Exhibit 4.1
MFRI, INC.
AND
XXXXXX TRUST AND SAVINGS BANK
(RIGHTS AGENT)
DATED AS OF SEPTEMBER 15, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 15, 1999 (the "Agreement"),
between MFRI, INC., a Delaware corporation (the "Company"), and XXXXXX
TRUST AND SAVINGS BANK, an Illinois banking corporation (the "Rights
Agent").
W I T N E S S E T H:
WHEREAS, on September 15, 1999, (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
dividend distribution of one Right for each share of Common Stock (as
hereinafter defined) of the Company outstanding at the close of business on
September 22, 1999 (the "Record Date"), and authorized the issuance of one
Right (as such number may hereafter be adjusted pursuant to the provisions
of Section ll(p) hereof) for each share of Common Stock of the Company
issued between the Record Date (whether originally issued or delivered from
the Company's treasury) and the Distribution Date (as hereinafter defined),
each Right initially representing the right to purchase one (1) of a share
of Common Stock for each whole share of Common Stock held upon the terms
and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include:
(i) the Company,
(ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the
terms of any such plan,
(iv) any Person who becomes an Acquiring Person solely as a
result of a reduction in the number of shares of Common Stock
outstanding due to the repurchase of shares of Common Stock by
the Company, unless and until such Person shall thereafter
purchase or otherwise become the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the shares of
Common Stock outstanding at the time that such Person becomes the
Beneficial Owner of 15% or more of the then outstanding shares of
Common Stock,
(v) any Person described in Rule 13d-l(b)(l) under the
Exchange Act who is eligible to report beneficial ownership of
Common Stock on Schedule 13G, unless such Person (1) becomes
required to file a Statement on Schedule 13D with respect to its
Beneficial Ownership of Common Stock or (2) acquires Beneficial
Ownership (whether or not required to be reported on Schedule 13D
or Schedule 13G) of 22% or more of the then outstanding shares of
Common Stock, or
(vi) Heartland Advisors, Inc. (and any successor thereto,
but no purchaser or assignee thereof or purchaser or assignee of
any Common Stock of the Company held by Heartland), but only so
long as Heartland does not become the Beneficial Owner of 22% or
more of the Common Stock of the Company then outstanding.
Notwithstanding the foregoing, Heartland shall not become an
"Acquiring Person" as the result of an acquisition of Common
Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by Heartland to 22% or more of the Common
Stock then outstanding; provided, however, that if Heartland
shall become the Beneficial Owner of 22% or more of the Common
Stock then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock, then
Heartland shall be deemed an "Acquiring Person." If the Board of
Directors of the Company determines in good faith that Heartland
has inadvertently exceeded the 22% threshold and if Heartland
divests itself as promptly as practicable of beneficial ownership
of a sufficient number shares of Common Stock so that Heartland
would no longer be an Acquiring Person, then Heartland shall not
be deemed to be or have become an "Acquiring Person" for any
purpose in this Agreement.
Notwithstanding the foregoing, "Acquiring Person" shall not
include any Person whose ownership of 15% or more of the shares of
Common Stock then outstanding results from any action, transaction or
series of transactions approved in advance by the Company's Board of
Directors (provided that such Person shall become an Acquiring Person
if such Person shall thereafter purchase or otherwise become the
Beneficial Owner of additional shares of Common Stock constituting 1%
or more of the outstanding shares of Common Stock unless otherwise
approved in advance by the Board; provided however, (A) any transfer
of shares by such Person to a third party (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any trustee in respect thereof acting in such capacity) who after such
transfer owns 15% or more of the shares then outstanding will cause
the Rights to become exercisable at the time and in the manner
provided for herein, and (B) any institution of a tender or exchange
offer that is not approved in advance by the Company's Board of
Directors by any Person will trigger the exercisability of the Rights,
notwithstanding the above.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants, options, or
otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event,
or (C) securities issuable upon exercise of Rights from and after
the occurrence of a Triggering Event which Rights were acquired
by such Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as
described in the provision to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of the
Company; provided, however, that nothing in this paragraph (c)
shall cause a Person engaged in the business as an underwriter of
securities to be deemed the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of such
acquisition.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Illinois
are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 p.m.,
Chicago, Illinois time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., Chicago, Illinois
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, par value $0.01
per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct
the management, of such Person.
