______________________________________________________________
MERIDIAN INSURANCE GROUP, INC.
And
XXXXXX TRUST AND SAVINGS BANK,
As Rights Agent
____________
Rights Agreement
Dated as of September 18, 1998
______________________________________________________________
TABLE OF CONTENTS
Page
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 . . . . . . .7
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. . . . . . . . . . . . . . . 10
Section 9. Availability of Preferred Shares. . . . . . . 10
Section 10. Preferred Shares Record Date . . . . . . . . 11
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. . . . . . . . 11
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares . . . . . . . . . . . 18
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . 19
Section 14. Fractional Rights and Fractional Shares. . . 20
Section 15. Rights of Action . . . . . . . . . . . . . . 21
Section 16. Agreement of Right Holders . . . . . . . . . 21
Section 17. Right Certificate Holder Not Deemed a
Shareholder . . . . . . . . . . . . . . . 22
Section 18. Concerning the Rights Agent. . . . . . . . . 22
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . 23
Section 20. Duties of Rights Agent . . . . . . . . . . . 24
Section 21. Change of Rights Agent . . . . . . . . . . . 26
Section 22. Issuance of New Right Certificates . . . . . 27
Section 23. Redemption . . . . . . . . . . . . . . . . . 27
Section 24. Exchange . . . . . . . . . . . . . . . . . . 28
Section 25. Notice of Certain Events . . . . . . . . . . 30
Section 26. Notices. . . . . . . . . . . . . . . . . . . 30
Section 27. Supplements and Amendments . . . . . . . . . 31
Section 28. Successors . . . . . . . . . . . . . . . . . 32
Section 29. Benefits of this Rights Agreement. . . . . . 32
Section 30. Severability . . . . . . . . . . . . . . . . 32
Section 31. Governing Law. . . . . . . . . . . . . . . . 32
Section 32. Counterparts . . . . . . . . . . . . . . . . 32
Section 33. Descriptive Headings . . . . . . . . . . . . 32
Exhibit A Articles of Amendment . . . . . . . . . . . . .A-1
Exhibit B Form of Right Certificate . . . . . . . . . . .B-1
Exhibit C Summary of Rights to Purchase
Preferred Shares. . . . . . . . . . . .C-1
Rights Agreement
Rights Agreement, dated as of September 18, 1998,
between Meridian Insurance Group, Inc., an Indiana corporation
(the "Company"), and Xxxxxx Trust and Savings Bank (the
"Rights Agent").
The Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right
(a "Right") for each Common Share of the Company outstanding
on September 28, 1998 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a
Preferred Share, upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that
shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the
Expiration Date.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of this
Rights Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates
of such Person, shall be the Beneficial Owner of 20%
or more of the Common Shares then outstanding, but
shall not include (i) the Company or Meridian Mutual,
any Subsidiary of the Company or Meridian Mutual, any
employee benefit plan of the Company or Meridian
Mutual or of any Subsidiary of the Company or Meridian
Mutual, or any entity holding Common Shares for or
pursuant to the terms of any such plan, (ii) any
person who becomes the Beneficial Owner of 20% or more
of the Common Shares then outstanding as the result of
a reduction in the outstanding Common Shares resulting
from acquisition of Common Shares by the Company
approved by a majority of the Continuing Directors,
unless and until such Person becomes the Beneficial
Owner of any additional Common Shares, or (iii) any
person who becomes the Beneficial Owner of 20% or more
of the Common Shares then outstanding pursuant to any
action or transaction or series of related actions or
transactions approved by a majority of the Continuing
Directors, unless and until such Person becomes the
Beneficial Owner of any additional Common Shares.
Notwithstanding the foregoing, any Person who or which
the Board of Directors of the Company (upon the
approval of a majority of the Continuing Directors)
determines, in good faith, became an Acquiring Person
inadvertently, if such Person divests as promptly as
practicable a sufficient number of Common Shares so
that such Person would no longer be an Acquiring
Person, shall be deemed not to be and never to have
been an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in
Rule 12b-2 under the Exchange Act.
(c) A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "Beneficially Own"
any securities:
(i) which such Person or any of such
Person's Affiliates or Associates
beneficially owns, as determined pursuant to
Rule 13d-3 under the Exchange Act;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the
right to acquire (whether such right is
exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding (other than
customary agreements with and between
underwriters and selling group members with
respect to a bona fide public offering of
securities), or upon the exercise of
conversion rights, exchange rights, rights
(other than the Rights), warrants or options,
or otherwise, provided, however, that a
Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities
tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates
until such tendered securities are accepted
for purchase or exchange or (B) the right to
vote pursuant to any agreement, arrangement
or understanding, provided, however, that a
Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, any
security if the agreement, arrangement or
understanding to vote such security
(1) arises solely from a revocable proxy or
consent given to such Person in response to a
public proxy or consent solicitation made
pursuant to, and in accordance with, the
applicable rules and regulations promulgated
under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person
with which such Person or any of such
Person's Affiliates or Associates has any
agreement, arrangement or understanding
(other than customary agreements with and
between underwriters and selling group
members with respect to a bona fide public
offering of securities) for the purpose of
acquiring, holding, voting (except to the
extent contemplated by the proviso to
Section 1 (c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company,
shall mean the number of such securities then issued
and outstanding together with the number of such
securities not then actually issued and outstanding
which such Person would be deemed to Beneficially Own
hereunder.
(d) "Business Day" shall mean any day other than
a Saturday, a Sunday, or a day on which banking
institutions in New York or Illinois are authorized or
obligated by law or executive order to close.
(e) "Close of Business" on any given date shall
mean 5:00 p.m., New York City time, on such date,
provided, however, that, if such date is not a
Business Day, it shall mean 5:00 p.m., New York City
time, on the next succeeding Business Day.
