EXHIBIT 1
STOCKHOLDER RIGHTS AGREEMENT
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STOCKHOLDER RIGHTS AGREEMENT
Dated as of February 13, 1996
between
XXXX-XXXXX COMPANY
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
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TABLE OF CONTENTS
Section 1. Certain Definitions.................................. 1
Section 2. Appointment of Rights Agent.......................... 5
Section 3. Issue of Right Certificates.......................... 5
Section 4. Form of Right Certificates........................... 7
Section 5. Countersignature and Registration.................... 8
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates..................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights....................................... 9
Section 8. Cancellation and Destruction of Right
Certificates......................................... 11
Section 9. Reservation and Availability of Shares of
Common Stock......................................... 11
Section 10. Common Stock Record Date............................. 13
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights.................................. 13
Section 12. Certification of Adjusted Purchase Price or
Number of Shares..................................... 20
Section 13. Adjustments from Flip-Over Events.................... 21
Section 14. Fractional Rights and Fractional Shares.............. 24
Section 15. Rights of Action..................................... 25
Section 16. Agreement of Right Holders........................... 25
Section 17. Right Certificate Holder Not Deemed a
Stockholder.......................................... 25
Section 18. Concerning the Rights Agent.......................... 26
Section 19. Merger or Consolidation or Change of Name of
Rights Agent......................................... 26
Section 20. Duties of Rights Agent............................... 27
Section 21. Change of Rights Agent............................... 29
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Section 22. Issuance of New Right Certificates.................. 29
Section 23. Redemption and Termination.......................... 30
Section 24. Notice of Certain Events........................... 31
Section 25. Notices............................................ 31
Section 26. Supplements and Amendments......................... 32
Section 27. Successors......................................... 32
Section 28. Benefits of this Agreement......................... 32
Section 29. Severability....................................... 33
Section 30. Governing Law...................................... 33
Section 31. Counterparts....................................... 33
Section 32. Descriptive Headings............................... 33
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STOCKHOLDER RIGHTS AGREEMENT
This Stockholder Rights Agreement, dated as of February 13, 1996, between
Xxxx-Xxxxx Company, a Delaware corporation, and Norwest Bank Minnesota, National
Association, a national association.
WITNESSETH
WHEREAS, on February 13, 1996, the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one right to
purchase one-half of one share of Common Stock of the Company upon the terms and
subject to the conditions of this Stockholder Rights Agreement for each share of
Common Stock outstanding on the Record Date, and contemplated the issuance of
one such right for each share of Common Stock issued between the Record Date and
the Distribution Date;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which alone or
together with all Affiliates and Associates of such Person, shall be the
beneficial owner of 15% or more of the shares of the Common Stock then
outstanding but shall not include the company, any subsidiary of the Company,
any employee benefit plan (whether or not subject to any of the provisions of
ERISA, as amended from time to time) of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the terms of any
such plan.
(b) "Acquisition Event" shall mean any Flip-In Event or any Flip-Over
Event.
(c) "Act" shall mean the Securities Act of 1933.
(d) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii).
(e) "Adverse Person" shall mean any Person who or which:
(i) is declared by the Board to be a potential adverse person, upon a
determination that such Person, alone or together with all Affiliates and
Associates of such Person, has, at any time after the date of this
Agreement, become the beneficial owner of an amount of Common Stock of the
Company which the Board determines to be substantial, and upon a
determination, after reasonable inquiry and investigation, including
without limitation consultation with such persons as
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the Board shall deem appropriate, that (A) such beneficial ownership or an
increased beneficial ownership by such Person may be reasonably likely to
be intended to cause the Company to repurchase such Common Stock or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions intended to provide such Person with short-term
financial gain under circumstances where the Board determines that the best
long-term interest of the Company and its stockholders would not be served
by taking such action or entering into such transactions or series of
transactions or (B) such beneficial ownership or an increased beneficial
ownership may be reasonably likely to cause a material adverse impact
(including without limitation impairment of relationships with the
Company's employees, customers, suppliers or creditors or impairment of the
Company's ability to maintain its competitive position) on the business or
prospects of the Company; and
(ii) such potential adverse person, alone or together with all
Affiliates and Associates of such potential adverse person, thereafter
becomes the beneficial owner of an amount or percentage of Common Stock of
the Company equal to or greater than the amount or percentage established
by the Board at the time the Board makes the potential adverse person
determination referred to in (i) above (the "Adverse Person Ownership
Level"), PROVIDED, that the Board may from time to time determine to reduce
the Adverse Person Ownership Level to a lower amount or percentage of
Common Stock of the Company.
(f) "Affiliate" and "Associate" shall have the respective meanings given
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
(g) "Agreement" shall mean this Stockholder Rights Agreement
dated as of February 13, 1996.
