EXHIBIT 1
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THE VALSPAR CORPORATION
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGREEMENT
DATED AS OF MAY 1, 2000
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions...................................................................................1
Section 2. Appointment of Rights Agent...........................................................................4
Section 3. Issue of Right Certificates...........................................................................4
Section 4. Form of Right Certificates............................................................................5
Section 5. Countersignature and Registration.....................................................................6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates..........................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.........................................7
Section 8. Cancellation of Right Certificates....................................................................8
Section 9. Reservation and Availability of Common Shares.........................................................8
Section 10. Common Shares Record Date............................................................................9
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights..........................9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..........................................17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................18
Section 14. Fractional Rights and Fractional Shares.............................................................21
Section 15. Rights of Action....................................................................................21
Section 16. Agreement of Right Holders..........................................................................22
Section 17. Right Certificate Holder Not Deemed a Stockholder...................................................22
Section 18. Concerning the Rights Agent.........................................................................22
Section 19. Merger or Consolidation or Change of Name of Rights Agent...........................................23
Section 20. Duties of Rights Agent..............................................................................24
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Section 21. Change of Rights Agent..............................................................................26
Section 22. Issuance of New Right Certificates..................................................................26
Section 23. Redemption..........................................................................................27
Section 24. Exchange............................................................................................27
Section 25. Notice of Certain Events............................................................................28
Section 26. Notices.............................................................................................29
Section 27. Supplements and Amendments..........................................................................30
Section 28. Successors..........................................................................................30
Section 29. Benefits of this Agreement..........................................................................30
Section 30. Severability........................................................................................30
Section 31. Governing Law.......................................................................................30
Section 32. Counterparts........................................................................................31
Section 33. Descriptive Headings................................................................................31
Signatures ......................................................................................................31
Exhibit A -- Form of Right Certificates
Exhibit B -- Summary of Rights
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RIGHTS AGREEMENT
AGREEMENT, dated as of May 1, 2000, between The Valspar Corporation, a
Delaware corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one purchase right (a "Right") for each common share, par value
$.50, of the Company (the "Common Shares") outstanding at the Close of Business
on May 11, 2000 (the "Record Date"), each Right representing the right to
purchase one Common Share, upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right
with respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be
the Beneficial Owner of the Threshold Percentage or more of the Common
Shares then outstanding other than as a result of a Permitted Offer,
but shall not include any Exempt Person. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to the Threshold Percentage or
more of the Common Shares of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of the
Threshold Percentage or more of the Common Shares then outstanding by
reason of share purchases by the Company and shall, after such share
purchases by the Company, increase the number of Common Shares
beneficially owned by such Person above the number of Common Shares
beneficially owned by such Person at the time of the last such share
purchase by the Company, then such Person shall be deemed to be an
"Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number
of Common Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this
paragraph, then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
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 beneficially owns, directly or
indirectly, including without limitation securities with
respect to which such Person or any such Person's Affiliates
or Associates has "beneficial ownership" pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement;
(ii) that such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) that are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to clause (ii)(B) above) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference
to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together
with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
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"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in New Jersey or
Minnesota are authorized or obligated by law or executive order to
close.
"Close of Business" on any given date shall mean 5:00 P.M.,
Central time, on such date; provided, however, that if such date is not
a Business Day, it shall mean 5:00 P.M., Central time, on the next
succeeding Business Day.
When used with reference to any Person other than the Company,
"common shares" shall mean the capital stock (or equity interest) with
the greatest voting power of such other Person or, if such other Person
is a Subsidiary of any other Person, the Person or Persons that
ultimately control such first mentioned Person.
"Distribution Date" shall have the meaning set forth in
Section 3.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Date" shall have the meaning set forth in Section 7.
"Exempt Person" shall mean the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, and any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan.
"Final Expiration Date" shall have the meaning set forth in
Section 7.
"Person" shall mean any individual, firm, corporation, limited
liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.
"Permitted Offer" shall mean a tender offer or an exchange
offer for all outstanding Common Shares that is determined by the Board
of Directors of the Company, after receiving such advice as it deems
necessary and giving due consideration to all relevant factors, to be
in the best interests of the Company and its stockholders.
"Redemption Date" shall have the meaning set forth in Section
7.
"Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or any Person that a Person has become an
Acquiring Person.
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"Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person.
