RIGHTS AGREEMENT
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Rights Agreement, dated as of [ ], 2001 (the
"Agreement") between Westar Industries, Inc., a Kansas corporation (the
"Company"), and [ ], a [ ] [limited liability company/corporation]
(the "Rights Agent").
W I T N E S S E T H
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WHEREAS, the Board of Directors of the Company on [ ], 2001
(the "Rights Dividend Declaration Date") authorized and declared a dividend
distribution (the "Distribution") of one Right for each outstanding share of the
Common Stock (as defined in Section 1(i) hereof) outstanding at the close of
business on [ ], 2001 (the "Record Date") and has authorized and directed the
issuance of one Right (as such number may hereafter be adjusted pursuant to the
provisions of Section 11(p) hereof) in respect of each share of Common Stock of
the Company issued (whether originally issued or delivered from the Company's
treasury stock) between the Record Date and the earlier of the Distribution Date
or the Expiration Date (as such terms are hereinafter defined) (provided,
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however, that Rights may be issued with respect to shares of Common Stock that
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shall become outstanding after the Distribution Date and prior to the Expiration
Date in accordance with Section 22), each Right initially representing the right
to purchase, under certain circumstances, one one-hundredth of a share of Series
A Junior Participating Preferred Stock (as defined in Section 1(v) hereof) of
the Company having the rights, powers and preferences set forth in the Company's
Certificate of Designation attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights");
WHEREAS, the Board of Directors of the Company has authorized
the transactions contemplated by the Registration Statement filed on Form S-1
(Registration No. 333-47424), as amended, pursuant to which the Company will
distribute to the holders of common stock of Western Resources, Inc. ("Western
Resources"), the parent of the Company, rights to purchase shares of the
Company's Common Stock;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
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Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as
such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of securities of the Company
constituting a Substantial Block (as such term is hereinafter defined),
but shall not include,
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(i) prior to the Final Separation (as such term is hereinafter
defined), Western Resources and any of its Affiliates or Associates;
(ii) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any Person
organized, appointed or established by the Company or any Subsidiary of
the Company for or pursuant to the terms of any such plan; (iii) any
Person who or which, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of a Substantial Block solely
as a result of a change in the aggregate number of shares of Voting
Stock (as such term is hereinafter defined) outstanding since the last
date on which such Person acquired Beneficial Ownership of any shares
of the Voting Stock constituting all or a portion of such Substantial
Block; (iv) any Person who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of a
Substantial Block in the good faith belief that such acquisition would
not (x) cause such Person and its Affiliates and Associates to become
the Beneficial Owner of a Substantial Block and such Person relied in
good faith in computing the percentage of its voting power on publicly
filed reports or documents of the Company which are inaccurate or
out-of-date or (y) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a) to occur. Notwithstanding
clause (iii) or (iv) of the prior sentence, if any Person that is not
an Acquiring Person due to such clause (iii) or (iv) does not cease to
be the Beneficial Owner of a Substantial Block by the close of business
on the fifth Business Day (as such term is hereinafter defined) after
notice from the Company (the date of notice being the first Business
Day) that such Person is the Beneficial Owner of a Substantial Block,
such Person shall, at the end of such five Business Day period, become
an Acquiring Person (and such clause (iii) or (iv) shall no longer
apply to such Person). For purposes of this definition, the
determination whether any Person acted in "good faith" shall be
conclusively determined by the Board of Directors of the Company.
(b) "Act" shall have the meaning set forth in Section 9(c)
hereof.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and
in effect on the date hereof (the "Exchange Act").
(e) 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 has, directly or indirectly, the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement,
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arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights, warrants or
options, or otherwise, provided, however, that a Person shall
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not be deemed the "Beneficial Owner" of, or to "beneficially
own," (1) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for
purchase or exchange, (2) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering
Event (as such term is hereinafter defined) or (3) securities
issuable upon exercise of Rights from and after the occurrence
of a Triggering Event, which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) hereof
("Original Rights") or pursuant to Section 11(i), Section
11(p) or Section 22 hereof in connection with an adjustment
made with respect to Original Rights; or
(ii) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly, the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule l3d-3 of the General Rules and
Regulations under the Exchange Act) or has a "pecuniary
interest" or an "indirect pecuniary interest" in (as
determined pursuant to Rule 16a-1(a)(2) of the General Rules
and Regulations under the Exchange Act), in each case,
including pursuant to any agreement, arrangement or
understanding, whether or not in writing, provided, however,
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that a Person shall not be deemed the Beneficial Owner of, or
to "beneficially own," any security under this subparagraph
(ii) if the agreement, arrangement or understanding to vote
such security (1) arises solely from a revocable proxy given
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not 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 (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in the proviso to subparagraph
(ii) of this paragraph (e)) or disposing of any securities of
the Company.