(h) A Person shall be deemed the "beneficial owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, other
rights, warrants or options, or otherwise; PROVIDED, however, that a Person
shall not be deemed the "beneficial owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B) securities
issuable upon exercise of Rights at any time prior to the occurrence of an
Acquisition Event, or (C) securities
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issuable upon exercise of Rights from and after the occurrence of an
Acquisition Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 (the "Original Rights") or pursuant
to Section 11(a) (i) in connection with an adjustment made with respect to
any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement) including without limitation pursuant to any
agreement, arrangement or understanding, whether or not in writing;
PROVIDED, however, that a Person shall not be deemed the "beneficial owner"
of, or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises solely
from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the Exchange Act, and
(B) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in subparagraph (ii) of this paragraph (h)) or disposing of any
securities of the Company; PROVIDED, however, that nothing in this
paragraph (h) shall cause a person engaged in business as an underwriter of
securities to be the "beneficial owner" of, or to "beneficially own," any
securities acquired through such person's participation in good faith in a
firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
(i) "Board" shall mean the Board of Directors of the Company.
(j) "Business Day" shall mean any day other than a Saturday,
Sunday, federal holiday or a day on which banking institutions in the State of
Minnesota are authorized or obligated by law or executive order to close.
(k) "Close of Business" on any given date shall mean 4:30 P.M.,
Minneapolis, Minnesota time, on such date; PROVIDED, however, that if such date
is not a Business Day it shall mean 4:30 P.M., Minneapolis, Minnesota time, on
the next succeeding Business Day.
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(l) "Common Stock" shall mean the Common Stock, par value $1.66 2/3 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(m) "Company" shall mean Xxxx-Xxxxx Company, a Delaware corporation.
(n) "Current market price" shall have the meaning set forth in Section
11(d).
(o) "Distribution Date" shall have the meaning set forth in Section 3(a).
(p) "ERISA" shall mean the Employee Retirement Income Security Act of
1974.
(q) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(r) "Expiration Date" shall have the meaning set forth in Section 7(a).
(s) "Final Expiration Date" shall mean March 31, 2006.
(t) "Flip-In Event" shall mean an event described in Section
11(a)(ii)(A)(1) or Section 11(a)(ii)(A)(2). A Flip-In Event shall be
deemed to occur at the Close of Business on the date immediately preceding the
first date of public announcement by the Company or an Acquiring Person or an
Adverse Person that a Person has become an Acquiring Person or Adverse Person or
of facts which establish, in the good faith judgment of the Board, that a Person
has become an Acquiring Person or an Adverse Person.
(u) "Flip-Over Event" shall mean an event described in Section
13(a)(w), Section 13(a)(x) , Section 13(a)(y) or Section 13(a)(z).
(v) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(w) "Purchase Price" shall have the meaning set forth in Section 7(b).
(x) "Record Date" shall mean April 1, 1996.
(y) "Redemption Price" shall have the meaning set forth in
Section 23(a).
(z) "Right" shall mean each Right outstanding on the date of this
Agreement and each Right issued between the date of this Agreement and the
Distribution Date. Each Right outstanding on the
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date of this Agreement represents the right to purchase one-half of one share
of Common Stock, subject to the terms and conditions of this Agreement.
(aa) "Rights Agent" shall mean Norwest Bank Minnesota, National
Association, a national association.
(bb) "Right Certificate" shall have the meaning defined in Section 3(a).
(cc) "Subsidiary" shall mean, with reference to any Person, any corporation
or entity of which a majority of any class of equity security or other equity
interest is beneficially owned, directly or indirectly, or otherwise controlled
by such Person.
Any determination required by the definitions contained in this Section 1
shall be made by the Board, in its good faith judgment, which determination
shall be final and binding on the Rights Agent.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3, shall prior to the Distribution Date also be
the holders of the Common Stock) 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.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the twentieth day
following a Flip-In Event where the right of redemption has not been reinstated
pursuant to Section 23(a)(ii), or (ii) the Close of Business on the tenth
Business Day (unless this Agreement is amended prior to the time that any Person
becomes an Acquiring Person to increase such number of Business Days) after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company or any employee benefit plan (whether or not subject
to any of the provisions of ERISA as amended from time to time) of the Company
or of any Subsidiary of the Company or any entity organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof such Person would be an Acquiring Person (the
earlier of (i) or (ii) being herein referred to as the "Distribution Date") (y)
the Rights will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by separate Right
certificates, and (z) the Rights will be transferable only in connection with
the transfer of the
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underlying shares of Common Stock (including, without limitation, a transfer
to the Company). As soon as practicable after the Distribution Date, the
Rights Agent will send, by first-class, postage prepaid mail, to each record
holder of the Common Stock 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 share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the number
of Rights per share of Common Stock has been made pursuant to Section 11(i),
at the time of distribution of the Right Certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance with
Section 14(a)) so that Right Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As
of and after the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(b) With respect to certificates for the Common Stock outstanding as of
the Record Date, until the Distribution Date the Rights will be evidenced by
such certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
Distribution Date the surrender for transfer of any of the certificates for the
Common Stock shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates.
