EXHIBIT-3
RIGHTS AGREEMENT
by and between
TECHNITROL, INC.
and
REGISTRAR AND TRANSFER COMPANY
Rights Agent
Dated as of August 30, 1996
TABLE OF CONTENTS
Section Page
1. Certain Definitions.................................................... 1
2. Appointment of Rights Agent............................................ 4
3. Issue of Right Certificates............................................ 5
4. Form of Right Certificates............................................. 6
5. Countersignature and Registration...................................... 6
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates................ 7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.......... 7
8. Cancellation and Destruction of Right Certificates..................... 9
9. Reservation and Availability of Common Shares.......................... 10
10. Common Shares Record Date.............................................. 11
11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights.................................................... 11
12. Certificate of Adjusted Purchase Price or Number of Shares............. 16
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.......................................................... 16
14. Additional Covenants................................................... 18
15. Fractional Rights and Fractional Shares................................ 19
16. Rights of Action....................................................... 20
17. Agreement of Rights Holders............................................ 20
18. Right Certificate Holder Not Deemed a Stockholder...................... 21
19. Concerning the Rights Agent............................................ 21
20. Merger or Consolidation or Change of Name of Rights Agent.............. 21
21. Duties of Rights Agent................................................. 22
22. Change of Rights Agent................................................. 23
(i)
Section Page
23. Issuance of New Right Certificates..................................... 24
24. Redemption............................................................. 25
25. Exchange............................................................... 25
26. Notice of Certain Events............................................... 26
27. Notices................................................................ 27
28. Supplements and Amendments............................................. 27
29. Successors............................................................. 28
30. Determinations and Actions by the Board of Directors................... 28
31. Benefits of this Agreement............................................. 28
32. Severability........................................................... 28
33. Governing Law.......................................................... 29
34. Counterparts........................................................... 29
35. Descriptive Headings................................................... 29
Exhibit A -- Form of Right Certificate
Exhibit B -- Summary of Rights Agreement
(ii)
RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT, dated as of August 30, 1996 (the "Agreement"), by
and between Technitrol, Inc., a Pennsylvania corporation (the "Company"), and
Registrar and Transfer Company, a New Jersey corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as such term is hereinafter defined) for each share of
common stock, $0.125 par value, of the Company (the "Common Shares")
outstanding at the close of business on September 9, 1996 (the "Record Date"),
and has authorized the issuance of one Right with respect to each Common Share
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Final
Expiration Date (as such terms are hereinafter defined), each Right
representing the right to purchase one-half of a Common Share, upon the terms
and subject to the conditions hereinafter set forth (the "Rights").
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
a. "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
Common Shares then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, or (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company or any
entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" solely as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Shares then outstanding; provided, however, that
if a Person becomes the Beneficial Owner of 15% or more of the Common Shares
then outstanding by reason of share acquisitions by the Company and shall,
after such share acquisitions, become the Beneficial Owner of any additional
Common Shares, then such Person shall be deemed to be an "Acquiring Person".
b. "Affiliate", "Associate" and "control" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
c. A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, within the
meaning of Rule 13d-3 or Rule 13d-5 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement;
(ii) 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 (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own", (A) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event (as such term is
hereinafter defined) 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 23 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", any security under this subparagraph (iii) as a result of
an agreement, arrangement or understanding to vote such security if such
agreement, arrangement or understanding (1) arises solely from a revocable
proxy given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iv) 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 (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
subparagraph (iii) of this paragraph (c)) or disposing of any securities of the
Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
d. "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New Jersey are
authorized or obligated by law or executive order to close.
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e. "Close of business" on any given date shall mean 5:00 P.M.,
Cranford, New Jersey time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Cranford, New Jersey time, on
the next succeeding Business Day.
f. "Common Shares" when used with reference to the Company (or
without express reference to another Person) shall mean the shares of common
stock, $0.125 par value, of the Company or any other shares of capital stock of
the Company into which the Common Shares are reclassified or changed. "Common
Shares" when used with reference to any Person other than the Company shall
mean the capital stock or other equity securities or equity or other beneficial
interests of such Person with the greatest aggregate voting power.
g. "Common Stock Equivalent" shall mean a share, or fraction
of a share, of any authorized class of preferred stock of the Company having
dividend, voting, liquidation and other rights which result, in the judgment of
the Board of Directors, in such share, or fraction of a share, being
approximately equivalent in value to one Common Share as of the Event Date (as
such term is hereinafter defined); provided, however, that, if no preferred
stock has been authorized or, if authorized, in the judgment of the Board of
Directors there are not sufficient authorized but unissued shares of preferred
stock available for the creation of Common Stock Equivalents, "Common Stock
Equivalent" shall mean such cash, reduction in Purchase Price (as such term is
hereinafter defined), other equity securities, debt securities, other assets or
any combination of the foregoing, that the Board of Directors shall determine
to be approximately equivalent in value to one Common Share as of the Event
Date. As used herein, "Event Date" shall mean (i) for purposes of any
determination made pursuant to Section 11(a)(iii) hereof, the date of
occurrence of a Section 11(a)(ii) Event (as such term is hereinafter defined),
and (ii) for purposes of any determination made pursuant to Section 25(c)
hereof, the Exchange Date.