(f) "Common Shares" shall mean the common shares,
no par value, of the Company, except that "Common
Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of
such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(g) "Company" shall have the meaning set forth in
the preamble hereof.
(h) "Continuing Director" shall mean any member
of the Board of Directors of the Company, while such
person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person, or a representative or nominee
of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the
Board of Directors on the date of this Agreement or
(ii) subsequently became a member of the Board of
Directors, and whose nomination for election or
election to the Board of Directors was recommended or
approved by a majority of the Continuing Directors
then serving on the Board of Directors.
(i) "current per share market price" shall have
the meaning set forth in Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(k) "equivalent preferred shares" shall have the
meaning set forth in Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities
Exchange Act of 1934.
(m) "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof.
(n) "Expiration Date" shall mean the Close of
Business on September 18, 2008.
(o) "Meridian Mutual" shall mean Meridian Mutual
Insurance Company, an Indiana mutual insurance company
and its successors.
(p) "Nasdaq" shall mean the National Association
of Securities Dealers, Inc. Automated Quotations
System.
(q) "Person" shall mean any individual, firm,
corporation, partnership or other entity, and shall
include any successor (by merger or otherwise) of such
entity.
(r) "Preferred Shares" shall mean shares of
Series A Junior Participating Preferred Stock, no par
value, of the Company having the rights and
preferences set forth in the Form of Articles of
Amendment attached to this Rights Agreement as
Exhibit A.
(s) "Purchase Price" shall initially be $75.00
for each one one-thousandth of a Preferred Share
purchasable pursuant to the exercise of a Right, and
shall be subject to adjustment from time to time as
provided in Section 11 or 13 hereof.
(t) "Record Date" shall have the meaning set
forth in the second paragraph hereof.
(u) "Redemption Date" shall mean the time at
which the Rights are redeemed as provided in
Section 23 hereof.
(v) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(w) "Right" shall have the meaning set forth in
the second paragraph hereof.
(x) "Right Certificate" shall have the meaning
set forth in Section 3(a) hereof.
(y) "Rights Agent" shall have the meaning set
forth in the preamble hereof.
(z) "Security" shall have the meaning set forth
in Section 11(d)(i) hereof.
(aa) "Stock Acquisition Date" shall mean the first
date of public announcement (including, without
limitation, by a filing under the Exchange Act) by the
Company or an Acquiring Person that an Acquiring
Person has become such or such earlier date as a
majority of the Continuing Directors shall become
aware of the existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the
voting power of the voting equity securities or equity
interest is owned or otherwise controlled, directly or
indirectly, by such Person.
(cc) "Trading Day" shall have the meaning set forth
in Section 11(d)(i) hereof.
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 hereof, shall prior to the Distribution Date also be
the holders of the Common Shares) 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 Close of Business on the day (or
such later date as may be determined by action of the
Board of Directors, upon approval by a majority of the
Continuing Directors) which is the earlier of (i) the
tenth day after the Stock Acquisition Date or
(ii) such date, if any, as may be determined by action
of the Board of Directors of the Company (upon
approval by a majority of the Continuing Directors)
after the date of the commencement by any Person
(other than the Company, Meridian Mutual, any
Subsidiary of the Company or Meridian Mutual, any
employee benefit plan of the Company or Meridian
Mutual or of any Subsidiary of the Company or Meridian
Mutual or any entity holding Common Shares for or
pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any
Person (other than the Company, Meridian Mutual, any
Subsidiary of the Company or Meridian Mutual, any
employee benefit plan of the Company or Meridian
Mutual or of any Subsidiary of the Company or Meridian
Mutual or any entity holding Common Shares for or
pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring
Person (including any such date which is after the
date of this Rights Agreement and prior to the
issuance of the Rights; the earlier of such dates
being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the
holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate
Right Certificates and (y) the right to receive Right
Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be
sent (and the Rights Agent will, at the expense of the
Company, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common
Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right
Certificates. References in this Agreement to
certificates for Common Shares shall include
certificates for Common Shares as well as book-entry
notations of ownership in the record book of the
Company's transfer agent whether or not represented by
certificates.
(b) The Company will make available, as promptly
as practicable following the Record Date, a Summary of
Rights to Purchase Preferred Shares, in substantially
the form of Exhibit C hereto, to any holder of Rights
who may so request from time to time prior to the
Expiration Date. With respect to certificates for
Common Shares outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by
such certificates and the registered holders of the
Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date
(or the earlier of the Redemption Date or the
Expiration Date), the surrender for transfer of any
certificate for Common Shares in respect of which
Rights have been issued shall also constitute the
transfer of the Rights associated with such Common
Shares.
(c) Rights shall be issued in respect of all
Common Shares which are issued (whether originally
issued or from the Company's treasury) after the
Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the
Expiration Date. Certificates representing such
Common Shares shall bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES
THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET
FORTH IN A RIGHTS AGREEMENT BETWEEN MERIDIAN
INSURANCE GROUP, INC. (THE "COMPANY") AND THE
RIGHTS AGENT THEREUNDER (THE "RIGHTS
AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF
THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS
SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS
WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND
WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE
RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT), INCLUDING SUCH RIGHTS HELD
BY A SUBSEQUENT HOLDER, MAY BECOME NULL AND
VOID.