(c) Certificates for the Common Stock issued after the date of this
Agreement but prior to the earlier of the Distribution Date or the Expiration
Date shall be deemed also to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Stockholders Rights Agreement between
Xxxx-Xxxxx Company and Norwest Bank Minnesota, National Association dated
as of February 13, 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 offices of Xxxx-Xxxxx Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights may be redeemed, may
expire or may be evidenced by separate certificates and will no longer be
evidenced by this certificate. Xxxx-Xxxxx Company will mail to the holder
of this certificate a copy of the Rights Agreement without charge promptly
after receipt of a written request therefor. Under certain circumstances,
Rights issued to, or held by an Acquiring Person, an Adverse Person or
Affiliates or Associates thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become null and
void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, the Rights
associated with the Common Stock
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represented by such certificates shall be evidenced by such certificates alone
and the registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase and of
assignment on the reverse thereof) shall be substantially in the form attached
hereto as Exhibit A and may have such marks of the 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 be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22, the Right Certificates,
whenever distributed, shall be dated as of the Distribution Date and on their
face shall entitle the holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at the price set forth therein, but
the number of such shares and such price shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
that represents Rights beneficially owned by any Person known to be: (i) an
Acquiring Person, an Adverse Person or any Affiliate or Associate of an
Acquiring Person or an Adverse Person, (ii) a transferee of an Acquiring Person
or an Adverse Person (or of any such Affiliate or Associate) who becomes a
transferee after the Acquiring Person or Adverse Person becomes such, or (iii) a
transferee of an Acquiring Person or Adverse Person (or of any such Affiliate or
Associate) who becomes a transferee prior to or concurrently with the Acquiring
or Adverse Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person or
Adverse Person to holders of equity interests in such Acquiring Person or
Adverse person or to any Person with whom the Acquiring Person or Adverse Person
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board otherwise concludes in good
faith is part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e), and any Right Certificate issued
pursuant to Section 6 or Section 11 upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend, modified as applicable to
such Person:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an [Acquiring] [Adverse] Person or an
Affiliate or Associate of an [Acquiring] [Adverse] Person (as such terms
are
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defined in the Rights Agreement). Accordingly, this Right Certificate and
the Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Rights Agreement.
The provisions of Section 7 (e) of this Agreement shall be operative whether
or not the foregoing legend is contained on any such Rights Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President or any Vice President, either manually
or by facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be 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 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 Certificates may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificates, shall be a proper officer of the Company
to sign such Right Certificates, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal offices, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP. COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 14, at any time after the
Distribution Date, and at or prior to the Expiration Date, any Right Certificate
or Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request
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in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment 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.
(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, or indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXRIRATION DATE
OF RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office
or offices of the Rights Agent designated for such purpose, together with
payment, in lawful money of the United States of America, in the form required
by paragraph (c) below, but subject to the provisions of section 11(a)(iii),
of the aggregate Purchase Price with respect to the total number of shares (or
other securities, cash or other property, as the case may be) as to which the
surrendered Rights are then exercisable, at or prior to the earlier of (i) the
close of business on the Final Expiration Date, or (ii) the time at which the
Rights are redeemed as provided in Section 23 (such earlier time being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one full share of Common Stock shall, at
the date of this Agreement be $60.00, and such amount shall be subject to
adjustment from time to time as provided in Sections 11 and 13.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment (in
cash, or by certified check or bank draft payable to the order of the Company)
of the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax, the Rights Agent shall (subject to Section 20(j))
thereupon promptly (i) requisition from any transfer agent
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of the shares of Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the number of shares of Common
Stock being 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 to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be designated by
such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Right Certificate. In the event
that the Company is obligated to issue other securities of the Company or to pay
cash or distribute other property pursuant to section 11(a)(iii), the Company
will make all arrangements necessary so that such other securities, cash, and/or
other property are available for delivery by the Rights Agent.
(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 the duly authorized assigns of such holder, subject to the provisions of
section 14.
(e) Notwithstanding anything in this Agreement to the contrary, if a
Flip-In Event shall occur and the right of redemption shall not be reinstated
pursuant to Section 23(a)(ii), then any Rights beneficially owned by (i) an
Acquiring Person, an Adverse Person or an Affiliate or Associate of an Acquiring
Person or an Adverse Person, (ii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Affiliate or Associate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or (iii) a transferee
of an Acquiring Person or an Adverse Person (or of any such Affiliate or
Associate) who becomes a transferee prior to or concurrently with the Acquiring
Person or Adverse Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person or Adverse Person to holders of equity interests in such Acquiring Person
or Adverse Person or to any Person with whom the Acquiring Person or Adverse
Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board has determined is part of a
plan, arrangement or understanding which has as a primary purpose or effect
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) are complied with, 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
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respect to an Acquiring Person or Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
beneficial owner (or former beneficial owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Common Stock or its
authorized and issued shares of Common Stock held in its treasury, the number of
shares of Common Stock that will be sufficient to permit the exercise in full of
all outstanding Rights; PROVIDED, however, that the Company need not so reserve
shares of Common Stock which may be required by Section 11 unless, after the
occurrence of a Flip-In Event, the right of redemption has not been reinstated
pursuant to Section 23(a)(ii).