h. "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
i. "Exchange" shall have the meaning set forth in Section 25
hereof.
j. "Exchange Date" shall have the meaning set forth in Section
7(a) hereof.
k. "Exchange Ratio" shall have the meaning set forth in
Section 25 hereof.
l. "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
m. "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor by merger or
otherwise of such Person.
n. "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
o. "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
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p. "Record Date" shall have the meaning set forth in the
recital of this Agreement.
q. "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
r. "Redemption Price" shall have the meaning set forth in
Section 24(a) hereof.
s. "Registered Common Shares" shall have the meaning set forth
in Section 13(b) hereof.
t. "Right Certificates" shall have the meaning set forth in
Section 3(a) hereof.
u. "Rights" shall have the meaning set forth in the recital of
this Agreement.
v. "Section 11(a)(ii) Event" shall mean the event described in
Section 11(a)(ii) hereof.
w. "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13 hereof.
x. "Securities Act" shall mean the Securities Act of 1933, as
amended.
y. "Share Acquisition Date" shall mean the date of the first
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.
z. "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity or other beneficial interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by
such Person.
aa. "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
ab. "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
ac. "Triggering Event" shall mean any Section 11(a)(ii) Event
or Section 13 Event.
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Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more Co-
Rights Agent, the respective duties of the Rights Agent and any Co-Rights Agent
shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
a. Until the earlier of (i) the close of business on the
tenth day after the Share Acquisition Date (or, if the tenth day after the
Share Acquisition Date occurs before the Record Date, the close of business on
the Record Date) or (ii) the close of business on the tenth business day (or
such later day as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date that a
tender or exchange offer by any Person is first published, sent or given within
the meaning of Rule 14d-4(a) of the General Rules and Regulations under the
Exchange Act (or any comparable or successor rule) if, upon consummation
thereof, such Person would be an Acquiring Person (the earlier of such dates,
including any such date which is after the date of this Agreement and prior to
the issuance of the Rights, being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be deemed to be certificates for Rights) and not by separate certificates, and
(y) the Rights will be transferable only in connection with the transfer of the
underlying Common Shares. As soon as practicable after the Distribution Date,
the Rights Agent will send, by first-class, insured, postage prepaid mail, to
each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more Right certificates, in substantially the form of Exhibit A
hereto (the "Right Certificates"), evidencing one Right for each Common Share
so held, subject to adjustment as provided herein. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificate.
b. As promptly as practicable after the Record Date, the
Company will send a copy of a Summary of Rights in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares outstanding as
of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for Common Shares together with a copy of the Summary of
Rights, and the registered holders of Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution Date (or
the earliest of the Redemption Date, Exchange Date or Final Expiration Date),
the surrender for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights attached
thereto shall also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
c. Rights shall be issued in respect of all Common Shares
which become outstanding (including, without limitation, reacquired Common
Shares referred to in the penultimate sentence of this paragraph (c)) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date, the Exchange Date or the Final Expiration Date. Certificates
representing such Common Shares shall also be deemed to be certificates for
Rights, and shall bear the following legend:
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This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement by and between Technitrol,
Inc. (the "Company") and Registrar and Transfer Company, dated as of
August 30, 1996 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this certificate.
The Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. As described in the
Rights Agreement, Rights beneficially owned by (i) an Acquiring Person or
any Associate or Affiliate thereof (as such terms are defined in the
Rights Agreement), (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) under certain circumstances, a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee before or concurrently with the Acquiring Person becoming such,
shall be null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or
the Final Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone
and the registered holders of Common Shares shall also be the holders of the
associated Rights, and the surrender for transfer of any such certificates
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled
and retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding. Rights
shall again become outstanding with respect to such Common Shares at such time
as they may be reissued by the Company.
Section 4. Form of Right Certificates. The Right Certificates (and
the forms of election to purchase shares, certification and assignment to be
printed on the reverse thereof) shall be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or any securities
association on whose interdealer quotation system the Rights may from time to
time be authorized for quotation, or to conform to usage. Subject to the
provisions of Section 23 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the price per Common Share set forth therein (the "Purchase Price"),
but the number of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
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Section 5. Countersignature and Registration.
a. The Right Certificates shall be executed on behalf of
the Company by its Chief Executive Officer, 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 or the Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
b. Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at the office of the Rights Agent designated for such
purpose, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights as evidenced on the
face of each of the Right Certificates and the date and certificate number of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.
a. Subject to the provisions of Section 7(e) and Section
15 hereof, at any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earliest of the Redemption
Date, the Exchange Date or the Final Expiration Date, any Right Certificate or
Certificates (other than Rights Certificates representing Rights which have
been exchanged pursuant to Section 25 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares (or
other securities or other assets, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged, with the form of assignment and
certificate appropriately executed, at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Right Certificate or Certificates until the registered holder
shall have completed and signed the certificate contained in the form of
assignment set forth on the reverse side of each such Right 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 7(e) and Section 15 hereof, countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case may be,
as so requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
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b. Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.