Notwithstanding the foregoing, nothing contained in this
definition shall cause a Person ordinarily engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired in a bona fide firm
commitment underwriting pursuant to an underwriting agreement with the
Company.
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(f) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York
are authorized or obligated by law or executive order to close.
(g) "Certification" shall have the meaning set forth in
Section 18 hereof.
(h) "close of business" on any given date shall mean 5:00
P.M., New York City time, on such date, provided, however, if such date
is not a Business Day it shall mean 5:00 P.M. on the next succeeding
Business Day.
(i) "Common Stock" when used with reference to the Company
shall mean the Common Stock, $.01 par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company
shall mean the capital stock with the greatest voting power of such
Person or the equity securities or other equity interest having power
to control or direct the management of such Person.
(j) "common stock equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(k) "Company" shall have the meaning set forth in the
introduction hereto.
(l) "current market price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(m) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(n) "Distribution" shall have the meaning set forth in the
recitals hereto.
(o) "Distribution Date" shall have the meaning set forth
in Section 3(a).
(p) "equivalent preferred stock" shall have the meaning set
forth in Section 11(b) hereof.
(q) "Exchange Act" shall have the meaning set forth in the
definition of "Affiliate" and "Associate" above.
(r) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(s) "Expiration Date" shall have the meaning set forth in
Section 7(a).
(t) "Final Expiration Date" shall have the meaning set
forth in Section 7(a).
(u) "Final Separation" shall have the meaning set forth in
Section 35 hereof.
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(v) "Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner" above.
(w) "Person" shall mean any individual, firm, corporation,
partnership, trust, limited liability company, association or other
entity or organization.
(x) "Preferred Stock" shall mean the shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the
Company.
(y) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(aa) "Record Date" shall have the meaning set forth in the
recitals hereto.
(bb) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(dd) "Rights" shall have the meaning set forth in the
recitals hereto.
(ee) "Rights Agent" shall have the meaning set forth in the
introduction hereto.
(ff) "Rights Dividend Declaration Date" shall have the meaning
set forth in the recitals hereto.
(gg) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii).
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(ii) "Section 13 Event" shall mean any event described in
Section 13(a).
(jj) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, includes a
report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become
such.
(kk) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ll) "Subsidiary" shall mean, with reference to any Person,
any corporation (or other entity) of which an amount of voting
securities (or comparable ownership interests)
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sufficient to elect at least a majority of the directors (or comparable
individuals) of such corporation (or other entity) is beneficially
owned or otherwise controlled, directly or indirectly, by such Person.
(mm) "Substantial Block" shall mean a number of shares of the
Voting Stock which has [15]% or more of the aggregate voting power of
all outstanding shares of Voting Stock. A Person shall not be deemed
the Beneficial Owner of a Substantial Block if such Person, together
with all Affiliates and Associates of such Person, (a) beneficially own
less than 20% of the number of shares of Common Stock then outstanding,
(b) acquired all of such shares, in the sole judgment of the Board of
Directors of the Company, without the intention of effecting control of
the Company, and (c) dispose of a sufficient number of such shares
within ten calendar days of having acquired a Substantial Block such
that they would no longer beneficially own [15]% or more of the number
of shares of Common Stock then outstanding.
(nn) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(oo) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(pp) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(qq) "Triggering Event" shall mean any Section 11(a)(ii) Event
or Section 13 Event.
(rr) "Voting Stock" shall mean the outstanding shares of
Common Stock, $.01 par value, and any other shares of capital stock of
the Company which are entitled to vote generally in the election of
directors.
(ss) "Western Resources" shall have the meaning set forth in
the recitals hereto.