(g) "Distribution Date" shall mean the earlier of (i) the Close
of Business on the tenth Business Day after the Stock Acquisition Date
and (ii) the Close of Business on the tenth Business Day (or such
later date as the Board of Directors shall determine) after the date
that a tender or exchange offer that is not approved in advance by the
Company's Board of Directors by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within
the meaning of Rule 14d-2 (a) under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Exchange Ratio" shall have the meaning set forth in
Section 23 hereof.
(j) "Expiration Date" shall mean the earlier of (i) the Final
Expiration Date, or (ii) the time at which the Rights are redeemed as
provided in Section 24 hereof.
(k) "Final Expiration Date" shall mean the Close of Business on
September 15, 2009.
(l) "Original Rights" shall have the meaning set forth in
Section 1(c) hereof.
(m) "Principal Party" shall have the meaning set forth in
Section 13 hereof.
(n) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(o) "Purchase Price" shall have the meaning set forth in
Section 4 or Section 11 hereof, as the case may be.
(p) "Record Date" shall have the meaning set forth in the
recitals at the beginning of this Agreement.
(q) "Rights" shall have the meaning set forth in the recitals at
the beginning of this Agreement.
(r) "Rights Certificates" shall mean one or more rights
certificates, in substantially the form of Exhibit A hereto.
(s) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals at the beginning of this Agreement.
(t) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) hereof.
(u) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(v) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(w) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring
Person has become such; provided, however, if such person has first
been determined not to have become an Acquiring Person pursuant to
Section 1(a) hereof, then no Stock Acquisition Date shall be deemed to
have occurred.
(x) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to
elect at least a majority of the directors of such corporation is
Beneficially Owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(y) "Summary of Rights" shall mean the summary of rights to
purchase Common Stock, in substantially the form of Exhibit B hereto.
(z) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
(aa) "Triggering Event" shall mean any Section 11(a)(ii) Event or
any Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such concurrent
Rights Agents as it may deem necessary or desirable. Contemporaneously
with any such appointment the Company shall notify the Rights Agent
thereof.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Effective on or after the Record Date, one Right shall be
associated with each share of Common Stock outstanding on the Record
Date. Each additional share of Common Stock issued after the Record
Date through the first to occur of the Distribution Date or the
Expiration Date and each additional share of Common Stock with which
Rights are issued after the Distribution Date but before the
Expiration Date, will be subject to adjustment as provided in Section
11 below. Until the Distribution Date, (i) the Rights will be
evidenced (subject to the provisions of 3(b) hereof) by the
certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall
be deemed also to be certificates for Rights) and not by separate
certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock
(including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send, at the expense of
the Company, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records
of the Company, one or more Rights Certificates, evidencing one Right
for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of
Rights per share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights, by first-class,
postage prepaid mail, to each record holder of shares of Common Stock
as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company.
(c) Certificates issued for shares of Common Stock (including,
without limitation, certificates issued upon transfer, exchange or
replacement of shares of Common Stock) after the Record Date but
before the earliest of the Distribution Date, the Redemption Date and
the Final Expiration Date shall bear the following legend:
"This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between MFRI, Inc. and Xxxxxx Trust
and Savings Bank, as Rights Agent, dated as of
September 15, 1999 (the "Rights Agreements), the terms
of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices
of MFRI, Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer
be evidenced by this certificate. MFRI, Inc. will mail
to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently
held by or on behalf of such Person or by any
subsequent holder, may become null and void."
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date and (ii) the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall also
be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such
certificates.
(d) If the Company purchases or acquires any Common Stock after
the Record Date but before the Distribution Date, any Rights
associated with that Common Stock shall be deemed canceled so that the
Company shall not be entitled to exercise any Rights associated with
the Common Stock which are no longer outstanding.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of shares of
Common Stock (or fractions thereof) as shall be set forth therein at
the price set forth therein (such exercise price per full share of
Common Stock, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificates issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Persons with whom such
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary purpose or
effect avoidance of Section 7(e) hereof, and any Rights Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible)
the following additional legend:
"The Rights represented by this Rights Certificates are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may
become null and void in the circumstances specified in
Section 7(e) of such Agreement."