a. The Rights shall not be exercisable prior to the
Distribution Date. Subject to Section 7(e) hereof, the registered holder of any
Right 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), Section 24(b) and
Section 25(b)) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the
Purchase Price for each Common Share (or other securities, cash or other
assets, as the case may be) as to which the Rights are exercised, at or prior
to the earliest of (i) the close of business on September 9, 2006
(the "Final Expiration Date"), (ii) the time at which the Rights are redeemed
as provided in Section 24 hereof (the "Redemption Date") or (iii) the time at
which the Rights are exchanged as provided in Section 25 hereof (the "Exchange
Date"); provided, however, that no less than two Rights, and only whole
multiples of two Rights, may be exercised at any time by such registered
holders; and provided further, that if the number of Rights exercised would
entitle the holder thereof to receive any fraction of a Common Share greater
than one-half of a share, the holder thereof shall not be entitled to exercise
such rights unless such holder concurrently purchases from the Company (and in
such event the Company shall sell to such holder) an additional fraction of a
Common Share at a price equal to the same fraction of the current Purchase
Price which, when such fraction is added to the number of Common Shares to be
received upon such exercise, will equal a whole number of Common Shares.
b. The Purchase Price for each Common Share pursuant to
the exercise of two Rights (and only whole multiples of two Rights) shall
initially be $125 (equivalent to $62.50 for each one-half of a Common Share).
The Purchase Price shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
c. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares (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 required to be
paid by the holder of such Right Certificate in accordance with Section 9(e)
hereof, the Rights Agent shall, subject to Section 21(j) hereof, thereupon
promptly (i) requisition from any transfer agent of the Common Shares
(or make available, if the Rights Agent is the transfer agent for
such shares) certificates for the number of Common Shares to be purchased,
and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) when appropriate, requisition
from the Company the amount of cash, if any, to be paid in lieu of issuance
of fractional shares in accordance with Section 15 hereof, (iii) after
receipt of such certificates, cause the same to be delivered to or upon the
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order of the registered holder of such Right Certificate registered in such
name or names as may be designated by such holder, and (iv) when appropriate,
after receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Right Certificate. The payment of the Purchase Price
shall be made in cash or by certified or bank official check or money order
payable to the order of the Company. In the event that the Company is
obligated to issue other securities of the Company or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities or property are available for
distribution by the Rights Agent, if and when appropriate.
d. In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 15 hereof.
e. Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Section 11(a)(ii) Event, any
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 (or of any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or of any such Associate or Affiliate) or
to any Person with whom the Acquiring Person has any agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors in its discretion 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 be 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. No Right Certificate shall be issued pursuant to Section 3 or
Section 23 hereof that represents Rights beneficially owned by an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof and no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate.
Any Right Certificate delivered to the Rights Agent for transfer to any of the
foregoing Persons, or which represents void Rights, shall be canceled. The
Company shall use reasonable efforts to effect compliance with the provisions
of this Section 7(e), but shall have no liability to any holder of Right
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 transfer as set forth in Section 6 hereof or 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 assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
a. Subject to the Company's rights under Section
11(a)(iii) hereto to otherwise fulfill its obligations hereunder, the Company
covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Common Shares and/or any authorized and issued
Common Shares held in its treasury, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding Rights; provided,
however, that such action need not be taken with respect to Common Shares (or
other securities) issuable upon exercise of the Rights until after such time as
the Rights become exercisable.
b. So long as the Common Shares issuable upon the
exercise of Rights may be listed on any national securities exchange or
authorized for quotation on any interdealer quotation system of any securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange or quoted on such system upon official
notice of issuance upon such exercise.
c. The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the 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) or 11(a)(iii) hereof or as soon as is required by law
following the Distribution Date, as the case may be (provided the Company shall
not have elected to make the exchange permitted by Section 25 hereof for all
outstanding Rights (other than the Rights that shall have become null and void
pursuant to Section 7(e) hereof)), a registration statement under the
Securities Act with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Final Expiration Date. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to
exceed 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.
In addition, if the Company shall determine that a registration statement is
required following the Distribution Date but prior to the occurrence of a
Section 11(a)(ii) Event hereof, the Company may temporarily suspend the
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exercisability of the Rights until such time as a registration statement has
been declared effective. 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 Common Shares 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 shares.