Section 2. Appointment of Rights Agent. The Company hereby
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appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable upon ten calendar days' written notice to the
Rights Agent. In no event shall the Rights Agent have any duty to supervise, or
in any way be liable for the acts or omissions of, such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the earlier
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of (i) the close of business on the tenth calendar day after the Shares
Acquisition Date (or, if the tenth calendar day after the Shares Acquisition
Date occurs before the Record Date, the close of business on
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the Record Date) or (ii) the close of business on the tenth calendar day after
the date of the commencement of, or first public announcement of the intent of
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any Person
organized, appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer if, upon consummation thereof, such Person would be an Acquiring
Person (the earlier of the dates in subsections (i) and (ii) hereof being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for the Common Stock shall be deemed also to be
Right Certificates) and not by separate Right Certificates, and (y) the Rights
will be transferable only in connection with the transfer of the Common Stock.
As soon as practicable after receipt by the Rights Agent of written notice from
the Company of the Distribution Date and after the Company has provided the
Rights Agent with a list of shareholders of Common Stock, the Rights Agent, at
the Company's expense, will send by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each share of the Common Stock so
held, subject to adjustment as provided herein. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of the Common Stock
as of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Common Stock, and the registered
holders of the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any of the certificates
for the Common Stock outstanding on the Record Date shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date (as such term is defined in Section 7), or, in
certain circumstances provided in Section 22 hereof, after the Distribution
Date. Certificates representing such shares of Common Stock shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
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This certificate also evidences certain Rights as set forth in a Rights
Agreement dated as of [ ], 2001 and as amended from time to time
(the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of the Company. The Company will mail to the holder
of this certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request thereof. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
evidenced by separate certificates and no longer be evidenced by this
certificate, may be redeemed or exchanged or may expire. As set forth
in the Rights Agreement, Rights issued or transferred to, or held by,
any Person who is, was or becomes an Acquiring Person or an Affiliate
or Association thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may be null and void.
After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Common Stock represented
by certificates containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. In the event that the Company purchases
or acquires any shares of Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock which are no longer
outstanding. The failure to print the foregoing legend on any such Common Stock
certificate or any other defect therein shall not affect in any manner
whatsoever the application or interpretation of the provisions of this Agreement
or the rights of any holder of the Rights.
Section 4. Form of Right Certificates. (a) The Right
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Certificates (and the forms of election to purchase 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 Agreement
and which do not affect the rights, duties or responsibilities of the Rights
Agent, or as may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. The Right Certificates shall be in machine-printable format and in a form
reasonably satisfactory to the Rights Agent. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates, whenever distributed,
shall be dated as of the Record Date, shall show the date of countersignature,
and on their face shall entitle the holders thereof to purchase such number of
shares of Preferred Stock (or following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as
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shall be set forth therein at the price per one one-hundredth of a share of
Preferred Stock set forth therein (the "Purchase Price"), but the number of such
shares and the Purchase Price shall be subject to adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, any
Right Certificate issued pursuant to Section 3 or Section 22 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate thereof, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
became such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of an
agreement, arrangement or understanding which has as a primary purpose or effect
avoidance of Section 7(e) hereof, any Right Certificate issued at any time to
any nominee of such Acquiring Person, Associate or Affiliate, and, provided that
the Company shall have notified the Rights Agent that this Section 4(b) applies,
any Right Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible following the written
instruction of the Company to the Rights Agent) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration. The Right
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Certificates shall be executed on behalf of the Company by one of its authorized
officers in the manner provided in the Bylaws of the Company for Common Stock
certificates. The Right Certificates shall be countersigned by an authorized
signatory of 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, issued and delivered with the same
force and effect as though the Person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right 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
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Right Certificate, although at the date of the execution of this Rights
Agreement any such Person was not such an officer.
In case any authorized signatory of the Rights Agent who shall
have countersigned any of the Right Certificates shall cease to be such
signatory before delivery by the Company, such Right Certificates, nevertheless,
may be issued and delivered by the Company with the same force and effect as
though the Person who countersigned such Right Certificates had not ceased to be
such signatory; and any Right Certificate may be countersigned on behalf of the
Rights Agent by any Person who, at the actual date of the countersignature of
such Right Certificate, shall be a proper signatory of the Rights Agent to
countersign such Right Certificate, although at the date of the execution of
this Rights Agreement any such Person was not such a signatory.