With respect to such certificates containing the
foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled
and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Rights Agreement, or as may be required
to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or
regulation of any stock exchange or automated quotation system
on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths
of a Preferred Share as shall be set forth therein at the
price per one one-thousandth of a Preferred Share set forth
therein, but the number of one one-thousandths of a Preferred
Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on
behalf of the Company by the President, Chief
Executive Officer, any Senior Vice President, or
Treasurer, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights
Agent, either manually or by facsimile signature, and
shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall
cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same
force and effect as though the Person who signed such
Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be
signed on behalf of the Company by any Person who, at
the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company
to sign such Right Certificate although at the date of
the execution of this Rights Agreement any such Person
was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal
office, 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
hereof, at any time after the Close of Business on the
Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the
Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates
representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged
pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right
Certificate or Right Certificates entitling the
registered holder to purchase a like number of one
one-thousandths of a Preferred Share as the Right
Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the
Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the 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, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the
Right Certificate if mutilated, the Company will make
and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder
in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby
(except as otherwise provided in Sections 11, 23
and 24 hereof), 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 principal office of the Rights Agent,
together with payment of the Purchase Price for each
one one-thousandth of a Preferred Share as to which
the Rights are exercised, at or prior to the earliest
of (i) the Expiration Date, (ii) the Redemption Date
or (iii) the time at which such Rights are exchanged
as provided in Section 24 hereof.
(b) The Purchase Price shall be payable in lawful
money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of
election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof
by certified check, cashier's check, money order or
wire transfer payable to the order of the Company, the
Rights Agent shall thereupon promptly
(i)(A) requisition from any transfer agent of the
Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company
hereby irrevocably authorizes any such transfer agent
to comply with all such requests, or (B) requisition
from the depositary agent depositary receipts
representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent
of the Preferred Shares with such depositary agent)
and the Company hereby directs such depositary agent
to comply with such request; (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 hereof; (iii) promptly
after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right
Certificate, registered in such name or names as may
be designated by such holder; and (iv) when
appropriate, after receipt, promptly deliver such cash
to or upon the order of the registered holder of such
Right Certificate.
(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 to the registered
holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of
Section 14 hereof.
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 Rights 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. Availability of Preferred Shares.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in
accordance with Section 7. The Company covenants and
agrees that it will take all such action as may be
necessary to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of
the certificates for such securities (subject to
payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and
nonassessable.
(b) 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 Preferred Shares upon the
exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or
depositary receipts for Preferred Shares 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
reasonable satisfaction that no such tax is due.
(c) The Company will use its best efforts to
ensure that any securities issued pursuant hereto are
issued in compliance with all applicable laws.
Section 10. Preferred Shares Record Date. Each
Person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be
dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the
Company are closed, such Person shall be deemed to have become
the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any
rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
Preferred 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 Rights Agreement
(A) declare a dividend on the Preferred Shares payable
in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in
a reclassification of the Preferred Shares (including
any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for
such dividend or of the effective date of such
subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time
shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of
the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or
reclassification.
(ii) Subject to Section 24 of this Rights Agreement,
in the event any Person becomes an Acquiring Person, each
holder of a Right shall thereafter have a right to
receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of
one one-thousandths of a Preferred Share for which a Right
is then exercisable, in accordance with the terms of this
Rights Agreement, such number of Common Shares (or, in the
discretion of the Board of Directors of the Company, one
one-thousandths of a Preferred Share) as shall equal the
result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per
share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof on the date
of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any
action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the
contrary, from and after the time that any person becomes an
Acquiring Person, any Rights that are or were acquired or
Beneficially Owned by any Acquiring Person (or any Associate
or Affiliate of such Acquiring Person) shall be void and any
holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Rights
Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights Beneficially Owned by an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence shall be cancelled.
(iii) If there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the
Rights. If the Company shall, after good faith effort, be
unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with
substantially similar rights, privileges, preferences,
voting power and economic rights) such that the current
per share market price of one Preferred Share (or such
other security) multiplied by such number or fraction is
equal to the current per share market price of one Common
Share as of the date of issuance of such Preferred Shares
or fraction thereof (or other security).
(b) In case the Company shall fix a record
date for the issuance of rights, options or warrants
to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after
such record date) to subscribe for or purchase
Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion
price per share, if a security convertible into
Preferred Shares or equivalent preferred shares)
less than the then current per share market price of
the Preferred Shares on such record date, the
Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be
the number of Preferred Shares outstanding on such
record date plus the number of Preferred Shares
which the aggregate offering price of the total
number of Preferred Shares and/or equivalent
preferred shares so to be offered (and/or the
aggregate initial conversion price of the
convertible securities so to be offered) would
purchase at such current market price and the
denominator of which shall be the number of
Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares
and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the
convertible securities so to be offered are
initially convertible); provided, however, that in
no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par
value, if any, of the shares of capital stock of the
Company issuable upon exercise of one Right. In
case such subscription price may be paid in a
consideration part or all of which shall be in a
form other than cash, the value of such
consideration shall be as determined in good faith
by the Board of Directors of the Company (upon the
approval of a majority of the Continuing Directors),
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. Preferred Shares owned by or held for the
account of the Company shall not be deemed
outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that
such rights, options 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 the Preferred Shares (including any such
distribution made in connection with a consolidation
or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares)
or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a
fraction, the numerator of which shall be the then
current per share market price of the Preferred
Shares on such record date, less the fair market
value (as determined in good faith by the Board of
Directors of the Company (upon the approval of a
majority of the Continuing Directors), whose
determination shall be described in a statement
filed with the Rights Agent and shall be binding on
the Rights Agent and holders of the Rights) of the
portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights
or warrants applicable to one Preferred Share and
the denominator of which shall be such current per
share market price of the Preferred Shares;
provided, however, that in no event shall the
consideration to be paid upon the exercise of one
Right be less than the aggregate par value, if any,
of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments
shall be made successively whenever such a record
date is fixed; and in the event that such
distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price
which would then be in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation
hereunder, the "current per share market price" of
any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however,
that in the event that the current per share market
price of the Security is determined during a period
following the announcement by the issuer of such
Security of (A) a dividend or distribution on such
Security payable in shares of such Security or
securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or
distribution, or the record date for such
subdivision, combination or reclassification, then,
and in each such case, the current per share market
price shall be appropriately adjusted to reflect the
current market price per share equivalent of such
Security. The closing price for each day shall be
the last sale price, regular way, or, in case no
such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in
either case, as reported in the principal
consolidated transaction reporting system with
respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the Security
is listed or admitted to trading or, if the Security
is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use,
or, if on any such date the Security is 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 Security
selected by the Board of Directors of the Company
(upon the approval of a majority of the Continuing
Directors). The term "Trading Day" shall mean a day
on which the principal national securities exchange
on which the Security is listed or admitted to
trading is open for the transaction of business or,
if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall
be determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly
traded, the "current per share market price" of the Preferred
Shares shall be conclusively deemed to be the current per
share market price of the Common Shares as determined pursuant
to Section 11(d)(i) (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are
publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the
Company (upon the approval of a majority of the Continuing
Directors), whose determination shall be described in a
statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall
be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which
by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into
account in any subsequent adjustment. All
calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one hundred-
thousandth of a Preferred Share or one one hundred-
thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction
which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made
pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number
of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly
equivalent as practicable to the provisions with
respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect
to the Preferred Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number
of one one-thousandths of a Preferred Share
purchasable from time to time hereunder upon
exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised
its election as provided in Section 11(i), upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each
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 one one-thousandths of a Preferred Share
(calculated to the nearest one hundred-thousandth of
a Preferred Share) obtained by (A) multiplying
(x) the number of one one-thousandths of a share
covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price and (B) dividing the product so obtained by
the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date
of any adjustment of tile Purchase Price to adjust
the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a
Preferred Share 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 one one-thousandths of
a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the
number of Rights shall become that number of Rights
(calculated to the nearest one one hundred-
thousandth) obtained by dividing the Purchase Price
in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its
election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made.