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates
shall be countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office or offices designated as
the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Rights Certificates,
the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS
CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14 hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case
may be) as the Rights Certificate or Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of
the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated,
the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except
as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 24(a) hereof) in whole or in part at
any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with
respect to the total number of shares of Common Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of
(i) the Final Expiration Date, or (ii) the Expiration Date.
(b) The Purchase Price for each full share of Common Stock
pursuant to the exercise of a Right shall initially be $25.00, and
shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to the Rights so
exercised, of the Purchase Price per share of Common Stock (or other
securities, cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i)(A) requisition from any transfer agent of the Common
Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of shares of Common
Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of
Common Stock issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depository agent depository
receipts representing such number of shares (or fractions of shares)
of Common Stock as are to be purchased (in which case certificates for
the shares (or fractions of shares) of Common Stock represented by
such receipts shall be deposited by the transfer agent with the
depository agent) and the Company will direct the depository agent to
comply with such request, (ii) requisition from the Company the amount
of cash, if any, to be paid in lieu of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or
depository receipts, cause the same to be delivered to or upon the
order of the registered holder of such Rights Certificate registered
in such name or names as may be designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant
to Section 11(a)(iii) hereof) may be made (x) in cash or by certified
bank check or bank draft payable to the order of the Company, or
(y) by delivery of a certificate or certificates (with appropriate
stock powers executed in blank attached thereto) evidencing a number
of shares of Common Stock equal to the then Purchase Price divided by
the closing price (as determined pursuant to Section 11(d) hereof) per
share of Common Stock on the Trading Day immediately preceding the
date of such exercise. In the event that the Company is obligated to
issue other securities of the Company, pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make
all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if
and when appropriate. The Company reserves the right to require prior
to the occurrence of a Triggering Event that upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of
Common Stock would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificates,
registered in such name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance
of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts
to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to make
any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) and Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) Except as permitted pursuant to Section 11(a)(iii) hereof,
the Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Common
Stock or shares of Common Stock held in the Treasury, the number of
shares of Common Stock that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights. In the event that there shall not
be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit the exercise or exchange of Rights,
the Company covenants and agrees that it will take all such action as
may be necessary to authorize additional shares of Common Stock for
issuance upon the exercise or exchange of Rights; provided, however,
that if the Company is unable to cause the authorization of additional
shares, then the Company shall, or in lieu of seeking any such
authorization, the Company may, to the extent necessary and permitted
by applicable law and any agreements or instruments in effect prior to
the Distribution Date to which it is party, (1) upon surrender of a
Right, pay cash equal to the Purchase Price in lieu of issuing shares
of Common Stock and requiring payment therefor, or (2) upon due
exercise of a Right and payment of the Purchase Price for each share
of Common Stock as to which such Right is exercised, distribute a
combination of shares of Common Stock and cash and/or debt securities
having an aggregate value equal to the value of the shares of Common
Stock which otherwise would have been issuable, which value shall be
determined by a nationally recognized investment banking firm selected
by the Board. To the extent that any legal or contractual
restrictions (pursuant to agreements or, instruments in effect prior
to the Distribution Date to which it is party) prevent the Company
from paying the full amount payable in accordance with the foregoing
sentence, the Company shall pay to holders of the Rights as to which
such payments are being made all amounts which are not then restricted
on a pro rata basis as such payments become permissible under such
legal or contractual restrictions until such payments have been paid
in full.
(b) So long as the shares of Common Stock issuable and
deliverable upon the exercise of the Rights may be listed on any
national securities exchange or quoted on an automated quotation
system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved
for such issuance to be listed on such exchange or quoted on such
automated quotation system upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence
of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been
determined in accordance with Section 11(a)(ii) hereof, or as soon as
is required by law following the Distribution Date, as the case may
be, a registration statement under the Securities Act, with respect to
the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of such Act) until the earlier of
(A) the date as of which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the Rights. The
Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights
in order to prepare and file such registration statement and permit it
to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock
delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for shares of Common
Stock upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of shares of
Common Stock in respect of a name other than that of, the registered holder
of the Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for shares of Common Stock (or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificates at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of such shares of Common Stock represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Stock transfer
books of the Company are closed, such Person shall be deemed to have become
the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Common Stock transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall
not be entitled to any rights of a stockholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions
or to exercise any preemptive rights, and shall not be entitled to receive
any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding
Common Stock, (C) combine the outstanding Common Stock into a
smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number
and kind of shares of Common Stock or capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall
be entitled to receive, upon payment of the Purchase Price then
in effect, the aggregate number and kind of shares of Common
Stock or capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date and at a time
when the Common Stock transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a) and 13(a), the
adjustment provided for in this Section 11(a) shall be in
addition to and shall be made prior to, any adjustment required
pursuant to Section 13(a) hereof.