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
Right Certificates or of any Common Shares (or other securities or property)
upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates for Common Shares (or other securities or property) in
a name other than that of, the registered holder of the Right Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for Common Shares (or other securities or property) in a name
other than that of the registered holder upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose name any
certificate for Common Shares (or other securities) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Common Shares (or other securities) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Shares (or
other securities) transfer books of the Company are closed or a date on which
the exercisability of the Rights is suspended pursuant to Section 9(c), such
person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Shares (or other securities) transfer books of the Company are open or
the next succeeding Business Day on which such suspension is no longer in
effect. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a
shareholder of the Company with respect to Common Shares (or other securities)
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
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Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights
The Purchase Price, the number and kind of shares 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
Shares payable in Common Shares, (B) subdivide the outstanding Common
Shares into a greater number of shares, (C) combine the outstanding
Common Shares into a smaller number of shares or (D) issue any shares
of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and in 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 shall be
proportionately adjusted so that the holder of Rights exercised after
such time shall be entitled to receive the aggregate number and kind
of Common Shares or shares of capital stock, as the case may be,
which, if such Rights had been exercised immediately prior to such
date and at a time when the Common Shares (or other capital stock, as
the case may be) transfer books of the Company were open, such holder
would have acquired upon such exercise and been entitled to receive
with respect to such Common Shares or shares of capital stock, as the
case may be, by virtue of such dividend, subdivision, combination or
reclassification at an aggregate Purchase Price (i.e., the product of
the number of Common Shares or shares of capital stock, as the case
may be, multiplied by the Purchase Price) equal to the aggregate
Purchase Price prior to such dividend, subdivision, combination or
reclassification.
(ii) Subject to Sections 11(a)(iii) and 25 hereof, in
the event that any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person, then proper provision
shall be made so that each holder of two Rights, except as provided
in Section 7(e) hereof, shall thereafter have a right to receive,
upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of Common Shares for which two Rights
are then exercisable in accordance with the terms of this Agreement,
such number of Common Shares as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the number of
Common Shares for which two Rights are then exercisable and (y)
dividing that product by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share on the date
such Person, alone or together with its Affiliates and Associates,
became an Acquiring Person.
(iii) Subject to Section 25 hereof, in the event
that the number of Common Shares which are authorized by the
Company's articles 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), the Rights shall not
be exercisable for Common Shares, but proper provision shall be made
so that each holder of two Rights, except as provided in section 7(e)
hereof, shall thereafter have a right to receive, upon
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exercise thereof in accordance with the terms of this Agreement at
the price determined pursuant to subparagraph (ii), such number of
Common Stock Equivalents (or, in the judgment of the Board of
Directors, such combination of Common Stock Equivalents and Common
Shares) as shall equal the number of Common Shares determined
pursuant to subparagraph (ii).
b. In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Shares or securities convertible
into Common Shares at a price per Common Share (or having a conversion price
per share, if a security convertible into Common Shares, less than the current
market price (as determined pursuant to Section 11(d) hereof) per Common Share
on such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such record date, plus the number of
Common Shares which the aggregate offering price of the total number of Common
Shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional Common Shares to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Common Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and 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 Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend), assets, stock (other than a dividend
payable in Common Shares) or subscription rights, options or warrants
(excluding those referred to in or excluded pursuant to 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 one Common Share on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes)
of the portion of the cash, assets, stock or evidences of indebtedness so to be
distributed or of such subscription rights, options or warrants applicable to
one Common Share and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per one Common Share.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
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d. For the Purposes of any computation hereunder, the
"current market price" per Common Share on any date shall be deemed to be the
average of the daily closing prices per Common Share for the 30 consecutive
Trading Days (as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current market price per
Common Share is determined during a period following the announcement by the
issuer of such Common Shares of (i) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convertible into such Common
Shares (other than the Rights) or (ii) any subdivision, combination or
reclassification of such Common Shares and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then,
and in each such case, the "current market price" shall be appropriately
adjusted at the discretion of the Board of Directors of the Company 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 on the principal national securities exchange on
which the Common Shares are listed or admitted to trading or, if the Common
Shares 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 Common
Shares 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 Shares selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Shares, 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 and shall be conclusive for all
purposes. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Common Shares are listed or admitted
to trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Shares are 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 1% in such 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 Common Share or other
share, as the case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the Final 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 to be
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
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Common Shares contained in this Section 11 and the provisions of Sections 6, 7,
9, 10, 13 and 15 with respect to the Common Shares shall apply on like terms to
any such other shares.
g. All Rights issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
h. Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each two Rights
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of Common Shares covered by two Rights immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
i. The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of Common Shares purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment
in the number of Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 15 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holder shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
j. Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of Common Shares which were
expressed in the initial Right Certificates issued hereunder.
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k. Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
Common Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, upon the advice of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
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 issuing to the holder of any Right exercised after such record
date of the Common Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
m. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in 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 Shares, (ii) issuance wholly for
cash of any of the Common Shares at less than the current market price, (iii)
issuance wholly for cash of Common Shares or securities which by their terms
are convertible into or exchangeable for Common Shares, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Common Shares shall
not be taxable to such stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 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 Shares a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Shares) in accordance with Section 27 hereof.