This record date may be the date on which the
Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the
public announcement. If Right Certificates have
been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be
distributed to holders of record of Right
Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed
to such holders of record in substitution and
replacement for the 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 shall be registered
in the names of the holders of record of Right
Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change
in the Purchase Price or the number of one one-
thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to
express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were
expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause
an adjustment reducing the Purchase Price of the
Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be
necessary in order that the Company may validly and
legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be
made effective as of a record date for a specified
event, the Company may elect to defer until the
occurrence of such event the issuing to the holder
of any Right exercised after such record date of the
Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon
such exercise over and above the Preferred Shares
and other capital stock or securities of the
Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company
shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's
right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent
that, it, in its sole discretion, shall determine to
be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred
Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such
shareholders.
(n) In the event that at any time after the
date of this Rights Agreement and prior to the
Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in
Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser
number of Common Shares, then in any such case
(A) the number of one one-thousandths of a Preferred
Share purchasable after such event upon proper
exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a
Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is
the number of Common Shares outstanding immediately
before such event and the denominator of which is
the number of Common Shares outstanding immediately
after such event, and (B) each Common Share
outstanding immediately after such event shall have
issued with respect to it that number of Rights
which each Common Share outstanding immediately
prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(n)
shall be made successively whenever such a dividend
is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as
provided in Sections 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for
such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Shares or the Preferred Shares a
copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall
not be obligated or responsible for calculating any adjustment
nor shall it be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power. Except for any
transaction approved by the Board of Directors (including
approval by a majority of the Continuing Directors), in the
event, directly or indirectly, at any time after a Person has
become an Acquiring Person, (a) the Company shall consolidate
with, or merge with and into, any other Person, (b) any Person
shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into
or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property or (c) the
Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person other than
the Company or one or more of its wholly-owned Subsidiaries,
then, and in each such case, proper provision shall be made so
that
(i) each holder of a Right (except as
otherwise provided herein) shall thereafter
have the right to receive, upon the exercise
thereof at a price equal to the then current
Purchase Price multiplied by the number of
one one-thousandths of a Preferred Share for
which a Right is then exercisable, in
accordance with the terms of this Rights
Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other
Person (including the Company as successor
thereto or as the surviving corporation) as
shall equal the result obtained by
(A) multiplying the then current Purchase
Price by the number of one one-thousandths of
a Preferred Share for which a Right is then
exercisable and dividing that product by
(B) 50% of the then current per share market
price of the Common Shares of such other
Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such
consolidation, merger, sale or transfer;
(ii) the issuer of such Common Shares
shall thereafter be liable for, and shall
assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations
and duties of the Company pursuant to this
Rights Agreement;
(iii) the term "Company" shall thereafter
be deemed to refer to such issuer; and
(iv) such issuer shall take such steps
(including, but not limited to, the
reservation of a sufficient number of its
Common Shares in accordance with Section 9
hereof) in connection with such consummation
as may be necessary to assure that the
provisions hereof shall thereafter be
applicable, as nearly as reasonably may be,
in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto
the Company and such issuer shall have executed and delivered
to the Rights Agent a supplemental agreement so providing.
The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such
transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements
which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
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 Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by
any such organization, the average of the closing
bid and asked prices as furnished by a professional
market maker making a market in the Rights selected
by the Board of Directors of the Company (upon the
approval of a majority of the Continuing Directors).
If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights
on such date as determined in good faith by the
Board of Directors of the Company (upon the approval
of a majority of the Continuing Directors) shall be
used.
(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions
which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional
Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a
Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a
depositary selected by it; provided that such
agreement shall provide that the holders of such
depositary receipts shall have all the rights,
privileges and preferences to which they are
entitled as Beneficial Owners of the Preferred
Shares represented by such depositary receipts. In
lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a
Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time
such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the
current market value of one Preferred Share. For
the purposes of this Section 14(b), the current
market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i)
hereof for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any
fractional Rights or any fractional shares upon
exercise of a Right (except as expressly provided
above).