(ii) In the event
(A) (1) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the
date of this Agreement, directly or indirectly, shall merge
into the Company or otherwise combine with the Company and
the Company shall be the continuing or surviving corporation
of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, or (2)
subject to the right of redemption granted in Section 24
hereof, any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together
with its Affiliates and Associates, shall, at any time after
the Rights Dividend Declaration Date, become an Acquiring
Person, other than pursuant to any transaction set forth in
Section 13(a) hereof, or pursuant to an offer for all
outstanding shares of Common Stock at a price and upon such
terms and conditions as a majority of the Board of Directors
determines to be in the best interests of the Company and
its stockholders, other than such Acquiring Person, its
Affiliates and its Associates, or
(B) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the Company with
any of its Subsidiaries or any other transaction or series
of transactions involving the Company or any of its
Subsidiaries, other than a transaction or transactions to
which the provisions of Section 13(a) apply (whether or not
with or into or otherwise involving an Acquiring Person)
which has the effect, directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding
shares of any class of equity securities of the Company or
any of its Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person or any Associate
or Affiliate of any Acquiring Person, then, promptly
following the occurrence of a Section ll(a)(ii) Event, the
Company and, to the extent necessary or appropriate, the
Acquiring Person and its Affiliates and Associates, shall
make proper provision so that each holder of a Right (except
as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of that number of shares of
Common Stock (or fraction thereof), such number of shares of
Common Stock as shall equal the result obtained by
multiplying (x) the product of the then current Purchase
Price divided by 50% of the current market price (determined
pursuant to Section ll(d) hereof) per share of Common Stock
on the date of such first occurrence by (y) the then number
of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section
11(a)(ii) Event (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section ll(a), the Company shall: (A)
determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spreads), and (B) with
respect to each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company ("common stock equivalents"), (4) debt
securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of
a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver the
value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a Section
ll(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 24(a) expires (the later of (x)
and (y) being referred to herein as the "Section ll(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of Rights and without requiring
payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90)
days after the Section ll(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of
such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or
second sentences of this Section ll(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is
no longer in effect. For purposes of this Section ll(a)(iii), the
value of the Common Stock shall be the current market price (as
determined pursuant to Section ll(d) hereof) per share of the
Common Stock on the Section ll(a)(ii) Trigger Date and the value
of any common stock equivalents shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock
entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Common
Stock (or shares having the same rights, privileges and preferences as
the shares of Common Stock ("Equivalent Common Stock")) or securities
convertible into Common Stock or Equivalent Common Stock at a price
per share of Common Stock or per share of Equivalent Common Stock (or
having a conversion price per share, if a security convertible into
Common Stock or Equivalent Common Stock) less than the current market
price (as determined pursuant to Section 11(d) hereof) per share of
Common Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares
of Common Stock and/or Equivalent Common Stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market
price, and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or Equivalent Common Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or
all of which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Common Stock
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Common Stock and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the
"current market price" per share of Common Stock on any day shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the
current market price per share of the Common Stock is determined
during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock
payable in shares of such Common Stock of securities convertible into
shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the "current market price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading by the NASDAQ National Market System or,
if the shares of Common Stock are not listed or admitted to trading on
the NASDAQ National Market System, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System (NASDAQ) or such
other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on
such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the shares
of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) 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 ten-thousandth of a
share of Common Stock. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of
the transaction which mandates such adjustment, or (ii) or the
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections
ll(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the shares of
Common Stock (or fractions thereof) 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 13(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections ll(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Common Stock (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number
of shares of Common Stock (or fraction thereof) covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number
of shares of Common Stock (or fraction thereof) 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-one-hundredth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company,
new Rights Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates issued may continue to
express the Purchase Price and the number of shares of Common Stock
which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
number of shares of Common Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of one one-hundredths of a
share of Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number
of shares of Common Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the
Board of Directors of the Company shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at less
than the current market price, (iii) issuance wholly for cash of
shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock,
(iv) stock dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), (ii) merge with or into any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if
(x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the
Rights, or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the principal party for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 24 or Section 27
hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the Rights
Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
(q) Notwithstanding anything in the foregoing to the contrary,
the provisions of this Section 11 shall not apply to or be triggered