The Rights Agent shall be fully authorized to rely and be protected in relying
on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
a. In the event that, following the earlier of the
Distribution Date or the Share Acquisition Date, (x) the Company, directly or
indirectly, shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 14(b) hereof) and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 14(b)
hereof), directly or indirectly, shall consolidate with, or merge with and
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding Common Shares shall be
changed into or exchanged for stock or other securities of any other Person (or
of the Company) or cash or any other property, or (z) the Company, directly or
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indirectly, shall sell or otherwise transfer (or one or more of its
Subsidiaries, directly or indirectly, shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 14(b)),
then, and in each such case, proper provision shall be made so that (i) each
holder of two Rights (except as provided in Section 7(e) hereof) shall
thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of Common
Shares for which two Rights are then exercisable (without taking into account
any adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii)
hereof), in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable Common
Shares of the Principal Party (as hereinafter defined), free and clear of any
liens, encumbrances and other adverse claims and not subject to any rights of
call or first refusal, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of Common Shares for
which two Rights are then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof)
and (2) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share of the Principal Party on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, pay and
perform in all respects, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement, regardless of any provision to the contrary in any agreement between
the Company and such Principal Party; (iii) except for purposes of Section 1(g)
hereof, the term "Company" shall thereafter be deemed to refer to such
Principal Party; (iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common
Shares) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights; provided, however, that, upon the
subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of two Rights (except as otherwise provided herein) shall
thereupon be entitled to receive, upon exercise of such Rights and payment of
the Purchase Price, such cash, shares, rights, warrants and other property
which such holder would have been entitled to receive had he, at the time of
such transaction, owned the Common Shares of the Principal Party purchasable
upon the exercise of such Rights (after giving effect to the foregoing
provisions of this Section 13(a), and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with
the terms hereof for such cash, shares, rights, warrants and other property and
(v) the provisions of Sections 11(a)(ii) and 11(a)(iii) hereof shall be of no
effect following the occurrence of any Section 13 Event.
b. "Principal Party" shall mean
(i) in the case of any merger described in clause (x)
or (y) of Section 13(a), any Person that is the issuer of any securities into
which Common Shares of the Company are converted in such merger, and if no
securities are so issued, any Person that is a party to such merger that
survives the merger;
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(ii) in the case of any consolidation described in
clause (x) or (y) of Section 13(a), any Person that directly controls, alone or
with other Persons, a corporation that is consolidating with the Company; and
(iii) in the case of any transaction or transactions
described in clause (z) of Section 13(a), any Person that receives any assets
or earning power transferred pursuant to such transaction or transactions;
provided, however, that with respect to such Person (or, if there is more than
one such Person, with respect to each such Person), (1) if the Common Shares of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act ("Registered Common Shares"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person which has
Registered Common Shares outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Shares of such Person are not Registered Common
Shares or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Shares outstanding,
"Principal Party" shall refer to the ultimate parent entity of such first
mentioned Person; (3) if the Common Shares of such Person are not Registered
Common Shares or such Person is not a corporation, and such Person is directly
or indirectly controlled by more than one Person, and one or more of such
latter Persons have Registered Common Shares outstanding, "Principal Party"
shall refer to whichever of such latter Persons is the issuer of outstanding
Registered Common shares having the greatest aggregate current market value
(determined pursuant to Section 11(d)(i) hereof); or (4) if the Common Shares
of such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such latter Persons have Registered Common Shares
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the entity having the greatest net assets; provided, further, however, that
if under the foregoing provisions of this Section 13(b) there shall for any
reason be more than one Principal Party, "Principal Party" shall refer to
whichever of such Persons is the issuer of outstanding Registered Common Shares
having the greatest aggregate current market value (determined pursuant to
Section 11(d) hereof) or, if none of such Persons has Registered Common Shares
outstanding, whichever of such Persons is the entity having the greatest net
assets.
c. Notwithstanding anything herein to the contrary, if
the Principal Party as determined pursuant to paragraph (b) above is not a
corporation, proper provision shall be made so that such Principal Party shall
create or otherwise make available for purposes of the exercise of the Rights
in accordance with the terms of this Agreement, a type or types of securities
having a fair market value (as determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company) equal to at
least the value of the Common Shares which each holder of a Right would have
been entitled to receive if such Principal Party had been a corporation.
d. The Company shall not consummate any Section 13 Event,
unless (1) at the time of and after such consummation the Principal Party shall
have a sufficient number of authorized Common Shares 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 (2) prior to such consummation 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 this Section 13
and further providing that, as soon as practicable after the date of any such
Section 13 Event, the Principal Party will
-18-
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the Final
Expiration Date, and similarly comply with applicable state securities or "blue
sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
share exchanges, mergers or consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the first
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Additional Covenants.
a. Except as expressly provided herein, no adjustment to
the Purchase Price, the number of Common Shares or other securities for which a
Right is exercisable or the number of Rights outstanding (except as permitted
by Section 24 or Section 25 hereof) or any similar adjustment shall be made or
be effective if such adjustment would have the effect of reducing or limiting
the benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section 11(a)(ii) and Section
13 hereof, unless the terms of this Agreement are amended so as to preserve
such benefits.
b. The Company covenants and agrees that, following the
earlier of the Share Acquisition Date and the Distribution Date, except as
permitted by Sections 24, 25 and 28 hereof, it shall not, directly or
indirectly, take any action the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights.
c. The Company covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof if (i) at the time of or after such consummation there are
or would be any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect (whether of the
Company or any other Person) or any other action taken (whether by the Company
or any other Person) the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights or (ii) the stockholders of the Principal Party shall have
received, either prior to, simultaneously with, or after the consummation of
such transaction, a distribution of Rights previously owned by the Principal
Party or any of its Affiliates and Associates.
d. The Company further covenants and agrees that it
shall not consummate any of the transactions described in clauses (x), (y)
and (z) of Section 13(a) hereof unless prior thereto the Company and the
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with paragraph (c) above
and further providing that the Principal Party covenants and agrees that it
shall not, directly or indirectly, take any action the purpose or effect of
which is to eliminate or otherwise diminish in any material respect the
-19-
benefits intended to be afforded by the Rights. The provisions of this
paragraph (d) and paragraph (c) above shall similarly apply to successive
mergers, consolidations, sales or other transfers.