Section 15. Rights of Action. All rights of action
in respect of this Rights Agreement, except the rights of
action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered
holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate
and in this Rights 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 Rights
Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject
to, this Rights 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 transferable only in connection with the
transfer of the Common Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer;
and
(c) the Company and the Rights Agent may deem
and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered
as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the
associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate
shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof, or to
receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in
the administration and execution of this Rights
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 Rights Agreement, including the costs and
expenses of defending against any claim of liability
in the premises. The costs and expenses of
enforcing this right of indemnification shall also
be paid by the Company. The indemnification
provided for hereunder shall survive the expiration
of the Rights and the termination of this Agreement.
(b) The Rights Agent may conclusively rely
upon and shall be protected and shall incur no
liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its
administration of this Rights Agreement in reliance
upon any Right Certificate or certificate for the
Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document
believed by it to be genuine and to be signed,
executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in
Section 20 hereof.
(c) Notwithstanding anything in this Agreement
to the contrary, in no event shall the Rights Agent
be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the
action.
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 stock transfer or
corporate trust powers of the Rights Agent or any
successor Rights Agent, shall be the successor to
the Rights Agent under this Rights 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 hereof. In case at the
time such successor Rights Agent shall succeed to
the agency created by this Rights Agreement, any of
the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so
countersigned; and, in case at that time any of the
Right Certificates shall not have been
countersigned, any successor Rights Agent may
countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force
provided in the Right Certificates and in this
Rights Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the
Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may
countersign such Right Certificates either in its pr
or 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
Rights Agreement.
Section 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this
Rights Agreement (and no implied duties or obligations of the
Rights Agent shall be read into 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) Before acting or refraining from acting,
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 Rights Agreement the Rights Agent shall
deem it necessary or desirable that any fact or
matter be proved or established by the Company prior
to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by
a certificate signed by any one of the President,
Chief Executive Officer, any Senior Vice President,
Treasurer or 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 Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder
to the Company and any other Person only for its own
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 Rights 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
Rights Agreement or the execution and delivery
hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its
countersignature thereof; nor shall it be
responsible for any breach by the Company of any
covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability
of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such
change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment
is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to
the authorization or reservation of any Preferred
Shares to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether
any Preferred 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 Rights
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from any one of
the President, Chief Executive Officer, any senior
Vice President, Secretary or 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
by it in good faith in accordance with instructions
of any such officer or for any delay in acting while
waiting for those instructions. Any application by
the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set
forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and
the date on or after which such action shall be
taken or such omission shall be effective. The
Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such
application on or after the date specified in such
application (which date shall not be less than ten
Business Days after the date any officer of the
Company actually receives such application, unless
any such officer shall have consented in writing to
an earlier date) unless, prior to taking any such
action (or the effective date in the case of an
omission), the Rights Agent shall have received
written instructions in response to such application
subject to the proposed action or omission and/or
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily
interested in any transaction in which the Company
may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Rights
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 reasonable care was exercised
in the selection and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in
the exercise of its rights if there shall be
reasonable grounds for believing that repayment of
such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(k) The Rights Agent shall not be required to
take notice or be deemed to have notice of any fact,
event or determination (including, without
limitation, any dates or events defined in this
Agreement or the designation of any Person as an
Acquiring Person, Affiliate or Associate) under this
Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Company of
such fact, event or determination.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be
discharged from its duties under this Rights Agreement upon
30-days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and, at the expense of the
Company, to the holders of the Right Certificates. The
Company may remove the Rights Agent or any successor Rights
Agent upon 30-days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Shares or Preferred Shares
by registered or certified mail, and to the holders of the
Right Certificates. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder
of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation
organized and doing business under the laws of the United
States or of the State of New York (or of any other state of
the United States so long as such corporation is authorized to
do business as a banking institution in the State of New York,
in good standing, having an office in the State of New York),
which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital
and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to
the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Rights 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 of Directors of the
Company (upon the approval of a majority of the Continuing
Directors) to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other
securities or property purchasable under the Right
Certificates made in accordance with the provisions of this
Rights Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Company may,
at its option, at any time prior to the Close of
Business on the tenth day following the Stock
Acquisition Date, redeem all but not less than all
the then outstanding Rights at a redemption price of
$.005 per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar
transaction occurring after the date hereof (such
redemption price being hereinafter referred to as
the "Redemption Price"), provided, however, that
during the time period relating to when the Rights
may be redeemed, the Board of Directors of the
Company may extend the time during which the Rights
may be redeemed to be at any time as may be
determined by the Board of Directors, and provided,
further, that if the Board of Directors of the
Company authorizes redemption of the Rights or an
extension of the time period during which the Rights
may be redeemed after the time that any Person
becomes an Acquiring Person, then there must be
Continuing Directors then in office and such
authorization or extension shall require the
concurrent of a majority of such Continuing
Directors. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of the
event described in Section 11(a)(ii) until such time
as the Company's right of redemption hereunder has
expired. The redemption of the Rights by the Board
of Directors of the Company may be made effective at
such time, on such basis and with such conditions as
the Board of Directors of the Company, in its sole
discretion, may establish. The Company may, at its
option, pay the Redemption Price in cash, Common
Shares (based on the current market price at the
time of redemption) or any other form of
consideration deemed appropriate by the Board of
Directors.
(b) Immediately upon the action of the Board
of Directors of the Company ordering the redemption
of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and
without any notice, the right to exercise the Rights
will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public
notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such
notice shall not affect the validity of such
redemption. Within 14 days after such action of the
Board of Directors of the Company ordering the
redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares.
Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of
redemption will state the method by which the
payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value
any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with
the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company
(upon the approval of a majority of the Continuing
Directors) may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or
part of the then outstanding and exercisable Rights
(which shall not include Rights that have become
void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of
one Common Share per Right, appropriately adjusted
to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to
as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company
shall not be empowered to effect such exchange at
any time after any Person (other than the Company,
any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the
terms of any such plan), together with all
Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common
Shares then outstanding.