by (i) any announcement, commencement or consummation of a transaction
approved in advance by the Company's Board of Directors, or (ii) the
execution, delivery or performance of a merger agreement (or similar
agreement) approved in advance by the Company's Board of Directors.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Rights Agent, and with each
transfer agent for the Common Stock, a copy of such certificate, and
(c) mail or cause the Rights Agent to mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained, and shall not be obligated or responsible for calculating any
adjustment nor shall it be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate. Notwithstanding
the foregoing, the failure of the Company to prepare the certificate or
make such filings or give such notices as are required hereunder shall not
adversely affect, suspend, modify or change the validity or enforce ability
of this Agreement or the Rights.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person in a transaction not approved in
advance by the Company's Board of Directors, and the Company shall not
be the continuing or surviving corporation of such consolidation or
merger, (y) any Person shall consolidate with, or merge with or into,
the Company in a transaction not approved in advance by the Company's
Board of Directors, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or exchanged
for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions in a transaction not
approved in advance by the Company's Board of Directors, assets or
earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person
or Persons, then, and in each such case, the Company and the Principal
Party (as such term is herein defined) and its Affiliates and
Associates shall make proper provision so that: (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid,
nonassessable and freely transferable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by multiplying (1)
the product of the then current Purchase Price divided by 50% of the
current market price (determined pursuant to Section 11(d)(i) hereof)
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event by (2) the number of shares of
Common Stock for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13
Event, multiplying the number of such shares (or fraction thereof) for
which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event); (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to
such Principal Party following the first occurrence of a Section 13
Event; (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of
its Common Stock) in connection with the consummation of any such
transactions as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the first occurrence of any
Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such
merger or consolidation (or whichever company survives), and
if no securities are so issued, the Person that is the other
party to such merger or consolidation; and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that
is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case,
(1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has 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
Stocks 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 Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which have
not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for
the terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of
this Section 13, the Principal Party will
(i) prepare and file a registration statement under the
Securities Xxx 0000 (the "Act"), with respect to the Rights
and the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in
Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
NASDAQ National Market System or, if the Rights are not listed or
admitted to trading on the NASDAQ National Market System, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if
on any such date the rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the rights selected by
the board of directors of the company. If on any such date no such
market maker is making a market in the rights the fair value of the
rights on such date as determined in good faith by the board of
directors of the company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In
lieu of fractional shares of Common Stock, the Company may elect to
(i) utilize a depository arrangement to allow for the combination of
Rights into full shares of Common Stock or (ii) pay to the registered
holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the
current market value of shares of Common Stock. For purposes of this
Section 14(b), the current market value of shares of Common Stock
shall be the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by
this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy
at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
(including, without limitation, the Company) subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) After the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) Subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e) hereof,
shall be required to be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
shares of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder in accordance
with a fee schedule to be mutually agreed upon and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises. The costs
and expenses of enforcing this right of indemnification shall also be
paid by the Company. The indemnification provided for hereunder shall
survive the expiration of the Rights and termination of this
Agreement.
(b) In no case will the Rights Agent be liable for special,
indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the
likelihood of such loss or damage.
(c) The Rights Agent may conclusively rely upon, and shall be
protected and shall incur no liability for or in respect of any action
taken, suffered or omitted by it in connection with its administration
of this Agreement in reliance upon, any Rights Certificate or
certificate for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or
any corporation succeeding to the corporate trust or stock transfer
business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any
of the parties hereto; provided, however, that such corporation would
be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms
and conditions (and no implied duties or obligations of the Rights Agent
shall be read into this Agreement), all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) Before the Rights Agent acts or refrains from acting, if
reasonable or necessary, the Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market prices) be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or
in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
actual notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any one of the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties under this
Agreement, and it shall not be liable for any action taken or suffered
to be taken by it in good faith in accordance with instructions of any
such officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on or after which such
action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which
date shall not be less than ten Business Days after the date any
officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the
case of an omission), the Rights Agent shall have received written
instructions in response to such application subject to the proposed
action or omission and/or specifying the action to take taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect
or misconduct of any such attorneys or agents or for any loss to the
Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may
be, has either not been completed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer
without first consulting with the Company.