Following the Distribution Date and receipt by the Rights
Agent of all relevant information, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates, and
the date of each of the Right Certificates and the date of countersignature of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
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Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may be)
as the Right Certificate or Right Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office of the Rights Agent designated for such
purpose, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have properly completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request. Thereupon
the Rights Agent shall, subject to Section 4(b), Section 7(e), Section 14 and
Section 20(k) hereof,
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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 from a Right Certificate holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. The Rights Agent shall have
no duty or obligation under this Section 6 unless and until it is satisfied that
all such taxes and/or governmental charges have been paid in full.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, along with a signature guarantee and such other
further documentation as the Rights Agent may reasonably request and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
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of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
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Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the designated
office of the Rights Agent, together with payment of the aggregate Purchase
Price for the total number of one one-hundredths of shares of Preferred Stock
(or shares of Common Stock, other securities, cash or other assets, as the case
may be) as to which the Rights are then exercisable, at or prior to the earliest
of (i) the close of business on [ ], [2010]1 (the "Final Expiration Date"), (ii)
the time at which the Rights are exchanged as provided in Section 24, or (iii)
the time at which the Rights are redeemed as provided in Section 23 (such
earliest date being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be $[ ],
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed and completed accompanied
________________________________
1 Ten years from date of Agreement.
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by payment of the Purchase Price for the number of one one-hundredths of shares
of Preferred Stock (or shares of Common Stock, other securities, cash or other
assets, as the case may be) to be purchased and an amount equal to any
applicable tax or governmental charge, the Rights Agent shall thereupon, subject
to Section 20(k), promptly (i) requisition from any transfer agent of Preferred
Stock certificates for the number of one one-hundredths of shares of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, (ii) if the Company shall have elected
to deposit the total number of shares of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of shares of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to
comply with such request, (iii) when necessary to comply with this Agreement,
requisition from any transfer agent of the Common Stock of the Company
certificates for the total number of shares of Common Stock to be paid in
accordance with Section 11(a)(ii) and 11(a)(iii), (iv) when necessary to comply
with this Agreement, requisition from the Company the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14, (v)
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 (vi) when necessary to comply with this Agreement, after receipt,
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate. The Rights Agent shall have no duty or obligation under the
previous sentence of this Section 7(c) unless and until it is satisfied that all
such taxes and/or governmental charges have been paid. The payment of the then
Purchase Price may be made by certified bank check or bank draft or money order
payable to the order of the Company or the Rights Agent. In the event that the
Company is obligated to issue securities, distribute property or pay cash
pursuant to Section 11(a)(iii) hereof, the Company will make all arrangements
necessary so that cash, property or securities are available for issuance,
distribution or payment by the Rights Agent, if and when necessary to comply
with this Agreement.
(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 6 and Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, any Rights that are or were at any time on or after the earlier of the
Distribution Date or the Shares Acquisition Date beneficially owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person became such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior
-13-
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors of the Company
has determined is a part of an agreement, arrangement or understanding which has
as a primary purpose or effect the avoidance of this Section 7(e), shall become
null and void upon the occurrence of a Triggering Event and no holder of such
Rights shall have any right with respect to such Rights under any provision of
this Agreement or otherwise from and after the occurrence of a Triggering Event.