Section 15. Fractional Rights and Fractional Shares.
a. The Company shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
15(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 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 and shall be conclusive for all purposes.
b. The Company shall not be required to issue fractions
of Common Shares upon exercise of the Rights or to distribute certificates
which evidence fractional Common Shares. In lieu of fractional Common Shares
equal to one-half of a share or less, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Common Share. Any exercise of Rights that would entitle the
holder thereof to receive any fraction of a Common Share greater than one-half
of a share shall be governed by Section 7(a) hereof. In the event that an
additional fraction of a Common Share is not purchased by such holder (or sold
by the Company) pursuant to such Section 7(a), the Company shall pay such
holder an amount in cash equal to the same fraction of the current market value
of one Common Share. For purposes of this Section 15(b), the current market
value of one Common Share shall be the closing price of a Common Share (as
determined pursuant to Section 11(d) hereof) for the Trading Day immediately
prior to the date of such exercise.
c. The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 15 and
Section 7(a) hereof.
-20-
Section 16. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 17. 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 the Common Shares;
b. after the Distribution Date, the Right Certificates
will be transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such purposes,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully completed and duly executed;
c. subject to Sections 6(a) and 7(f) hereof, the Company
and the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
d. notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the Company must
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
-21-
Section 18. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. Concerning the Rights Agent.
a. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and 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. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Rights Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of the action.
b. The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, instruction, 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 20. 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 with or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
22 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and
in case at such time any of the Right Certificates
-22-
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and
in this Agreement.
b. In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at such time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
a. The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
b. Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact
or matter be proved or established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chief
Executive Officer, the President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the 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 Right Certificates or be required to verify the same (except as to its
countersignature thereof), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
e. The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to
-23-
make any representation or warranty as to the authorization or reservation of
any Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares will, when 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 Chief Executive Officer, the President, a Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and 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.
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 for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
j. If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to any item
therein, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer until it has received instructions with
respect thereto from the Company.
Section 22. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and, if instructed by the
Company, to each transfer agent of the Common Shares by registered or certified
mail, and, at the expense of the Company, to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon 30 days, notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail, if the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such
-24-
notice, submit his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus adequate in the judgment of at least a majority of the Board of
Directors to assure the performance of its duties hereunder and the protection
of the interests of the Company and the holders of the Rights. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares, and mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in this Section
22, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 23. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the earliest of the Redemption Date, the Exchange Date and the Final
Expiration Date, the Company (a) shall, with respect to Common Shares so issued
or sold pursuant to the exercise of employee stock options or under any
employee plan or arrangement outstanding, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company prior to such date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificates
would be issued and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 24. Redemption.
a. The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.005 per Right, appropriately adjusted to reflect any
stock split, stock dividend, reclassification or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). The redemption of the Rights may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish. Without limiting the generality of the
foregoing, the Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the
-25-
"current market price" as defined in Section 11(d) hereof, of the Common Shares
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 Board of Directors
of the Company ordering the redemption of the Rights (or at such later time as
the Board of Directors may establish for the effectiveness of such redemption),
and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give or any defect in such notice shall not affect the validity of such
redemption. Within 10 days 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 the Rights Agent and to all such holders at their 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
Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
c. Neither the Company nor any of its Subsidiaries may
redeem, acquire, or purchase for value any Rights at any time in any manner
except (i) pursuant to a redemption in accordance with this Section 24 or an
exchange pursuant to Section 25 hereof or (ii) in connection with the purchase
or other acquisition of Common Shares prior to the Distribution Date.
Section 25. Exchange.
a. Subject to paragraph (c) of this Section 25, the Board
of Directors of the Company may, at its option, at any time after the
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common
Shares at an exchange ratio of two Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend, reclassification or
similar transaction occurring after the date hereof (such exchange being
hereinafter referred to as the "Exchange" and such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
b. Immediately upon the action of the Board of Directors
of the Company authorizing the Exchange and without any further action and
without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of a holder of Rights included in the Exchange shall be
to receive that number of Common Shares equal to the number of Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of the Exchange; provided, however, that the failure to give or
any defect in such notice shall not affect the validity of the Exchange.
Within 10 days after such action of the Board of Directors ordering the
Exchange, the Company shall mail a notice of Exchange to the Rights Agent and
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 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.
-26-
c. In the event that the number of Common Shares which
are authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights
are not sufficient to permit the Exchange in full, the Exchange Ratio shall
equal one Common Stock Equivalent (in lieu of one Common Share) per Right.
