stock issuable upon
exercise of a Right and the Purchase Price, are subject to adjustment in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Shares occurring prior to the Distribution Date. The Purchase
Price payable, and the number of Fractional Shares of Preferred Stock or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution in the event of certain
transactions affecting the Preferred Stock.
C-2
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares of Preferred Stock that are not integral
multiples of a Fractional Share are required to be issued upon exercise of
Rights and, in lieu thereof, an adjustment in cash may be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise. Pursuant to the Rights Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock will be issued.
At any time until the time a person becomes an Acquiring
Person, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right, payable, at the option of the Company, in cash, shares of
Common Stock or such other consideration as the Board of Directors may
determine. Immediately upon the effectiveness of the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.01 redemption
price.
At any time after the occurrence of a Flip-In Event and prior
to a person's becoming the beneficial owner of 50% or more of the shares of
Common Stock then outstanding or the occurrence of a Flip-Over Event, the
Company may exchange the Rights (other than Rights owned by an Acquiring Person
or an affiliate or an associate of an Acquiring Person, which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
and/or other equity securities deemed to have the same value as one share of
Common Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
should not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for the common stock of the acquiring company as set forth above or
are exchanged as provided in the preceding paragraph.
Other than the redemption price, any of the provisions of the
Rights Agreement may be amended by the Board of Directors of the Company as long
as the Rights are redeemable. Thereafter, the provisions of the Rights Agreement
other than the redemption price may be amended by the Board of Directors in
order to cure any ambiguity, defect or inconsistency, to make changes that do
not materially adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
lengthen the time period governing redemption shall be made at such time as the
Rights are not redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Current Report on Form
8-K. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
C-3