"Threshold Percentage" shall mean 15%.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions of this Agreement, 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, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the 10th day after the Shares Acquisition
Date or (ii) the 10th day (or such later date as may be determined by action of
the Board of Directors prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the intention of any Person
(other than an Exempt Person) to commence, a tender or exchange offer, the
consummation of which would result in any Person becoming an Acquiring Person
(the earlier of such dates being referred to herein as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the provisions of Section 3(b)) by
the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company shall
notify the Rights Agent of the Distribution Date and provide the Rights Agent
with a list of holders of Common Shares, and the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested and if provided with all
necessary information, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable after the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Common Shares, in substantially
the form of Exhibit B (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Close of
Business on the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof,
together with a copy of the Summary of Rights. Until the Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date if occurring
prior to the Distribution Date), the surrender for transfer of any certificate
for Common Shares outstanding on the Record Date, with or without a copy of the
Summary of Rights
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attached thereto, also shall constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Certificates for Common Shares that become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
The Valspar Corporation and ChaseMellon Shareholder Services,
L.L.C. or any successor (as amended from time to time the
"Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive office of The Valspar Corporation. Under
certain circumstances, as set forth in the Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Valspar
Corporation will mail to the holder of this certificate a copy
of the Agreement without charge after receipt of a written
request therefor. Under certain circumstances, as set forth in
the Agreement, Rights issued to any Person who becomes an
Acquiring Person or an Associate or Affiliate thereof (as
defined in the Agreement), or certain transferees of such
Person, may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares that are no
longer outstanding.
(d) Reference in this Agreement to certificates for Common Shares
include uncertificated Common Shares, and any uncertificated Common Shares also
shall represent the associated right. Any legend required to be placed on any
certificate for Common Shares may instead be included on any book entry
confirmation or notification to the holder of such Common Shares.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be substantially the same as Exhibit A hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotations system on which the Rights may from time to time be listed, or to
conform to usage, provided that such marks, legends, summaries
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and endorsements do not affect the rights, duties or responsibilities of the
Rights Agent. Subject to the provisions of Section 11, the Right Certificates
shall entitle the holders thereof to purchase such number of Common Shares as
shall be set forth therein at the price per Common Share set forth therein (the
"Purchase Price"), but the number of such Common Shares and the Purchase Price
shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairperson of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer either manually or by facsimile signature and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned manually by
the Rights Agent for purposes of authorization only and shall not be valid for
any purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any
such Person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of all
relevant information, the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. At any
time after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earlier of the Redemption Date and the Final Expiration
Date, any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 11(a)(ii)) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
Common Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or offices of the Rights Agent designated
for such purpose. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates. The Rights Agent shall have no duty or obligation under this
Section 6 or any other similar provision
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of this Agreement unless and until it is satisfied that all such taxes and/or
governmental charges have been paid in full.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and in case of loss, theft or destruction, of indemnity or security
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will issue, execute and deliver a new Right Certificate
of like tenor to the Rights Agent for countersignature and delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part, at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each Common Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on May 11, 2010 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section 23
(the "Redemption Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24 (the "Exchange Date").
(b) The Purchase Price for each Common Share purchasable pursuant to
the exercise of a Right shall initially be $140.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13 and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the aggregate Purchase Price for the shares to be purchased and an
amount equal to any applicable tax or governmental charge required to be paid by
the holder of such Right Certificate in accordance with Section 9 by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) requisition from any transfer agent
for the Common Shares (or make available, if the Rights Agent is the transfer
agent for the Common Shares) certificates for the number of Common Shares to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) when necessary to comply with this
Agreement, requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14, (iii) after receipt
of such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, and (iv) when necessary to comply with this
Agreement, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
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(d) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 6
and Section 14.
(e) 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
completed and executed the form of election to purchase set forth on the reverse
side of the Right Certificate surrendered for such exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of such Right Certificate or Affiliates or Associates thereof
as the Company or the Rights Agent shall reasonably request.
Section 8. Cancellation of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or
exchange shall, if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company.
Section 9. Reservation and Availability of Common Shares.
(a) The Company will cause to be reserved and kept available out of its
authorized and unissued Common Shares, or any Common Shares held in its
treasury, the number of Common Shares that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) From and after such time as the Rights become exercisable (but only
to the extent that it is reasonably likely that the Rights will be exercised),
the Company shall use its best efforts to cause all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company will prepare and file, as soon as practicable after the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and use its best efforts to
cause such registration statement to (i) become effective as soon as practicable
after such filing and (ii) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the Final
Expiration Date. The Company also will 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,
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for a period of time not to exceed 90 days after the date the registration
statement is filed, the exercisability of the Rights in order to permit the
registration statement to become effective. Upon any such suspension, the
Company shall promptly notify the Rights Agent thereof and issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement (and prompt notice to the Rights
Agent) at such time as the suspension is no longer in effect. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof is not
permitted under applicable law.