(b) Immediately upon the action of the Board
of Directors of the Company (upon the approval of a
majority of the Continuing Directors) ordering the
exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and
without any notice, the right to exercise such
Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such
Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided,
however, that the failure to give, or any defect in,
such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state
the method by which the exchange of the Common
Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights
(other than Rights which have become void pursuant
to the provisions of Section 11(a)(ii) hereof held
by each holder of Rights.
(c) In the event that there shall not be
sufficient Common Shares issued but not outstanding
or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this
Section 24, the Company shall take all such action
as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights. In
the event the Company shall, after good faith
effort, be unable to take all such action as may be
necessary to authorize such additional Common
Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or
fraction thereof (or a security with substantially
similar rights, privileges, preferences, voting
power and economic rights) such that the current per
share market price of one Preferred Share (or other
such security) multiplied by such number or fraction
is equal to the current per share market price of
one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof (or other such
security).
(d) The Company shall not be required to issue
fractions of Common Shares or to distribute
certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares,
the Company shall pay to the registered holders of
the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable
an amount in cash equal to the same fraction of the
current market value of a whole Common Share. For
the purposes of this paragraph (d), the current
market value of a whole Common Share shall be the
closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to
pay any dividend payable in stock of any class to
the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred
Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for
or to purchase any additional Preferred Shares or
shares of stock of any class or any other
securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than
a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other
transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares
payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of
dividends in Common Shares), then, in each such
case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which
shall specify the record date for the purposes of
such stock dividend, or distribution of rights or
warrants, or the date on which such
reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein
by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of
the Preferred Shares for purposes of such action,
and in the case of any such other action, at least
10 days prior to the date of the taking of such
proposed action or the date of participation therein
by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in
Section 11(a)(ii) hereof shall occur, then the
Company shall as soon as practicable thereafter give
to each holder of a Right Certificate, in accordance
with Section 26 hereof, a notice of the occurrence
of such event, which notice shall describe such
event and the consequences of such event to holders
of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized
by this Rights 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:
Meridian Insurance Group, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Rights 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 certified or registered mail, return
receipt requested, addressed (until another address is filed
in writing with the Company) as follows:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Notices or demands authorized by this Rights
Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. For as
long as the Rights are then redeemable and except as provided
in the last sentence of this Section 27, the Company may in
its sole and absolute discretion, 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 the
Rights. At any time when the Rights are not then redeemable
and except as provided in the last sentence of this Section
27, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Rights Agreement without
the approval of any holders of Rights Certificates (i) to cure
any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to change or supplement the
provisions hereof in any manner which the Company may deem
necessary or desirable, provided that no such supplement or
amendment pursuant to this clause (iii) shall materially
adversely affect the interest of the holders of Rights
Certificates, or (iv) to change or supplement the provisions
hereof in any manner at the direction of the Indiana Insurance
Commissioner. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything contained
in this Rights Agreement to the contrary, supplements or
amendments may be made only upon approval by a majority of the
Continuing Directors. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment that
changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without
the execution of such supplement or amendment by the Rights
Agent.
Section 28. Successors. All the covenants and
provisions of this Rights Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement.
Nothing in this Rights Agreement shall be construed to give to
any Person, other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or
equitable right, remedy or claim under this Rights Agreement;
but this Rights Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 30. Severability. If any term, provision,
covenant or restriction of this Rights Agreement is held by a
court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Rights Agreement shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 31. Governing Law. This Rights Agreement
and each Right Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Indiana 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.
Section 32. Counterparts. This Rights Agreement
may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Rights Agreement are
inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Rights Agreement to be duly executed and attested, all as
of the day and year first above written.
MERIDIAN INSURANCE GROUP, INC.
By: /s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx, President
and
Chief Executive Officer
XXXXXX TRUST AND SAVINGS BANK,
as RIGHTS AGENT
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Trust Officer
Exhibit A
ARTICLES OF AMENDMENT
setting forth terms of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
MERIDIAN INSURANCE GROUP, INC.
___________________
Pursuant to the Indiana Business Corporation Law
(the "IBCL"), Meridian Insurance Group, Inc., an Indiana
corporation (the "Corporation"), in accordance with the
provisions of Section 23-1-25-2 of the IBCL, does hereby
certify:
Article I.
The name of the corporation filing these Articles of
Amendment is Meridian Insurance Group, Inc.
Article II.
The Articles of Incorporation of the Corporation are
hereby amended by adding thereto a new Section 4.04A within
Article IV, which new section is as follows:
Section 4.04A. Series A Preferred Stock. In
accordance with the provisions of Section 4.04 of the
Corporation's Articles of Incorporation, the following sets
forth the designation and number of shares, and fixes the
preferences, limitations and relative voting and other rights
of a series of Preferred Shares of the Corporation:
Section 1. Designation and Amount. The shares of
such series of Preferred Shares shall be designated as
"Series A Junior Participating Preferred Stock, no par value"
(the "Series A Preferred Stock") and the number of shares
constituting the Series A Preferred Stock shall be 42,000.
Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series A
Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred
Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any
shares of any series of Preferred Shares (or any similar
shares) ranking prior and superior to the Series A Preferred
Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of the
Common Shares of the Corporation, and of any other junior
shares, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates
as the Board of Directors of the Corporation shall approve
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the greater
of (a) $10.00 or (b) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in
Common Shares or a subdivision of the outstanding Common
Shares (by reclassification or otherwise), declared on the
Common Shares since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the
amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common
Shares that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of Section 4.04A.2 immediately after it declares
a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares); provided that, in the
event no dividend or distribution shall have been declared on
the Common Shares during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the
Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Stock
shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation.