(b) So long as the shares of Common Stock (and, following the occurrence
of an Acquisition Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be quoted in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other system then in use, or listed on
any national securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares of
Common Stock and/or other securities
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reserved for such issuance to be quoted in such over-the-counter market or
listed on such exchange upon official notice of issuance.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable after the Close of Business on the twentieth day following a Flip-In
Event (unless the right of redemption has been reinstated pursuant to Section
23(a)(ii) , in which event no such filing shall be required) and after the
consideration to be delivered by the Company upon exercise of the Rights has
been determined pursuant to this Agreement (including without limitation in
accordance with Section 11(a)(iii)), or as soon as is required by law, as the
case may be, a registration statement under the 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 Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, or (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 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, the company may temporarily suspend the
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, and shall be void so long as
held, by a holder in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained or the exercise thereof shall not be
permitted under applicable law.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all shares of Common Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any certificates for shares of Common Stock upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer involved in the transfer or
12
delivery of Right Certificates or the issuance or delivery of certificates for
shares of Common Stock in a name other than that of the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates for shares of Common Stock 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 STOCK RECORD DATE. Each person in whose name any
certificate for shares of Common Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
shares of Common Stock represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, however, that if the date of such surrender and
payment is not a Business Day, 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. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including without limitation the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Stock payable in shares of Common
Stock, (B) subdivide the Common Stock, (C) combine the Common Stock into a
smaller number of shares or (D) issue any shares of its capital stock in a
reclassification of the Common Stock (including without limitation 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), the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision" combination or reclassification, and the number and kind of
shares of Common Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of Common Stock or capital stock, as the case may be, which, if
such Right had been exercised on the Business Day immediately prior to such
date, such holder would have owned upon such exercise and been entitled to
receive by
13
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to any adjustment required pursuant
to Section 11(a)(ii).
(ii) If (A) (1) any Person shall become an Acquiring Person, or (2)
any Person shall become an Adverse Person and (B) the right of redemption is not
reinstated pursuant to Section 23(a)(ii), then promptly after the Close of
Business on the twentieth day following the first occurrence of an event under
Section 11(a)(ii)(A)(1) or Section 11(a)(ii)(A)(2), proper provision
shall be made so that each holder of a Right, except as provided below and in
Section 7(e), shall thereafter have a right to receive, upon exercise thereof at
one-half of the then current Purchase Price for one full share in accordance
with the terms of this Agreement, such number of shares of Common Stock of the
Company as shall equal the result obtained by (y) multiplying the then current
Purchase Price for one full share by the then number of shares of Common Stock
for which a Right was exercisable immediately prior to such first occurrence,
and (z) dividing that product by fifty percent (50%) of the current market price
(determined pursuant to Section 11(d)) per one full share of Common Stock on the
date of such first occurrence (such number of shares being referred to as the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock which
are authorized by the Company's certificate of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of all of the exercisable Rights
in accordance with Section 11(a)(ii), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares (the "Current Value") over (2)
one-half of the Purchase Price for a full share (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon the exercise of such Right, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the Company
(including without limitation shares, or units of shares, of preferred stock
which the Board has deemed to have the same value as shares of Common Stock
(such shares or units of shares of Preferred Stock are herein called "common
stock equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to the
Current Value, where such aggregate value has been determined by the Board based
upon the advice of a nationally recognized investment banking firm selected by
the Board; PROVIDED, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30) days
following the first date upon which the Rights become exercisable after the
first occurrence of a Flip-In Event (such first date being sometimes referred to
herein as the "Section 11(a)(iii) Trigger Date"), then the Company shall be
obligated to deliver,
14
upon the surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(iii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action needs be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (y) shall
provide, subject to Section 7(e), that such action shall apply uniformly to all
outstanding Rights, and (z) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding anything to the contrary in the foregoing provisions of
this Section 11(a)(iii), the Company may, at its option, elect, by Board
action taken within thirty (30) days following the first date upon which the
Rights become exercisable after the first occurrence of a Flip-In Event, to
exchange each of the Rights outstanding at the Close of Business on the date of
such Board action (but not any Rights which become void pursuant to Section
7(e)) for shares of Common Stock having a value equal to the excess of the value
of the Adjustment Shares over one-half of the Purchase Price for a full share
(the "Excess"). The aforesaid Board action must relate to all of the Rights
outstanding at such time (other than the aforesaid void Rights). Immediately
following the Close of Business on the date of the aforesaid Board action, and
without any further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent only the right to
receive shares of Common Stock having a value equal to the Excess. Promptly
after the aforesaid Board action, the Company shall give notice thereof
(specifying the steps to be taken to receive the shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice in accordance with Section 25. For purposes of
this Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d)) per share of the Common
Stock on the first date upon which the Rights become exercisable after the first
occurrence of a Flip-In Event, and the value of any "common stock equivalent"
shall be deemed to have the same value as the Common Stock on such date.