(d) The Company will take all such action as may be necessary to ensure
that all Common Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Common Shares (subject to payment of the
Purchase Price and any applicable taxes and governmental charges), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(e) The Company 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 Right Certificates or of any Common Shares upon the exercise of Rights.
The Company shall not, however, be required to pay any tax or governmental
charge that may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of certificates
for the Common Shares in a name other than that of the registered holder of the
Right Certificate evidencing Rights surrendered for exercise, or to issue or
deliver any certificates for Common Shares upon the exercise of any Rights until
any such tax or governmental charge shall have been paid (any such tax or
governmental charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax or governmental charge is due.
Section 10. Common Shares Record Date. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable taxes and governmental charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the transfer books of the Company for the Common Shares are closed, such
Person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which such
transfer books are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any rights of a
holder of Common Shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11:
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(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares
payable in Common Shares, (B) subdivide the outstanding Common Shares,
(C) combine the outstanding Common Shares into a smaller number of
Common Shares, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), 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 capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Common Shares
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs that would require an adjustment under both
this subparagraph (a)(i) and subparagraph (a)(ii) below, the adjustment
provided for in this subparagraph (a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to
subparagraph (a)(ii).
(ii) Subject to Sections 23 and 24, in the event any Person
becomes an Acquiring Person, unless the event by which such Person
becomes an Acquiring Person is a transaction described in Section
13(a), each holder of a Right shall thereafter have a right to receive,
upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of Common Shares for which a Right is
then exercisable, in accordance with the terms of this Agreement and in
lieu of the Common Shares for which such right was exercisable
immediately prior to the date such Person becomes an Acquiring Person,
such number of Common Shares as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of Common
Shares for which a Right is then exercisable and dividing that product
by (y) 50% of the then current per share market price of the Common
Shares (determined pursuant to Section 11(d)) on the date that such
Person becomes an Acquiring Person. In the event that any Person shall
become an Acquiring Person and the Rights shall then be outstanding,
the Company shall not take any action that would eliminate or diminish
the benefits intended to be afforded by the Rights.
From and after the date that such Person becomes an Acquiring
Person, any Rights that are or were acquired or beneficially owned by
any Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void, and any holder of such Rights shall thereafter
have no right to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued pursuant to Section 3
that represents Rights beneficially owned by an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate shall be issued at
any time
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upon the transfer of any Rights to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate
or Affiliate; and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be void pursuant
to the preceding sentence shall be canceled.
(iii) If, on a Distribution Date, the Company does not have
sufficient Common Shares issued but not outstanding, or authorized but
unissued, available to permit the exercise in full of all Rights that
are exercisable on the Distribution Date for the number of Common
Shares per Right provided for in Section 11(a)(ii), then the Exercise
Price (as such term is defined below) and the number of Common Shares
to be delivered by the Company upon exercise of a Right shall be
further adjusted as provided in this subparagraph (iii).
(1) Definitions:
(A) The "Aggregate Market Value" is the
product of (i) the number of Available Shares and
(ii) the current per share market price of the Common
Shares on the Distribution Date, determined as
provided in Section 11(d).
(B) The "Available Shares" are all
unreserved Common Shares which are authorized and
unissued, or any Common Shares held in the Company's
treasury, immediately prior to the Distribution Date.
(C) The "Exercise Price" is the amount of
the payment that must be made by the holder of a
Right in connection with the exercise of one Right
immediately prior to the Distribution Date.
(D) The "Deficiency" is the amount by which
(i) two times the Exercise Price exceeds (ii) the
quotient obtained by dividing the Aggregate Market
Value by the number of Rights remaining outstanding
immediately prior to the Distribution Date (the
"Remaining Rights") (which number shall not include
the Rights that are or were beneficially owned by any
Acquiring Person (or any Associate or Affiliate or
certain transferees thereof) that shall have become
void pursuant to Section 11(a)(ii)).
(2) If the Deficiency is less than or equal to the
Exercise Price, then
(A) the number of Common Shares to be
delivered by the Company upon exercise of a Right
shall be adjusted to be equal to the number of
Available Shares divided by the number of Remaining
Rights; and
(B) the amount of cash required to be
delivered by the holder of a Right upon the exercise
thereof shall be adjusted (the "New Exercise Price")
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to equal the Exercise Price minus the Deficiency;
provided, however, that in no event will the New
Exercise Price be less than the aggregate par value
of the Common Shares required to be delivered upon
the exercise of one Right pursuant to subparagraph
(2)(A) above.