In the event the Corporation shall at any time declare or pay
any dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the
number of votes per share to which holders of shares of Series
A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of Common
Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any
other Articles of Amendment creating a series of Preferred
Shares or any similar shares, or by law, the holders of shares
of Series A Preferred Stock and the holders of Common Shares
and any other shares of the Corporation having general voting
rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with
holders of Common Shares as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Preferred Stock as
provided in Section 4.04A.2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any
other distributions, on any shares ranking on
a parity (either as to dividends or upon
liquidation, dissolution or winding up) with
the Series A Preferred Stock, except
dividends paid ratably on the Series A
Preferred Stock and all such parity shares on
which dividends are payable or in arrears in
proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise
acquire for consideration any shares ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that
the Corporation may at any time redeem,
purchase or otherwise acquire any such junior
shares in exchange for shares of the
Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or
winding up) to the Series A Preferred Stock;
or
(iv) redeem or purchase or otherwise
acquire for consideration any shares of
Series A Preferred Stock, or any shares
ranking on a parity with the Series A
Preferred Stock, except in accordance with a
purchase offer made in writing or by
publication (as determined by the Board of
Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual
dividend rates and other relative rights and
preferences of the respective series and
classes, shall determine in good faith will
result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of the Corporation unless the
Corporation could, under paragraph (A) of Section 4.04A.4,
purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of
Series A Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued Preferred Shares and may be reissued as part of a new
series of Preferred Shares subject to the conditions and
restrictions on issuance set forth herein, in the Articles of
Incorporation, or in any other Articles of Amendment creating
a series of Preferred Shares or any similar shares or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders
of any shares ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares
of Series A Preferred Stock shall have received the greater of
(i) $1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (ii) an aggregate
amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate
amount to be distributed per share to holders of Common
Shares, or (2) to the holders of any shares ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred
Stock and all such parity shares in proportion to the total
amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any
dividend on the Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the Common Shares
are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each Common Share
is changed or exchanged. In the event the Corporation shall
at any time declare or pay any dividend on the Common Shares
payable in Common Shares, or effect a subdivision or
combination or consolidation of the outstanding Common Shares
(by reclassification or otherwise than by payment of a
dividend in Common Shares) into a greater or lesser number of
Common Shares, then in each such case the amount set forth in
the preceding sentence with respect to the exchange or change
of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of Common Shares outstanding immediately after
such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock
shall rank, with respect to the payment of dividends and the
distribution of assets, junior to any other series of the
Corporation's Preferred Shares.
Section 10. Amendment. At any time that shares of
the Series A Preferred Stock are outstanding, the Articles of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares
of Series A Preferred Stock, voting together as a single
class.
Article III.
These Articles of Amendment were duly authorized by
the Board of Directors of the Corporation at a meeting duly
called and held on September 18, 1998. Pursuant to Section
23-1-25-2(d) and Section 23-1-38-2(7) of the IBCL, no action
by the Corporation's shareholders was required.
IN WITNESS WHEREOF, these Articles of Amendment are
executed on behalf of the Corporation by its duly authorized
officers this 18th day of September, 1998.
MERIDIAN INSURANCE GROUP, INC.
By: _______________________
Xxxxx X. Xxxx, President
and Chief Executive
Officer
Attest:
By: ________________________
J. Xxxx XxXxxxxx, Senior
Vice President, Secretary
and General Counsel
Exhibit B
Form of Right Certificate
Certificate No. R-
________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 18, 2008 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.005 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
MERIDIAN INSURANCE GROUP, INC.
This certifies that _________________, or registered
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject
to the terms, provisions and conditions of the Rights
Agreement, dated as of September 18, 1998 (the "Rights
Agreement"), between Meridian Insurance Group, Inc., an
Indiana corporation (the "Company"), and Xxxxxx Trust and
Savings Bank (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m.,
New York time, on September 18, 2008 at the principal office
of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-
assessable share of Series A Junior Participating Preferred
Stock of the Company, no par value (the "Preferred Shares"),
at a purchase price of $75.00 per one one-thousandth of a
Preferred 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 one one-thousandths
of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of September 18,
1998, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price
and the number of one one-thousandths of a Preferred Share
which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of
the Company and the offices of 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
Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Right Certificate (i) may be
redeemed by the Company at a redemption price of $.005 per
Right or (ii) may be exchanged, in whole or in part, for
Preferred Shares or the Company's Common Shares, no par value.
No fractional Preferred Shares will be issued upon
the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one-
thousandth of a Preferred Share, which may, at the election of
the Company, be evidenced by depositary receipts), but in,
lieu thereof, a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of _________________ __, 1998.
MERIDIAN INSURANCE GROUP, INC.
By: _______________________
Name:
Title:
COUNTERSIGNED:
By _______________________
Name:
Title:
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
___________________________________________ hereby sells,
assigns and transfers unto ___________________________________
______________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ________________________
Signature ________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
Certificate
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement). After due inquiry and
to the best knowledge of the undersigned, the Rights evidenced
by this Right Certificate were not acquired or beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof.
Dated: ________________________
Signature ________________________
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate)
To: MERIDIAN INSURANCE GROUP, INC.
The undersigned hereby irrevocably elects to
exercise _________________ Rights represented by this Right
Certificate to purchase the Preferred Shares issuable upon the
exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security or other identifying number:
________________________________
_______________________________
(Please print name and address)
_______________________________
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security or other identifying number:
________________________________
_______________________________
(Please print name and address)
_______________________________
Dated: ________________________
Signature ________________________
Signature Guaranteed
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.
Certificate
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement). After due inquiry and
to the best knowledge of the undersigned, the Rights evidenced
by this Right Certificate were not acquired or beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof.
Dated: ________________________
Signature ________________________
The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in
the Form of Assignment or the Form of Election to Purchase, as
the case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced
by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will
not be honored.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On September 18, 1998, the Board of Directors of Meridian
Insurance Group, Inc. (the "Company"), adopted a Shareholder
Rights Plan (the "Rights Plan"). The purpose of the Rights
Plan is to deter certain coercive takeover tactics and enable
the Board of Directors to represent effectively the interests
of shareholders in the event of a takeover attempt, and to
protect against market accumulators who may be interested in
putting the Company "into play." The Rights Plan does not
deter negotiated mergers or business combinations that the
Board of Directors determines to be in the best interests of
the Company and its shareholders.