15
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Stock (or securities convertible into Common Stock) at a
price per share of Common Stock (or having a conversion price per share, if a
security convertible into Common Stock) less than the current market price (as
determined pursuant to Section 11(d)) per share of Common Stock on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares of
Common Stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the number of additional
shares of Common Stock 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, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including without limitation any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Common Stock, but including without limitation any dividend payable
in stock other than Common Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)) per
share of Common Stock on such record date, less the fair market value (as
determined in good faith by the Board whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the evidences of
indebtedness, cash, assets or securities to be distributed in respect of one
16
share of Common Stock and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d)) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; PROVIDED, however, that in the event that the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of 30 Trading Days after the exdividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
or such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board. If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares on such date
as determined in good faith by the Board shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, "current market
price" per share shall mean the
17
fair value per share as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights.
Notwithstanding anything to the contrary in this Section 11(d), for purposes of
the computations made pursuant to Section 11(a)(iii), the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following such date.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in 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 share of Common Stock 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
mandates such adjustment or (ii) the Expiration Date.
(f) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or Section 13, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock other
than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 11(a), (b) and (c), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the shares of Common Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to such adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so
18
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 shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of shares of Common Stock for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights and shall notify the Rights Agent
thereof, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. The record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be entitled as
a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price), shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement and shall be dated the date of such record date.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Common Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may
19
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Purchase Price. If upon any exercise of the Rights, a
holder is to receive a combination of Common Stock and common stock equivalents,
a portion of the consideration paid upon such exercise, equal to at least the
then par value of a share of Common Stock of the Company, shall be allocated as
payment for each share of Common Stock of the Company so received.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the shares
of Common Stock and other capital stock or securities of the company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares 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 the Board in its sole discretion shall determine to be advisable
in order that any (i) consolidation or subdivision of the Common Stock, (ii)
issuance wholly for cash of any shares of Common Stock at less than the current
market price, (iii) issuance wholly for cash of any shares of Common Stock or
securities which by their terms are convertible into or exchangeable for Common
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the Company to
holders of its Common Stock, shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, except as permitted by Section 23 or Section 26, take (or
permit any Subsidiary of the Company to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will eliminate or
otherwise diminish in any respect the benefits intended to be afforded by this
Agreement to the holders of the Rights.
Section 12. CERTIFICATION 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 Stock a copy of such certificate and (c) mail a brief summary thereof to
20
each holder of a Right Certificate in accordance with Section 25. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. ADJUSTMENTS FROM FLIP-OVER EVENTS. (a) If any Person shall
become an Acquiring Person, if the right of redemption shall not be reinstated
pursuant to Section 23(a)(ii) and if thereafter, (w) the Company shall
consolidate with, or merge with or into, an Acquiring Person or any Affiliate or
Associate thereof, or an Acquiring Person or any Affiliate or Associate thereof
shall consolidate with, or merge with or into, the Company, and, in connection
therewith, all or part of the outstanding shares of Common Stock of the Company
shall be changed in any way or converted into or exchanged for stock or other
securities or cash or other property, or (x) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or a series of related or unrelated transactions within a period of two
years, assets (i) aggregating more than fifty percent (50%) of the assets
(measured either by book value or fair market value) or (ii) generating more
than fifty percent (50%) of the operating income or cash flow, of the Company
and its Subsidiaries (taken as a whole) to one or more Persons (other than the
Company or any Subsidiary or subsidiaries of the Company), but excluding
transactions approved by the Board prior to the time when the Rights may no
longer be redeemed pursuant to Section 23(a)(i), or (y) an Acquiring Person
or an Affiliate or Associate thereof shall (1) acquire from the Company or any
of its Subsidiaries, with or without consideration, over any period of twelve
(12) consecutive calendar months, beneficial ownership of any additional shares
of any class of capital stock of the Company or any of its Subsidiaries equal in
the aggregate to more than one percent (1%) of the outstanding shares of such
class, or securities exercisable or exchangeable for or convertible into more
than one percent (1%) of the authorized or outstanding shares of any class of
capital stock of the company or any of its Subsidiaries (in each case other than
as part of a PRO RATA distribution to all holders of such stock or pursuant to
the exercise of rights or warrants, or the conversion or exchange of securities,
issued PRO RATA in such a distribution), (2) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, to, from, or
with, as the case may be, the Company or any of its Subsidiaries, over any
period of twelve (12) consecutive calendar months, assets (including without
limitation cash or cash equivalents) (a) having an aggregate fair market value
of more than five million dollars ($5,000,000) or (b) on terms and conditions
less favorable to the Company than the Company would be able to obtain through