(3) If the Deficiency is greater than the Exercise
Price, then
(A) the number of Common Shares to be
delivered by the Company upon exercise of a Right
shall be adjusted to equal the quotient obtained by
dividing the Exercise Price by the current per share
market price of the Common Shares on the Distribution
Date;
(B) the New Exercise Price shall equal the
aggregate par value of the Common Shares required to
be delivered upon the exercise of one Right pursuant
to subparagraph (3)(A) above; and
(C) in lieu of issuing Common Shares (in
whole or in part upon the exercise of Rights) the
Company may issue, upon the exercise of Rights at the
New Exercise Price, other equity securities of the
Company (such equity securities are hereinafter
referred to as "common share equivalents"). To the
extent that such common share equivalents (or
fractions thereof) are substituted for Common Shares
upon exercise of the Rights following the occurrence
of a Section 11(a)(ii) Event, they shall be
substituted on a pro rata basis with respect to all
Rights (other than Rights that are or were
beneficially owned by any Acquiring Person (or any
Associate or Affiliate or certain transferees
thereof) that shall have become void pursuant to
Section 11(a)(ii)). Such common share equivalents
shall not be included in Available Shares, and all of
the Available Shares shall be reserved, as of the
Distribution Date, for issuance, on a pro-rata basis,
upon exercise of the Rights and may be substituted
for with common share equivalents upon the exercise
of any Right except to the extent that the number of
Common Shares required to be delivered under
subparagraph (3)(A) upon the exercise of such Right
exceeds the quotient of the number of Available
Shares divided by the number of Remaining Rights.
(4) If, at the time any adjustment is required
pursuant to this Section 11(a)(iii), the Common Shares shall
have no par value, then for the purposes of this Section
11(a)(iii) the par value of the Common Shares shall be deemed
to be $.01 per share.
(5) In the event that there shall not be sufficient
authorized but unissued and unreserved Common Shares (or
common share equivalents the issuance of which is permitted
under Section 11(a)(iii)(3)(C)) to permit the exercise in full
of the Rights in accordance with this subparagraph (iii), the
Company shall use its best efforts to
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cause the authorization of sufficient additional Common Shares
or common share equivalents to permit such exercise and, if
the Board of Directors of the Company shall have determined in
good faith that it is likely that sufficient additional Common
Shares or common share equivalents could be authorized to
permit such exercise, the Company may suspend the
exercisability of the Rights for a period not to exceed 90
days in order to seek any authorization of additional Common
Shares or other common share equivalents. In the event of any
such suspension, the Company shall promptly notify the Rights
Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended as
well as a public announcement (with prompt notice to the
Rights Agent) at such time as the suspension is no longer in
effect.
(6) If the Company is unable to obtain the
authorization referred to in Section 11(a)(iii)(5), then, in
lieu of issuing Common Shares in accordance with Section
11(a)(ii) (or common share equivalents the issuance of which
is permitted under Section 11(a)(iii)(3)(C)), the Company may,
if a majority of the Board of Directors determines that such
action is necessary or appropriate and not contrary to the
interests of the holders of the Rights, elect to issue or pay,
upon the exercise of the Rights, cash, property, debt
securities or any combination thereof having an aggregate
value equal to the value of the Common Shares that otherwise
would have been issuable pursuant to Section 11(a)(ii), which
value shall be determined by a nationally recognized banking
firm selected by the Board of Directors. Any such election by
the Board of Directors must be made and publicly announced
within 60 days after a Distribution Date, and the Company
shall promptly notify the Rights Agent thereof. Following a
Distribution Date, the Company may suspend the exercisability
of the Rights for a period not to exceed 60 days in the event
that the Board of Directors has not made a determination
pursuant to this Section 11(a)(iii)(6). In the event of any
such suspension the Company shall promptly notify the Rights
Agent thereof and issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended,
as well as a public announcement (with prompt notice to the
Rights Agent) at such time as the suspension is no longer in
effect.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling them to
subscribe for or purchase Common Shares or securities convertible into Common
Shares at a price per Common Share (or having a conversion price per share, if a
security convertible into Common Shares) less than the then current per share
market price (as such term is defined in Section 11(d)) of the Common Shares on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such record date plus that number of
Common Shares which the aggregate offering price of the total number of Common
Shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price, and the denominator of which shall be
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the number of Common Shares outstanding on such record date plus the number of
additional Common Shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be 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. Common Shares 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, options 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 the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Common Shares) or subscription rights or warrants (excluding those referred to
in Section 11(b)), 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
then current per share market price of the Common Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share, and the denominator of which shall be such
current per share market price of the Common Shares; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares and any other security (a "Security" for
the purpose of this Section 11(d)) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the 30 consecutive
Trading Days (as hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current per share market
price equivalent of such
-14-
Security. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last sale price on
the Nasdaq National Market or such other system then in use, or, if on any such
date the Security is not quoted on the Nasdaq National Market, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. If on any such day no market maker is making a market in the Common
Shares, the fair value of such share on such day as determined in good faith by
the Board of Directors of the Company shall be used in lieu of the closing price
for such day. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading or the Nasdaq National Market, as applicable, is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange or the Nasdaq National Market, a Business
Day.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
Common Share 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 that
requires such adjustment and (ii) the date of the expiration of the right to
exercise any Rights.