Alternatively, the Board of Directors of the Company may, at its option,
determine that the Company shall (i) issue Common Shares in the Exchange to the
extent Common Shares are available and (ii) utilize Common Stock Equivalents in
the Exchange as provided above to the extent Common Shares are not available,
in which case such Common Shares shall be allocated on such basis as the Board
of Directors determines pursuant to Section 30 hereof.
d. After aggregating all the Common Shares to which a
holder of Rights is entitled upon the Exchange, the Company shall not be
required to issue a fraction of a Common Share to such holder. In lieu of
issuing fractional shares, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional shares would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of one Common Share. For the purposes of this paragraph (d), the current
market value of one Common Share shall be the closing price of a Common Share
(as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the Exchange Date.
Section 26. 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 Shares or to make any other distribution to the holders
of Common Shares (other than a regular quarterly cash dividend), (ii) to offer
to all of the holders of Common Shares rights, options or warrants to subscribe
for or to purchase any additional Common Shares at less than the current market
price of the Common Shares, or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer, (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
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, 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 Right Certificate,
in accordance with Section 27 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, or
distribution of rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, if any such date is to be fixed
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least 20 days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
b. In case a Section 11(a)(ii) Event shall occur,
then (i) the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 27 hereof,
a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof and (ii) all references in
-27-
the preceding paragraph to Common Shares shall thereafter be deemed to refer
to, if appropriate, Common Share Equivalents.
c. The failure to give notice required by this Section 26
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote on any such action.
Section 27. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Technitrol, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Secretary
Subject to the provisions of Section 22 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Registrar and Transfer Company
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxx, Assistant Vice President
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 28. Supplements and Amendments. Prior to the earlier of the
Share Acquisition Date and the Distribution Date the Company and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement, whether or not adverse to the holders of Rights, without any
approval of the holders of Rights. From and after the earlier of the Share
Acquisition Date and the Distribution Date the Company and the Rights Agent may
from time to time supplement or amend this Agreement without any approval of
the holders of Rights 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 extend the period
during which the Rights may be redeemed; provided however, that such period may
not be extended if at the time of such supplement or amendment the Rights are
not then redeemable, or (iv) to change or supplement the provisions herein to
effectuate the purposes of this Agreement, or to make any other provisions with
respect to the Rights, which, in either such case, shall not materially
adversely affect the interests of the holders of Rights (other than Acquiring
Persons and Affiliates or Associates thereof). Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or
-28-
amendment is in compliance with the terms of this Section 28, the Rights Agent
shall execute such supplement or amendment; provided, however, that the Rights
Agent may, but shall not be obligated to, enter into any such supplement or
amendment which affects the Rights Agent's own rights, duties or immunities
under this Agreement.
Section 29. 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 30. Determinations and Actions by the Board of Directors. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or 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 to redeem the Rights pursuant to Section 24 hereof, to exchange or not to
exchange the Rights pursuant to Section 25 hereof or to supplement or amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) shall be presumed to have been done or made by the Board of
Directors of the Company in good faith and 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 of Directors to any liability to
the holders of the Rights.
Section 31. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 32. 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 33. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of such Commonwealth applicable to
contracts to be made and performed entirely within such Commonwealth.
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Section 34. 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 35. 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 attested, all as of the date and year first above written.
Attest: TECHNITROL, INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx Xxxxx, III
Name: Xxxx X. Xxxxx Name: Xxxxxx Xxxxx, III
Title: Assistant Secretary Title: Vice President of Finance
Attest: REGISTRAR AND TRANSFER COMPANY
/s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Tattler
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Tattler
Title: Vice President Title: Vice President
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EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 9, 1996 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT
$.005 PER RIGHT, AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATE OR AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE
OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE, BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BE NULL AND VOID.
RIGHT CERTIFICATE
TECHNITROL, INC.
This certifies that ______________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of August 30, 1996 (the "Rights Agreement"),
between Technitrol, Inc., a Pennsylvania corporation (the "Company"), and
Registrar and Transfer Company (the "Rights Agent"). Each Right entitles the
registered holder to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (Cranford, New Jersey time) on September 9, 2006 at the office of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one-half of a fully paid, non-assessable share of Common Stock (the
"Common Shares") of the Company. No less than two Rights and only whole
multiples of two Rights may be exercised at any time by holders of Rights at a
purchase price of $125 per Common Share (the "Purchase Price") (equivalent to
$62.50 for each one-half of a Common Share), subject to adjustment, upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of September 9, 1996, based on the Common
Shares as constituted at such date.
From and after the occurrence of the event described in section 11(a)(ii)
of the Rights Agreement, if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate
thereof (as such terms are defined in the Rights Agreement), (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) under certain
circumstances, a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee before or concurrently with the Acquiring
Person becoming such, such Rights shall be null and void and no holder hereof
shall have any rights with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Common Shares or other securities which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive office of the
Company and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at its option at a
redemption price of $.005 per Right or (ii) may be exchanged by the Company at
its option for shares of the Company's Common Stock, $0.125 par value (or, in
certain circumstances, Common Stock Equivalents (as such term is defined in the
Rights Agreement)).