(l) At any time and from time to time after the Distribution
Date, upon the request of the Company, the Rights Agent shall promptly
deliver to the Company a list, as of the most recent practicable date
(or as of such earlier date as may be specified by the Company), of
the holders of record of Rights.
(m) The Rights Agent shall not be required to take notice or be
deemed to have any notice of any fact, event or determination
(including, without limitation, any dates or events defined in this
Agreement or the designation of any Person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the
Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the
Company, and to each transfer agent of the Common Stock, by registered or
certified mail, and, at the expense of the Company, to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock, by registered or
certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the resigning, removed, or
incapacitated Rights Agent shall remit to the Company, or to any successor
Rights Agent designated by the Company, all books, records, funds,
certificates and other documents and instruments of any kind then in its
possession which were acquired or created by such resigning, removed or
incapacitated Rights Agent in connection with its services as Rights Agent
hereunder, and shall thereafter be discharged from all further duties and
obligations hereunder. Following notice of such removal, resignation or
incapacity, the Company shall appoint a successor to the Rights Agent. If
the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified
in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be either (a) a corporation organized and doing
business under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which either has or is an
affiliate of a corporation which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000, or
(b) an affiliate of such corporation. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the Common Stock,
and mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the registration or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and/or the number or kind or
class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares
of Common Stock following the Distribution Date and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of stock options
or warrants or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors, of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. EXCHANGE.
(a) The Company's Board of Directors may, at their option, at any
time after any Person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange ratio
of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
subsidiary or any entity holding shares of Common Stock for or
pursuant to any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of Shares of
Common Stock aggregating 50% or more of the shares of Common Stock
then outstanding.
(b) Immediately upon the action of the Company's Board of
Directors ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 23 and without any further action and
without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give 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
shall mail promptly a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state
the method by which the exchange of the shares of Common Stock for
Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall
be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.
(c) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares
of Common Stock, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional shares of
Common Stock would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current
market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to the
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 23.
Section 24. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at their option,
at any time prior to the earlier of (i) the close of business on the
tenth business day following the Stock Acquisition Date or (ii) the
Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split,
reverse stock split, reclassification, stock dividend or similar
transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price); provided,
however, that if, following the occurrence of a Stock Acquisition Date
and following the expiration of the right of redemption hereunder but
prior to any Triggering Event, (i) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of shares of
Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering
Event such that such Person is thereafter a Beneficial Owner of 10% or
less of the outstanding shares of Common Stock, and (ii) there are no
other Persons, immediately following the occurrence of the event
described in clause (i), who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to the
provisions of this Section 24. Notwithstanding anything contained in
this Agreement to the contrary, subject to Section 27 hereof, the
Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the
"current market price," as defined in Section 11(d)(i) hereof, of the
Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Company's Board of
Directors ordering the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the redemption of
the Rights, the Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the
Common Stock. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. 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 24, and other than in
connection with the purchase of Common Stock before the Distribution
Date.
(c) Notwithstanding the provisions of Section 24(a) hereof, in
the event that a majority of the Board is elected by stockholder
action by written consent, or is comprised of Persons elected at a
meeting of stockholders who were not nominated by the Board in office
immediately prior to such meeting, then for a period of ninety (90)
days following the effectiveness of such election the Rights shall not
be redeemed if such redemption is reasonably likely to have the
purpose or effect of allowing any Person to become an Acquiring Person
or otherwise facilitating the occurrence of a Triggering Event or a
transaction with an Acquiring Person.
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 Common Stock or to make any other distribution
to the holders of Common Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of Common Stock rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or
shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Common Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale of other
transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Common Stock,
if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of
the shares of Common Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common Stock
whichever shall be the earlier.
(b) In case any of the events set forth in Section ll(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under
Section ll(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if
sent by registered or certified mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
MFRI, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by registered or certified mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
XXXXXX TRUST AND SAVINGS BANK
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) 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.
Notices given by registered or certified mail under this Section 26
shall be deemed given effective upon receipt.