(f) If as a result of an adjustment made pursuant to Sections 11(a) and
13(a), the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the Common
Shares contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
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), subject to the provisions of Sections 11(a) and 13, upon each
adjustment of the Purchase Price as a result of the calculations made in Section
11(b) and (c), each Right outstanding immediately prior to
-15-
the making of such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Common Shares (calculated to the
nearest one ten-thousandth of a Common Share) obtained by (i) multiplying (x)
the number of shares covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall promptly notify the Rights Agent and make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein, may bear, at the option of
the Company, the adjusted Purchase Price, and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares that were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below of the then par value, if any, of the Common Shares
issuable upon exercise of the Rights, 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 Common Shares
at such adjusted Purchase Price.
-16-
(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 promptly notify the
Rights Agent of such election) until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the Common Shares
and other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Common Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(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 its sole discretion the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Shares, (ii) issuance wholly for cash of any Common
Shares at less than the current market price, (iii) issuance wholly for cash of
Common Shares or securities which by their terms are convertible into or
exchangeable for Common Shares, (iv) dividends on Common Shares payable in
Common Shares, or (v) issuance of rights, options or warrants referred to in
Section 11(b), hereafter made by the Company to holders of its Common Shares
shall not be taxable to such stockholders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o)), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of
or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
that would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company, after the Distribution Date, will not, except as
permitted by Section 23, 24 or 27, take (or permit any Subsidiary of the Company
to take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment and a
brief, reasonably detailed statement of the facts and
-17-
computations accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Common Shares a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment contained therein, and shall have
no duty with respect to and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event, directly or indirectly, at any time after there is an
Acquiring Person,
(w) 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,
(x) any Person shall consolidate with, or merge with and into,
the Company, 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 Common Shares shall be
changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property,
(y) the Company shall effect a statutory share exchange with
the outstanding Common Shares of the Company being exchanged for stock
or other securities of any other Person, cash or property, or
(z) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person other than the Company or one or more
of its wholly owned Subsidiaries,
then, and in each such case, except as contemplated by Section 13(e), proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided in this Agreement) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of Common Shares for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Common Shares, such
number of validly authorized and issued, fully paid, nonassessable and freely
tradable common shares of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or adverse claims,
as shall be equal to the result obtained by (x) multiplying the then current
Purchase Price by the number of Common Shares for which a Right is, immediately
prior to such consolidation, merger, statutory share exchange, sale or transfer,
exercisable and (y) dividing that product by 50% of the current per share market
price of the common shares of such Principal Party (determined pursuant to
Section 11(d)) on the date of consummation of such consolidation, merger,
statutory share exchange, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of
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such merger, consolidation, statutory share exchange, sale or transfer, all of
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such Principal Party; and
(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of its common shares to permit the
exercise of all outstanding Rights) in connection with the consummation of any
such transaction as may be necessary to assure that the provisions of this
Agreement shall thereafter be applicable, as nearly as reasonably may be, in
relation to its common shares thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (w),
(x) or (y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which Common Shares of the Company
are converted in such merger, consolidation or exchange, or if no
securities are so issued, the Person that is the other party to such
merger, consolidation or exchange; 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;
provided, however, that in any such case, (1) if the common shares of such
Person are not at such time or have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the common shares of which
are and have been so registered, "Principal Party" shall refer to such other
Person, and (2) in case such Person is a Subsidiary, directly or indirectly, of
more than one Person, the common shares of two or more of which are and have
been so registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the common shares having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
share exchange, sale or transfer unless the Principal Party shall have a
sufficient number of authorized, unreserved common shares that have not been
issued or are held in treasury to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in Section 13(a) and
(b) and further providing that, as soon as practicable after the date of any
such consolidation, merger, share exchange, sale or transfer, the Principal
Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise
of the Rights, on an appropriate form and 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 Act) until the
earlier of (1) the date as of which the Rights are no longer
exercisable for such securities and (2) the Final Expiration Date;
-19-
(ii) 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; and
(iii) 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.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights. Without limiting the generality of the preceding
sentence, in case the Principal Party that is to be a party to a transaction of
the kind referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or bylaws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction of the kind referred to in this Section
13, common shares of such Principal Party at less than the then current per
share market price (determined pursuant to Section 11(d)) or securities
exercisable for or convertible into common shares of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of common shares of such
Principal Party pursuant to the provisions of Section 13, then, in such event,
the Company shall not consummate any such transaction unless prior thereto the
provision in question of such Principal Party shall have been canceled, waived
or amended so as to avoid any of the effects referred to in clauses (i) and (ii)
of this paragraph, or the authorized securities shall have been redeemed, so
that the applicable provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
(e) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in clauses (w), (x) or (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired Common Shares pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such tender
offer or exchange offer, and (iii) the form of consideration being offered to
the remaining holders of Common Shares pursuant to such transaction is the same
as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(e), all Rights hereunder shall expire.