To implement the Rights Plan the Board of Directors
declared a dividend of one preferred share purchase right (a
"Right") for each outstanding common share (the "Common Shares")
of the Company. The dividend was paid on September 28, 1998
to the shareholders of record on that date. Each Right
entitles the registered holder to purchase from the Company
one one-thousandth of a share of Series A Junior Participating
Preferred Stock of the Company, no par value (the "Preferred
Shares"), at a price of $75.00 per one-thousandth of a
Preferred Share, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and Xxxxxx Trust and
Savings Bank, as Rights Agent.
Rights Attach to Common Shares Initially
Initially and until a Distribution Date (as defined
below) occurs, the Rights are attached to all Common Shares
and no separate Rights certificates will be issued. During
this initial period,
the Rights are not exercisable;
the Rights are transferred with the Common Shares and
are not transferable separately from the Common
Shares;
new Common Shares certificates or book entry shares
issued will contain a notation incorporating the
Rights Agreement by reference; and
the transfer of any Common Shares will also constitute
the transfer of the Rights associated with those
Common Shares.
Distribution of Rights
Separate certificates evidencing the Rights will be
mailed to holders of record of the Common Shares on the
"Distribution Date." The Distribution Date is the earlier to
occur of the following two events (or such later date as may
be determined by the Board of Directors, upon approval by a
majority of Continuing Directors as defined below):
the tenth day after a public announcement that a
person or group of affiliated or associated persons
has acquired 20% or more of the outstanding Common
Shares (thereby becoming an "Acquiring Person" under
the Rights Plan); or
such date as may be determined by the Board of
Directors of the Company, upon approval of a majority
of the Continuing Directors, after the commencement or
announcement of a tender or exchange offer by a person
or group for 20% or more of the outstanding Common
Shares.
Acquisitions by the following persons will not result in
the person becoming an Acquiring Person: the Company,
Meridian Mutual Insurance Company ("Meridian Mutual"), any
subsidiary or employee benefit plan of the Company or Meridian
Mutual, or any other person approved in advance by the Board
of Directors and the Continuing Directors.
After the Distribution Date, the Rights will be tradable
separately from the Common Shares. After the Distribution
Date and after the Company's right to redeem (as described
below) has expired, the Rights will be exercisable in two
different ways depending on the circumstances as set forth
below.
Right to Purchase Company Stock
If a person or group acquires 20% or more of the
outstanding Common Shares (thereby becoming an Acquiring
Person) and the Company's redemption right has expired, each
holder of a Right (except those held by the Acquiring Person
and its affiliates and associates) will have the right to
purchase, upon exercise, Common Shares (or, in certain
circumstances, one one-thousandths of a Preferred Share or
other similar securities of the Company) having a value equal
to two times the purchase price of the Right. In other words,
the Rights holders other than the Acquiring Person may
purchase Common Shares or their equivalent at a 50% discount.
For example, at the purchase price of $75.00 per Right,
each Right not owned by an Acquiring Person would entitle its
holder to purchase $150.00 worth of Common Shares (or their
equivalent) for $75.00. Assuming a value of $20.00 per Common
Share at such time, the holder of each valid Right would be
entitled to purchase 7.5 Common Shares (or their equivalent)
for $75.00.
Right to Purchase Acquiring Person Stock
Alternatively, if, in a transaction not approved by the
Board of Directors and the Continuing Directors, the Company
is acquired in a merger or other business combination or 50%
or more of its assets or earning power are sold after a person
or group has become an Acquiring Person, and the Company's
redemption right has expired, proper provision will be made so
that each holder of a Right will thereafter have the right to
purchase, upon exercise, that number of shares of common stock
of the acquiring company as have a market value of two times
the exercise price of the Right. In other words, a Rights
holder may purchase the acquiring company's common stock at a
50% discount.
Exchange of Company Stock for Rights
At any time after any person or group becomes an
Acquiring Person and before the Acquiring Person acquires 50%
or more of the outstanding Common Shares, the Board of
Directors may exchange the Rights (other than Rights owned by
the Acquiring Person which will have become void), in whole or
in part, at an exchange ratio of one Common Share (or a share
or interest in a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
The Rights are redeemable by the Company in whole but not
in part at a price of $0.005 per Right at any time up to and
including the tenth day after the time that a person or a
group has become an Acquiring Person, subject to extension of
this redemption period by the Board of Directors. Immediately
upon redemption the right to exercise will terminate and the
only right of holders will be to receive the redemption price.
Expiration of Rights
The Rights will expire on September 18, 2008 unless the
expiration date is extended by amendment as described below or
unless the Rights are earlier redeemed or exchanged by the
Company as described above.
Amendments
As long as the Rights are redeemable, the terms of the
Rights may be amended by the Board of Directors (upon the
approval of a majority of the Continuing Directors) in its
discretion without the consent of the Rights holders. After
that time, no amendment may adversely affect the interests of
the Rights holders (other than the Acquiring Person).
Miscellaneous
"Continuing Director" means a member of the Board of
Directors, who is not an Acquiring Person or a representative
or nominee of an Acquiring Person, and who either (i) was a
member of the Board of Directors on the date of the Rights
Agreement or (ii) thereafter became a member of the Board of
Directors, and whose nomination for election or election to
the Board of Directors was recommended or approved by a
majority of the Continuing Directors then on the Board of
Directors.
The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of
each Right are subject to adjustment under certain
circumstances.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a Preferred Share that may be purchased
upon exercise of each Right should approximate the value of
one Common Share.
Until a Right is exercised, a Rights holder, as such,
will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available to Rights holders free of charge upon
request to the Corporate Secretary of the Company.
This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference
to the Rights Agreement, which is hereby incorporated herein
by reference.