arms-length negotiations with an unaffiliated third party, (3) receive any
compensation for services from the Company or any of its Subsidiaries, other
than compensation for full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries') past practices, or (4)
receive the benefit, directly or indirectly (except proportionately as a
stockholder), over any period of twelve (12) consecutive calendar months, of any
loans, advances, guarantees, pledges, insurance, reinsurance or
21
other financial assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries involving an aggregate principal
amount in excess of five million dollars ($5,000,000) or an aggregate cost or
transfer of benefits from the Company or any of its Subsidiaries in excess of
five million dollars ($5,000,000) or, in any case, on terms and conditions less
favorable to the Company than the Company would provide or be able to obtain
through arms-length negotiations with a third party, or (z) as a result of any
reclassification of securities (including any reverse stock split), or
recapitalization, of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
(whether or not with or into or otherwise involving an Acquiring Person or an
Affiliate or Associate thereof), the proportionate share of the outstanding
shares of any class of equity or convertible securities of the Company or any of
its Subsidiaries which is directly or indirectly beneficially owned by an
Acquiring Person is increased by more than one percent (1%), then, and in each
such case, proper provision shall be made so that (a) each holder of a Right
shall thereafter have a right to receive, upon exercise thereof at one-half of
the then current Purchase Price for one full share in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by (1) multiplying the then
current Purchase Price for one full share by the then number of shares of Common
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-Over Event (or, if a Flip-In Event has occurred prior to
the first occurrence of a Flip-Over Event, by the then number of such shares for
which a Right was exercisable immediately prior to the first occurrence of a
Flip-In Event), and (2) dividing that product by fifty percent (50%) of the
current market price (determined pursuant to Section 11(d)) per one full share
of the Common Stock of such Principal Party on the date of consummation of such
Flip-Over Event; (b) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of the occurrence of such Flip-Over Event, all the
obligations and duties of the Company pursuant to this Agreement; (c) the term
"Company" shall thereafter be deemed to refer to such Principal Party; (d) such
Principal Party shall take such steps (including without limitation the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (e) the provisions of Section 11 shall be of no
further effect following the first occurrence of a Flip-over Event (except to
the extent already applicable by reason of events and acts already having
occurred).
(b) "Principal Party" shall mean
22
(i) in the case of any transactions described in clause (w)
of the first sentence of Section 13 (a), the Person that is the issuer
of any securities into which shares of Common Stock of the Company are
converted in such consolidation or merger, and if no securities are so
issued, the Person that is the other party to such consolidation or merger;
(ii) in the case of any transaction described in clause (x)
of the first sentence of Section 13 (a) , the Person that is the
party receiving the greatest portion of the assets sold or transferred
pursuant to such transaction or transactions; and
(iii) in the case of any transaction described in clause (y)
or clause (z) of the first sentence of Section 13 (a), the Acquiring
Person;
PROVIDED, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any Flip-Over Event unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any such Flip-Over Event, the Principal Party
will (i) prepare and file a registration statement and other necessary documents
under the Act and applicable blue sky laws, 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 and other
documents to (A) become effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the requirements of
the Act and such blue sky laws) until the Expiration Date; and (ii) will deliver
to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act. The Company covenants and
agrees that it shall not, at any time after the Distribution Date, enter into
any agreement with respect to, consummate or permit to occur any Flip-Over Event
if at the time thereof there are any rights, warrants or securities outstanding
or any other arrangements, agreements or instruments in effect which would
eliminate or otherwise diminish in any respect the benefits intended to be
afforded by this Agreement to the holders of the Rights.
23
(d) The provisions of this Section 13 shall similarly apply to successive
Flip-over Events. In the event that any Flip-over Event shall occur, the Rights
which have not theretofore been exercised pursuant to Section 11(a)(ii) shall
thereafter become exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
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 the National Association of Securities
Dealers Automated Quotation System or other such system then in use. If on any
such date the Rights are not quoted by any such organization, the fair value of
the Rights on such date as determined in good faith by the Board shall be used
and shall be binding on the Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Common Stock or other securities or to distribute certificates which evidence
fractional shares. In lieu of 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 share of Common Stock or one
unit of other securities. For purposes of this Section 14 (b), the current
market value shall be the closing price of one share or one unit (as determined
pursuant to Section 11(d)) for the Trading Day immediately prior to the date on
which such fractional shares would have been otherwise issuable.
(c) The holder of a Right by the acceptance of the Rights
expressly waives the holder's right to receive any fractional
Rights or any fractional shares, except as permitted by this
Section 14.
24
Section 15. 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, of the Common Stock); and any
such registered holder, without the consent of the Rights Agent or of any other
holder, may, in the holder's own behalf and for the holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, the holder's right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferrable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock Certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common Stock Certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or government authority,
prohibiting or otherwise restraining performance of such obligation.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose
25
the holder of Common Stock or any other securities of the Company which may at
any time be issuable hereunder, nor shall anything contained herein or in any
Right Certificates be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder or securityholder of
the Company.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on request 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 without limitation the costs and
expenses of defending against any claim of liability. 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 of Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all cases such Right Certificates shall
have the full force provided in the Right Certificates and in this Agreement.