(f) The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, statutory share exchanges or sale or other
transfers.
-20-
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights otherwise would be issuable an amount in cash equal
to the same fraction of the current market value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise
would have been issuable determined in accordance with Section 11(d).
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute certificates
that evidence fractional Common Shares. In lieu of fractional Common
Shares, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market
value of one Common Share. For the purposes of this Section 14(b), the
current market value of a Common Share shall be the closing price of a
Common Share (as determined pursuant to Section 11(d)) for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such holder's right to receive any fractional Rights
or any fractional shares upon exercise of a Right (except as provided
above).
(d) The Rights Agent shall have no duty or obligation with
respect to this Section 14 or Section 24(d) unless and until it has
received specific instructions (and sufficient cash, if required) from
the Company with respect to its duties and obligations under such
Sections.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
-21-
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office or offices of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Shares certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(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, judgment or ruling (whether interlocutory or final) 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, that the Company must use its best
efforts to have any such order, decree, judgment or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions of
this Agreement.
Section 18. Concerning the Rights Agent.
-22-
(a) The Company will pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the preparation, delivery, administration, execution
and amendment of this Agreement and the exercise and performance of its duties
hereunder. The Company will 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 on the part of the Rights Agent (as finally
determined by a court of competent jurisdiction), for any action taken, suffered
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise or performance of its duties
hereunder, including, without limitation, the costs and expenses of defending
against any claim of liability in the premises. The indemnity provided herein
shall survive the termination of this Agreement and the termination and the
expiration of the Rights. The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company if the Rights Agent
prevails in any such enforcement.
(b) The Rights Agent shall be authorized to rely on, shall be protected
and shall incur no liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its acceptance and administration of this
Agreement or the exercise or performance of its duties hereunder in reliance
upon any Right Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20.
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 shareholder services 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 to this Agreement,
provided that such Person would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at
the time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either
in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in
this Agreement.
-23-
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates
shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations, and only the duties and obligations, imposed by this
Agreement (and no implied duties or obligations) upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (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 and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted by it in good faith
and 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 be proved or established by the Company prior to
taking, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by
a certificate signed by any one of the Chairperson of the Board, the
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall
be full authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for or in respect of any action
taken, suffered or omitted in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own gross negligence, bad faith or
willful misconduct (as finally determined by a court of competent
jurisdiction). Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, incidental or consequential loss or damage
of any kind whatsoever (including, but not limited to, lost profits),
even if the Rights Agent has been advised of the possibility of such
loss or damage. Any liability of the Rights Agent under this Agreement
shall 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 Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
-24-
(e) The Rights Agent shall not have any liability for nor
shall it be under any responsibility in respect of the validity of this
Agreement or the execution and delivery of this Agreement (except the
due execution of this Agreement by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any change
in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii)) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
receipt of actual notice from the Company stating that a change or
adjustment is required and specifying the manner and amount thereof);
nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any Common Shares
to be issued pursuant to this Agreement or any Right Certificate or as
to whether any Common Shares will, when issued, be validly authorized
and issued, fully paid and nonassessable.
(f) The Company will perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairperson of the Board, the President,
any Vice President, the Secretary or the Treasurer of the Company, and
to apply to such officers for advice or instructions in connection with
its duties, and such advice or instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in good faith in accordance with the advice or instructions of any
such officer or for any delay in acting while waiting for such advice
or instructions.
(h) The Rights Agent and any shareholder, director, officer,
member, Affiliate 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 Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company or any
-25-
other Person resulting from any such act, default, neglect or
misconduct, absent gross negligence or willful misconduct (as finally
determined by 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 assured
to it.