Section 27. SUPPLEMENTS AND AMENDMENTS. Before the Distribution
Date, the Company and the Rights Agent shall, if a majority of the Board of
Directors so directs, supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing shares of
Common Stock. From and after the Distribution Date and subject to the
penultimate sentence of this Section 27, the Company and the Rights Agent
shall, if a majority of the Board of Directors so directs, supplement or
amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder for any or all purposes (for example, the Company
may shorten or lengthen the period during which the Rights may be redeemed
without changing the Distribution Date), (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable, or (v) lower the threshold set forth in Section 1(a) to not less
than 10%. Notwithstanding the previous sentence, in no event shall any
such supplement or amendment adopted after the Distribution Date adversely
affect the interests of the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). In addition,
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of the second sentence of this Section 27, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the rights of,
and/or the benefits to, the holders of Rights (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with this
Section 27, the Rights Agent shall sign such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price,
the Final Expiration Date, the Purchase Price or the number of shares of
Common Stock for which a Right is exercisable; provided, however, that at
any time before the Distribution Date, the Board of Directors may amend
this Agreement to increase the Purchase Price or to extend the Final
Expiration Date. Before the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights and duties of
the Rights Agent under this Agreement will be effective against the Rights
Agent without the execution of such supplement or amendment by 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. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act. The Board of Directors of the
Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause
(y) below, all omissions with respect to the foregoing) which are done or
made by the Board in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board to any liability to the holders of
the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the Distribution Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its
good faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 24 hereof shall be reinstated and shall
not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
Section 32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such
State.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
MFRI, INC.
By: /S/ XXXXX XXXXX
Name: Xxxxx Xxxxx
Title: Chairman, President
and Chief Executive Officer
XXXXXX TRUST AND SAVINGS BANK, AS RIGHTS AGENT
By: /S/ XXXXXX XXXXXXXX
Name: Xxxxxx Xxxxxxxx
Title: Vice President
Exhibit A
FORM OF ELECTION TO PURCHASE
(a) (To be executed if holder desire to exercise Rights represented by
the Rights Certificate.)
To: MFRI, INC.
The undersigned hereby irrevocably elects to exercise
_____________________Rights represented by this Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other person
which may be issuable upon the exercise of the Rights) and requests that
certificates for such shares be issued in the name of and delivered to:
Please insert social security or other identifying number:
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
Please print name and address:
Dated: ______________________________
Signature
SIGNATURE GUARANTEED:
Signatures must be guaranteed by a bank, broker, dealer, credit union or
savings association or other entity that is a member in good standing of a
signature guarantee medallion program approved by the Securities Transfer
Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
[ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated:____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker, dealer, credit union
or savings association or other entity that is a member in good standing of
a signature guarantee medallion program approved by the Securities Transfer
Association, Inc.
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On September 15, 1999, the Board of Directors of MFRI, Inc. (the
"Company") declared a dividend distribution of one right for each
outstanding share of common stock to stockholders of record at the close of
business on September 22, 1999. Each Right entitles the registered holder
to purchase from the Company one share of common stock, at a Purchase Price
of $25.00 full share of common stock, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and Xxxxxx Trust and Savings
Bank, as Rights Agent.
Initially, the Rights will be attached to all common stock certificates
representing shares then outstanding, and no separate Rights Certificates
will be distributed. The Rights will separate from the common stock and a
Distribution Date will occur upon the earlier of (i) 10 business days after
a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Persons") has acquired, or obtained the right to
acquire, after September 15, 1999 beneficial ownership of 15% or more of
the outstanding shares of common stock (the "Stock Acquisition Date"),
except under certain limited circumstances as described below, or (ii) 10
business days (or such later date as the Board of Directors shall
determine) following the commencement of a tender or exchange offer that
would result in a person or group beneficially owning 15% or more of such
outstanding shares of common stock. Until the Distribution Date, (i) the
Rights will be evidenced by the common stock certificates and will be
transferred with and only with such common stock certificates, (ii) new
common stock certificates issued after September 22, 1999 will contain a
notation incorporating the Rights Agreement by reference, and (iii) the
surrender for transfer of any certificates for common stock outstanding
will also constitute the transfer of the Rights associated with the common
stock represented by such certificates. Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a
Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of common stock
will be issued.