26
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations 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
(including without limitation the identity of any Acquiring Person or Adverse
Person and the determination of "current market price") 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 provided and established by a
certificate signed by the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereby by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be
27
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 make any representation or warranty as to the
authorization or reservation of any shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President or any Vice President or the Secretary or
any Assistant Secretary or the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, PROVIDED, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be
28
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer the certificate attached to the form of
assignment or form of election to exercise, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock by registered or certified 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 Stock by registered or certified mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. Any
successor Rights Agent shall be a corporation organized and doing business under
the laws of the United States or of the States of Minnesota or New York, in good
standing, having a principal office in the States of Minnesota or New York,
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, surplus
and undivided profits of at least $10,000,000. 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 mail notice thereof in writing to the predecessor Rights Agent,
each transfer agent of the Common Stock and the registered holders of the Right
Certificates. Failure to mail such notice 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.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares of stock or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this
29
Agreement. In addition, the Company may, if deemed necessary or appropriate by
the Board, issue Right Certificates in connection with the sale of shares of
Common Stock following the Distribution Date.
Section 23. REDEMPTION AND TERMINATION.
(a) (i) The Company may, at its option, at any time prior to the earlier
of (y) the Close of Business on the date of a Flip-In Event, or (z) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.Ol per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement (such redemption price being hereinafter referred to as the
"Redemption Price"). The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the "current market price," as defined
in Section 11(d), of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board.
(ii) If, prior to the Close of Business on the twentieth day following
the occurrence of a Flip-In Event, (y) a Person who is an Acquiring Person shall
have transferred or otherwise disposed of a number of shares of Common Stock in
one transaction or a series of transactions not directly or indirectly involving
the Company or any Subsidiary of the Company so that such Person is no longer an
Acquiring Person and there is no other Person immediately following such
transfer or other disposition who is an Acquiring Person or an Adverse Person,
or (z) a Person who is an Adverse Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in one transaction or a series of
transactions not directly or indirectly involving the Company or a Subsidiary of
the Company so that such Person is no longer an Adverse Person and there is no
other Person immediately following such transfer or other disposition who is an
Adverse Person or an Acquiring Person, then the right of redemption provided by
Section 23(a)(i) shall automatically be reinstated and any previously
occurring Flip-In Event shall, for purposes of Section 23, be deemed to have
been annulled AB INITIO.
(iii) Notwithstanding anything in this Agreement to the contrary,
the Rights shall not be exercisable until the Close of Business on the twentieth
day following a Flip-In Event and then shall only be exercisable if the right of
redemption provided by Section 23(a)(i) has not been reinstated pursuant to
the terms and provisions of Section 23(a)(ii).
(b) Immediately upon the action of the Board of the Company ordering the
redemption of the Rights, evidence of which shall be filed with the Rights
Agent, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Promptly after the action
of the Board ordering the redemption of the Rights, the Company shall give
30
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be made. At the
option of the Company, payment of the Redemption Price may accompany such
notice.
Section 24. NOTICE OF CERTAIN EVENTS. In case the Company shall
propose, at any time after the Distribution Date, to take any action of any of
the types described in Section 11(a)(i), Section 11(b) or Section 11(c) or 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 and the
Rights Agent, to the extent feasible and in accordance with Section 25, a notice
of such proposed action, which shall specify the record date or other date of
participation therein, and such notice shall be so given at least twenty (20)
days prior to the record date or other date of participation. If a Flip-In
Event occurs and the right of redemption is not reinstated pursuant to Section
23(a)(ii), then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, to the extent feasible and in accordance
with Section 25, 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) . The failure to give notice required by this Section 24 or any
defect therein shall not affect the legality or validity of the matter or event
as to which such notice was to relate.
Section 25. 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:
Xxxx-Xxxxx Company
Attention: Secretary
0000 Xxxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Subject to the provisions of Section 21, any notice of 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,
31
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
Norwest Bank Minnesota, National Association
Stock Transfer Department
000 Xxxxx Xxxxxxx Xxxxxxxx
Xxxxx Xx. Xxxx, Xxxxxxxxx 00000
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 firstclass mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. At any time and from time to
time while the Rights are redeemable pursuant to Section 23(a)(i), the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of certificates
representing Rights except for a supplement or amendment which would change the
Redemption Price, Final Expiration Date, Purchase Price, or the number of
fractional shares of Common Stock to which a Right relates. During any time
the Rights are not redeemable pursuant to Section 23(a)(i), the Company and
the Rights Agent shall at any time and from time to time, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing 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, or
(iii) to change or supplement any provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of certificates representing Rights (other than an
Acquiring Person, an Adverse Person or an Affiliate or Associate thereof).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
Section 27. 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 28. BENEFITS OF THIS AGREEMENT. (a) 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, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the
32
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
registered holders of the Common Stock).
(b) For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or any other securities outstanding at any particular
time, including without limitation for purposes of determining the particular
percentage of such outstanding shares of Common Stock or any other securities of
which any Person is the beneficial owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement.