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 by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares by registered or certified mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit such holder's Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or of any state of the United
States in good standing, which is subject to supervision or examination by
federal or state authority and that has or is a subsidiary of a corporation that
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million, 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 named originally as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares; provided, however, that failure to give any notice provided
for in this Section 21, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common
-26-
Shares after the Distribution Date, the Company shall, with respect to Common
Shares issued upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and outstanding on the Distribution Date,
issue Right Certificates representing the appropriate number of rights in
connection with such issuance; provided, however, that (i) no such Right
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
Right Certificate would be issued, and (ii) no such Right 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.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the Close of Business on the 10th day after the Shares Acquisition
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of this
Agreement (such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board of Directors may
be made effective at such time and on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to Section 23(a), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company promptly shall give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice 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
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24, and other than in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after the Close of Business on the 10th day after the Shares Acquisition
Date, exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date of this Agreement (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be
-27-
empowered to effect such exchange at any time after 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 Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company
promptly shall notify the Rights Agent and give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of outstanding and exercisable Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii)) held by each holder
of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued and unreserved to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates that evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares otherwise would be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose at any time after the
Distribution Date (i) to pay any dividend payable in stock of any class to the
holders of its Common Shares or to make any other distribution to the holders of
its Common Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Common Shares rights or warrants to subscribe for or to
purchase any additional Common Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any
-28-
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, (v) to effect any statutory share exchange with the
outstanding Common Shares of the Company being exchanged for stock or other
securities of any other corporation or cash or other property, or (vi) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 26, a notice of such proposed action,
which shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of the Common
Shares, 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) of this paragraph (a) at
least 10 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares, whichever
shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) shall occur, then
the Company shall as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 26, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
The Valspar Corporation
Attention: General Counsel
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
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 Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxx Xxxxxx - 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Relationship Manager
with a copy to:
ChaseMellon Shareholder Services, L.L.C.
-29-
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order (i) to extend the Final Expiration Date or, provided
that at the time of such amendment no Person has become an Acquiring Person, to
extend the period during which the Rights may be redeemed, (ii) to cure any
ambiguity or to correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions of this Agreement, (iii)
prior to the time that any Person becomes an Acquiring Person, to otherwise
change or supplement any provision in this Agreement in any manner that the
Company may deem necessary or desirable, or (iv) subject to clause (i) of this
Section 27, from and after the time that any Person becomes an Acquiring Person,
to otherwise change or supplement any provision in this Agreement in any manner
that the Company may deem necessary or desirable and that shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
however, that no such supplement or amendment shall be effective unless
evidenced by a writing signed by the Company and the Rights Agent.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that all provisions
-30-
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 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
THE VALSPAR CORPORATION
By: /s/ Xxxx Xxxx
--------------------------------------
Name: Xxxx Xxxx
-----------------------------------
Title: Secretary
-----------------------------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By: /s/ Xxxxx Xxxxx
--------------------------------------
Name: Xxxxx Xxxxx
-----------------------------------
Title: Assistant Vice President
-----------------------------------
-31-
EXHIBIT A
FORM OF RIGHT CERTIFICATES
Certificate No. R-___ ____________ Rights
NOT EXERCISABLE AFTER MAY 11, 2010 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT (SUBJECT TO ADJUSTMENT)
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY A
PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
SUBSEQUENT HOLDERS OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
THE VALSPAR CORPORATION
This certifies that ________________________ , or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of May 1, 2000 (the "Rights Agreement"), between
The Valspar Corporation, a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., on May 11, 2010, at the office or offices of
the Rights Agent designated for such purpose, or of its successor as Rights
Agent, one fully paid, nonassessable common share, par value $.50 (a "Common
Share"), of the Company, at a purchase price of $140.00 (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of Common Shares that may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of the __________, based on the Common Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of Common Shares that may be purchased upon the exercise of
the Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the
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Company and the holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive office of the Company and the
office or offices of the Rights Agent designated for such purpose and will be
mailed without charge by the Company or the Rights Agent to the holder of this
certificate promptly following receipt by the Company or the Rights Agent of a
written request therefor.