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby. In lieu of fractions of a share equal to one-half
of a share or less, a cash payment will be made, as provided in the Rights
Agreement. No Rights may be exercised that would entitle the holder to any
fraction of a Common Share greater than one-half of a share unless concurrently
therewith such holder purchases an additional fraction of a Common Share which,
when added to the number of Common Shares to be received upon such exercise,
equals a whole number of Common Shares, as provided in the Rights Agreement.
If such holder does not purchase such additional fraction of a Common Share, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of Common Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _________ ____, 19__
ATTEST: TECHNITROL, INC.
_______________________________ By:___________________________________
Secretary Name:_________________________________
Title:________________________________
Countersigned:
REGISTRAR AND TRANSFER COMPANY
By:___________________________________
Authorized Signature
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[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________ hereby sells,
assigns and transfers unto ___________________________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _____________ ____, 19__
______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial institution or
broker who is a member participant in a Medallion Program approved by the
Securities Transfer Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(i) the Rights evidenced by this Right Certificate [ ]
are [ ] are not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement);
(ii) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: _____________ ____, 19
______________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial institution or
broker who is a member participant in a Medallion Program approved by the
Securities Transfer Association, Inc.
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: TECHNITROL, INC.
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Right Certificate to
purchase the Common Shares issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of:
Please insert social security or other identifying number______________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number _____________________
_______________________________________________________________________________
(Please print name and address)
Dated: _____________ ____, 19__
_________________________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial institution or
broker who is a member participant in a 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 Right Certificate
[ ] are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: _____________ ____, 19__
_____________________________________________
Signature
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On August 30, 1996, the Board of Directors of Technitrol, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of Common Stock, $0.125 par value, of the Company (the "Common Shares")
payable to stockholders of record on September 9, 1996 (the "Record Date").
Each Right entitles the registered holder to purchase from the Company one-half
of a Common Share. No less than two Rights, and only whole multiples of two
Rights may be exercised at any time by holders of Rights at a price of $125 per
Common Share (the "Purchase Price") (equivalent to $62.50 for each one-half of
a Common Share), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Registrar and Transfer Company, as Rights Agent.
The Rights will initially be attached to all Common Share
certificates representing Common Shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding Common
Shares or (ii) 10 business days (or such later day as may be determined by
action of the Board of Directors prior to such time as any person or group
becomes an Acquiring Person) following the commencement of a tender offer or
exchange offer if, upon consummation thereof, any person or group would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such certificate together
with a copy of this Summary of Rights. The date of announcement of the
existence of an Acquiring Person referred to in clause (i) above is referred to
in this summary as the "Share Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding as of the Record
Date will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares on the
Distribution Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on September 9, 2006, unless earlier redeemed
or exchanged by the Company as described below.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of two Rights, except as
provided below, shall thereafter have the right to receive, upon exercise,
Common Shares (or, in certain circumstances, Common Stock Equivalents (as such
term is defined in the Rights Agreement)) having a then market value equal to
two (2) times the Purchase Price of the Rights. Upon the occurrence of the
event described in the preceding sentence, any Rights beneficially owned by (i)
an Acquiring Person or an Associate or Affiliate (as such terms are defined in
the Rights Agreement) 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 (or of any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person or to any person with whom the Acquiring
Person (or of any such Associate or Affiliate) has any agreement, arrangement
or understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company in its discretion has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect the
avoidance of the Rights Agreement 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 the Rights
Agreement or otherwise.
At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person, the Board of Directors of the Company may
exchange the Rights (except Rights which previously have been voided as
described above), in whole or in part, at an exchange ratio of two Common
Shares (or, in certain circumstances, two Common Stock Equivalents) per Right.
In the event that, following the earlier of the Distribution Date and
the Share Acquisition Date, (i) the Company engages in a merger or other
business combination transaction in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or other business combination
transaction with another person in which the Company is the surviving
corporation, but in which its Common Shares are changed or exchanged, or (iii)
more than 50% of the Company's assets or earning power is sold or transferred,
the Rights Agreement provides that proper provision shall be made so that each
holder of two Rights (except Rights which previously have been voided as
described above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a then market value equal to two
(2) times the Purchase Price of the Rights.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to all holders of the Common Shares of certain rights, options or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares, or (iii) upon the distribution
to all holders of the Common Shares of evidences of indebtedness, stock (other
than a dividend payable in Common Shares), assets or cash (excluding regular
quarterly cash dividends) or of subscription rights, options or warrants (other
than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued upon the
exercise of any Right or Rights. In lieu of fractions of a share equal to one-
half of a share or less, a cash payment will be made, as provided in the Rights
Agreement. No Rights may be exercised that would entitle the holders to any
fraction of a Common Share greater than one-half of a share unless concurrently
therewith such holder purchases an additional fraction of a Common Share which,
when added to the number of Common Shares to be received upon such exercise,
equals a whole number of Common Shares, as provided in the Rights Agreement.
If such holder does not purchase such additional fraction of a Common Share, a
cash payment will be made, as provided in the Rights Agreement.
At any time prior to such time as any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part at a price of $.005 per Right, subject to adjustment (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Distribution Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person).
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. A copy of
the Rights Agreement will be available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