(c) The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board or the Company or necessary or advisable in the administration of this
Agreement, including without limitation the right and power to interpret the
Agreement and to make all determinations deemed necessary or advisable for the
administration of this Agreement. All such acts, interpretations and
determinations done or made by the Board in good faith shall be final,
conclusive and binding on the Company, the Rights Agent and the holders of the
Rights. Accordingly, the Board shall not be liable to the holders of Rights
Certificates or any other party for any determination made, action taken, or
action omitted to be taken pursuant to the terms of this Agreement, if such
determination, action or omitted action was made or taken in good faith.
Section 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 30. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state, except that the rights and obligations of
the Rights Agent shall be governed by the laws of the state in which its
principal office is located.
Section 31. 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 32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience
33
only and shall not control or affect the meaning or construction of any of
the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
XXXX-XXXXX COMPANY
By: __________________________________
Title ___________________________
Attest: ______________________________
Title ___________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By: __________________________________
Title ___________________________
Attest: ______________________________
Title ___________________________
34
EXHIBIT A
[Form of Front Side of Right Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER MARCH 31, 2006 OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT
REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ADVERSE
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN [ACQUIRING] [ADVERSE]
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN [ACQUIRING]
[ADVERSE] PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF SUCH
AGREEMENT.] THE RIGHTS SHALL NOT BE EXERCISABLE AND SHALL
BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION
WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH
HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN
SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE.
-----------------------
1. The portion of the legend in brackets shall be inserted only if applicable,
shall be modified to apply to an Acquiring Person or an Adverse Person as
applicable, and shall replace the preceding sentence.
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RIGHT CERTIFICATE
XXXX-XXXXX COMPANY
(a Delaware corporation)
This certifies that ___________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Stockholder Rights Agreement dated as of February 13, 1996
(the "Rights Agreement") between Xxxx-Xxxxx Company, a Delaware corporation (the
"Company") and Norwest Bank Minnesota, National Association, a national
association (the "Rights Agent"), to purchase for cash from the Company at any
time that the Company's right of redemption has expired and has not been
reinstated (but only prior to 4:30 p.m. (Minneapolis, Minnesota) on March 31,
2006) at the principal office of the Rights Agent in Minnesota, or its successor
as Rights Agent, one-half of one fully paid, nonassessable share of the Common
Stock (the"Common Stock") of the Company at a purchase price of $60.00 per one
full share (the "Purchase Price") upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares which may
be purchased upon exercise hereof) and the Purchase Price are the number and
Purchase Price as, of February 13, 1996.
If a Flip-In Event (as such term is defined in the Rights Agreement) shall
occur and the Company's right of redemption is not reinstated, the Rights
evidenced by this Right Certificate, if beneficially owned by (i) an Acquiring
Person, an Adverse Person or an Affiliate or Associate of any such Person, (ii)
a transferee of any such Acquiring Person, Adverse Person, Affiliate or
Associate, or (iii) under certain circumstances, a transferee of a person who
became an Acquiring Person, Adverse Person, Affiliate or Associate concurrently
with or following such transfer, shall become null and void.
The Rights evidenced by this Right Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock 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,
A-2
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
A copy of the Rights Agreement is on file at the above-mentioned office of the
Rights Agent and may be obtained by written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof, another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at any time prior
to the earlier of the Close of Business on the date of a Flip-In Event or the
Final Expiration Date at a redemption price of $.O1 per Right, payable at the
election of the Company in cash, shares of Common Stock or such other
consideration as the Board may determine.
No fractional shares of Common Stock will be issued upon the exercise or
exchange of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise or exchange 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 or securityholder of the Company.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated:________________, 19__.
XXXX-XXXXX COMPANY
By _______________________________
Title _______________________
Attest ___________________________
Title _______________________
Countersigned:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By ________________________________
Authorized Signature
A-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed if 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.
The undersigned hereby certifies, by marking the appropriate boxes, that:
(1) This Right Certificate
[ ] is
or
[ ] is not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person, an Adverse Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights Agreement); and
(2) The undersigned (after due inquiry and to the best of the
undersigned's knowledge)
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person, an Adverse Person or an
Affiliate or Associate of any such Person.
Date: ________________, 19__
_________________________________
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Assignment 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.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: Xxxx-Xxxxx Company:
The undersigned hereby irrevocably elects to exercise
______________________ Rights represented by this Right Certificate to
purchase the shares of Common Stock issuable upon the exercise of such 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 (or other securities) be issued in the name of:
_____________________________________________________________________________
(Please print name and address)
Please insert social security
or other identifying number: _______________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
_____________________________________________________________________________
(Please print name and address)
Please insert social security
or other identifying number: ________________________________________________
The undersigned hereby certifies, by marking the appropriate boxes, that:
(1) The Rights evidenced by this Right Certificate
[ ] are
or
[ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person,
an Adverse Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement); and
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(2) The undersigned (after due inquiry and to the best of the
undersigned's knowledge)
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Right Certificate from any person who is,
was or subsequently became an Acquiring Person, an Adverse Person or an
Affiliate or Associate of any such Person.
Date: ________________, 19__
____________________________________
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Election to Purchase 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.
A-7