From and after the date that any Person becomes an Acquiring Person,
any Rights that are or were acquired or beneficially owned by any Acquiring
Person (or any Associate or Affiliate of such Acquiring Person) (as such terms
are defined in the Rights Agreement) shall be void and any holder of such Rights
thereafter shall have no right to exercise such Rights under any provision of
this Agreement.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Common Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this certificate (i) may, but are not required to, be redeemed by the Company
at a redemption price of $.001 per Right, subject to adjustment as provided in
the Rights Agreement, and (ii) may, but are not required to, be exchanged by the
Company in whole or in part for Common Shares.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
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 Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated: ______________
THE VALSPAR CORPORATION
By:
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Countersigned for purposes
of authentication only:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
---------------------------------
Authorized Signature
A-3
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto ________________________ (PRINT NAME OF TRANSFEREE)
___________________________ (PRINT ADDRESS OF TRANSFEREE) this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint _____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Please insert social security
number taxpayer identification
number or other identifying number: ____________________________________________
Dated: ____________________
Signature
Signature Guaranteed: _________________________________
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program),
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
A-4
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE--CONTINUED
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To: THE VALSPAR CORPORATION
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares be issued in the name of:
Please insert social security
number, taxpayer identification
number or other identifying number: ____________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security,
taxpayer identification
or other identifying number: ___________________________________________________
(Please print name and address)
Dated: __________________
Signature
Signature Guaranteed: _________________________________
The signature(s) should be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and credit
unions with membership in an approved signature guarantee medallion program),
pursuant to Rule 17Ad-15 of the Securities and Exchange Commission.
A-5
EXHIBIT B
THE VALSPAR CORPORATION
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On April 19, 2000, the Board of Directors of The Valspar Corporation
(the "Company"), declared a dividend of one common share purchase right (a
"Right") for each outstanding common share, $.50 par value (a "Common Share"),
of the Company. The dividend is payable to shareholders of record on May 11,
2000 (the "Record Date").
Each Right entitles the registered holder to purchase from the Company
one Common Share at a price of $140.00 per share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of May 1, 2000 (the "Rights Agreement") between the Company
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
Initially, the Rights will be evidenced by the certificates
representing Common Shares then outstanding, and no separate Right Certificates
will be distributed. The Rights will separate from the Common Shares, and a
distribution date (a "Distribution Date") for the Rights will occur, upon the
earlier of: (i) the 10th day following the first date of public announcement
that a person or group of affiliated or associated persons has become an
"Acquiring Person" (i.e., has become, subject to certain exceptions, the
beneficial owner of 15% or more of the outstanding Common Shares (other than as
a result of a Permitted Offer)) and (ii) the 10th day following the commencement
or public announcement of a tender offer or exchange offer, the consummation of
which would result in a person or group of affiliated or associated persons
becoming an Acquiring Person.
A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Shares determined by the Board of Directors of the Company,
after receiving such advice as it deems necessary and giving due consideration
to all relevant factors, to be in the best interests of the Company and its
shareholders.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Share certificates, together with a copy of this Summary of Rights, and
will be transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date upon transfer or new issuance of the
Common Shares will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any Common Share certificate,
even without such notation or a copy of this Summary of Rights attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 11, 2010, unless extended or earlier redeemed or exchanged by
the Company as described below. No fraction of a Common Share will be issued
and, in lieu thereof, an adjustment in cash will be made based on the closing
price on the last trading date prior to the date of exercise.
The Purchase Price payable and the number of Common Shares issuable
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution: (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Shares, (ii) upon the grant to
holders of the Common Shares of certain rights, options or warrants to subscribe
for or purchase Common Shares or convertible securities at less than the then
current market price of the Common Shares, or (iii) upon the distribution to
holders of the Common Shares of evidences of indebtedness or assets (excluding
quarterly cash dividends or dividends payable in Common Shares) or of
subscription rights or warrants (other than those described in clause (ii) of
this paragraph). With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in the Purchase Price.
In the event any person becomes an Acquiring Person, each holder of a
Right (other than the Acquiring Person) shall thereafter have a right to
receive, upon exercise thereof at the then current aggregate exercise price,
Common Shares having a current aggregate market price equal to twice the current
aggregate exercise price. In the event that at any time after there is an
Acquiring Person the Company is acquired in certain mergers or other business
combination transactions or 50% or more of the assets or earning power of the
Company and its subsidiaries (taken as a whole) are sold, holders of the Rights
(other than the Acquiring Person) will thereafter have the right to receive,
upon exercise thereof at the then current aggregate exercise price, such number
of common shares of the acquiring company (or, in certain cases, one of its
affiliates) having a current aggregate market price equal to twice the current
aggregate exercise price.
At any time after a person becomes an Acquiring Person (subject to
certain exceptions), and prior to the acquisition by a Person of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange all or part of the Rights for Common Shares at an exchange ratio of one
Common Share per Right, subject to adjustment.
At any time before a person has become an Acquiring Person, the Board
of Directors of the Company may redeem the Rights in whole, but not in part, at
a price of $0.001 per Right, subject to adjustment. The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board of Directors in its sole discretion may establish.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including without limitation, the right
to vote or to receive dividends.
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