The definition of Acquiring Persons does not include, among certain other
specified exclusions, Heartland Advisors Inc., who , on September 15, 1999
(the "Rights Dividend Declaration Date"), is the beneficial owner of more
than 15% of the shares of common stock of the Company unless it becomes the
beneficial owner of 22% or more of the then outstanding shares of common
stock of the Company.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on September 15, 2009 unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the common stock as of the close of
business on the Distribution Date, and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of common stock issued
prior to the Distribution Date will be issued with Rights.
If (i) the Company is the surviving corporation in a merger or other
business combination with an Acquiring Person and its common stock remains
outstanding and unchanged, (ii) any Acquiring Person acquires beneficial
ownership of more than 15% of the outstanding shares of common stock
(except pursuant to (A) certain consolidations or mergers involving the
Company or sales or transfers of the combined assets or earning power the
Company and its subsidiaries or (B) an offer for all outstanding shares of
common stock at a price and upon terms and conditions which a majority of
the Board of Directors determines to be in the best interests of the
Company and its stockholders) or (iii) there occurs a reclassification of
securities, a recapitalization of the Company or any of certain business
combinations or other transactions (other than certain consolidations and
mergers involving the Company and sales or transfers of the combined assets
or earning power of the Company and its subsidiaries) involving the Company
or any of its subsidiaries which has the effect of increasing by more than
1% the proportionate share of any class of the outstanding equity
securities of the Company or any of its subsidiaries beneficially owned by
an Acquiring Person, each holder of a Right (other than the Acquiring
Person and certain related parties) will thereafter have the right to
receive, upon exercise, common stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two
times the exercise price of the Right. However, Rights are not exercisable
following the occurrence of any of the events described above until such
time as the Rights are no longer redeemable by the Company as described
below. Notwithstanding any of the foregoing following the occurrence of
any of the events described in this paragraph, all Rights that are, or
under certain circumstances specified in the Rights Agreement were,
beneficially owned by any Acquiring Person will be null and void.
For example, at an exercise price of $25.00 per share of common stock,
each Right not owned by an Acquiring Person (or by certain related parties
or transferees) following an event set forth in the preceding paragraph
would entitle its holder to purchase $50.00 worth of common stock for
$25.00. Assuming that the common stock had a per share market price of
$10.00 at such time, the holder of valid Rights would be entitled to
purchase five shares of common stock for $25.00, which equates to $5.00 per
share.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation, (ii) the
Company is the surviving corporation in a consolidation or merger pursuant
to which all or part of the outstanding shares of common stock are changed
into or exchanged for stock or other securities of any other person or cash
or any other property or (iii) more than 50% of the combined assets or
earning power of the Company and its subsidiaries is sold or transferred
(in each case other than certain consolidations with, mergers with and
into, or sales of assets or earning power by or to subsidiaries of the
Company as specified in the Rights Agreement), each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise price of
the Rights. The events described in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, the number and kind of shares covered by each
Right and the number of Rights outstanding 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 stock,
(ii) if holders of the common stock are granted certain rights or warrants
to subscribe for common stock or securities convertible into common stock
at less than the current market price of the common stock, or (iii) upon
the distribution to holders of the common stock of evidences of
indebtedness, cash (excluding regular quarterly cash dividends), assets
(other than dividends payable in common stock) or of subscription rights or
warrants (other than those referred to in (ii) immediately above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of common stock are required to be issued and,
in lieu thereof, the Company may make an adjustment in cash based on the
market price of the common stock on the trading data immediately prior to
the date of exercise.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of common stock, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such person or group,
which will become void), in whole or in part, for shares of common stock at
an exchange ratio of one share of common stock per Right (subject to
adjustment).
At any time until ten business days following the Stock Acquisition Date,
the Company may redeem the Rights in whole, but not in part, at a price of
$0.01 per Right (payable in cash, shares of common stock or other
consideration deemed appropriate by the Board of Directors). Immediately
upon the action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $0.01 redemption price. Notwithstanding the
foregoing, the Rights generally may not be redeemed for 90 days following a
change in a majority of the Board as a result of a proxy contest.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for common stock (or other
consideration) of the Company or for common stock of the acquiring company
as set forth above or in the event that the Rights are redeemed.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by
the Board of Directors prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interest
of any Acquiring Person) or to shorten or lengthen any time period under
the Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights
are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A
and as an Exhibit to a report on Form 8-K each dated September 22, 1999. A
copy of the Rights Agreement is available free of charge from the Rights
Agent. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