The Company shall notify the Rights Agent when this Section 7(e) applies and
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but neither the Company nor the
Rights Agent shall have any liability to any holder of Right Certificates or
other Person as a result of the Company's failure to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company or the Rights Agent shall
reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
--------------------------------------------------
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this 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. Reservation and Availability of Shares of Capital
-------------------------------------------------
Stock. (a) The Company covenants and agrees that it will cause to be reserved
-----
and kept available out of its authorized and unissued shares of Preferred Stock
(and following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities) or out of its
authorized and issued shares of Preferred Stock (and, following the occurrence
-14-
of a Triggering Event, out of its authorized and issued Common Stock and/or
other securities) held in its treasury, the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights (it being understood that any of the foregoing shares or
securities may also be reserved for other purposes) or will take such other
steps as are appropriate to assure that the number of such shares or securities
(or their equivalents) sufficient to permit the exercise in full of all
outstanding Rights will be available upon such exercise.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable upon the exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable (but only to the extent that the Company's
Board of Directors determines that it is reasonably likely that the Rights will
be exercised), all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (X) (i) to file, as
soon as practicable following the first occurrence of a Section 11(a)(ii) Event,
or as soon as required by law, as the case may be, a registration statement
under the Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
to cause such registration statement to become effective as soon as practicable
after such filing, and (iii) to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date and (Y) (i) to file
appropriate applications with any state or federal regulatory bodies having
jurisdiction over the issuance of the securities (or assets) purchasable upon
exercise of the Rights in order to obtain any approvals or orders of such bodies
as may be legally required, (ii) to cause such approvals to be obtained or
orders to be issued as soon as practicable after such filing and (iii) to cause
such approvals or orders to remain effective until the earlier of (A) the date
as of which the Rights are no longer exercisable for such securities (or
assets), and (B) the Expiration Date. The Company will also take such action as
may be appropriate under the blue sky laws of the various states. The Company
may temporarily suspend, (X) for a period of time not to exceed ninety (90) days
after the date set forth in clause (X) (i) of the first sentence of this Section
9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective and (Y) for a period of
time not in excess of 180 days after such date (or for such longer period as is
required by any applicable law, rule or regulation of any appropriate regulatory
bodies), the exercisability of the Rights in order to obtain any such required
regulatory body approvals or orders. Upon any such suspension, the Company shall
issue a public announcement and shall give simultaneous written notice to the
Rights Agent stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and prompt notice to the Rights
Agent at
-15-
such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualifications in such jurisdiction
shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of the Preferred Stock
(and following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of the Preferred Stock (or Common Stock and/or other securities, as
the case may be) upon the exercise of Rights. The Company shall not, however, be
required (a) to pay any tax or governmental charge which may be payable in
respect of any transfer involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates for the Preferred Stock
(or Common Stock and/or other securities, as the case may be) in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or (b) to issue or deliver any certificates for shares
of the Preferred Stock (or Common Stock and/or other securities, as the case may
be) upon the exercise of any Rights until any such tax or governmental charge
shall have been paid (any such tax or governmental charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax or governmental
charge is due.
Section 10. Preferred Stock Record Date. Each Person in whose
---------------------------
name any certificate for any number of shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such whole and/or fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and any
applicable taxes and governmental charges) was made and shall show the date of
countersignature; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) 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 Stock (or Common Stock and/or other securities, as the case may be)
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 stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any
-16-
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 shares covered by each Right
----------------
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of the Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive upon payment of the
Purchase Price then in effect the aggregate number and kind of shares
of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock (or Common
Stock and/or other securities) transfer books of the Company were open,
he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date
of this Agreement, directly or indirectly, (1) merges into the
Company or otherwise combines with the Company and the Company
is the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company remains
outstanding and unchanged, (2) sells, purchases, leases,
exchanges, mortgages, pledges, transfers or otherwise disposes
(in one transaction or a series of transactions), to, from or
with the Company or any of its Subsidiaries, assets on terms
and conditions less favorable to the Company than the Company
would be able to obtain through arm's-length negotiation with
an unaffiliated third party, other than pursuant to a
transaction set forth in Section 13(a) hereof, (3) receives
any compensation from the Company or any of its Subsidiaries
other than compensation
-17-
for full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries') past
practices, or (4) receives a direct or indirect benefit
(except proportionately as a shareholder and except if
resulting from a requirement of law or government regulation),
of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries, or
(B) any Person (other than (x) prior to the Final
Separation, Western Resources and its Affiliates and
Associates and (y) the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person organized, appointed or
established by the Company or any Subsidiary of the Company
for or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, becomes at any
time after the Rights Dividend Declaration Date, the
Beneficial Owner of [15]% or more of the shares of Voting
Stock then outstanding unless the event causing the threshold
to be crossed is (1) a transaction set forth in Section 13(a)
hereof, or (2) an acquisition of shares of Voting Stock
pursuant to an offer for all outstanding shares of Voting
Stock at a price and upon such terms and conditions as a
majority of the Board of Directors of the Company determines
to be (a) at a price which is fair to stockholders (other than
the Person or any Affiliate or Associate thereof on whose
behalf the offer is being made) taking into account all
factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value and (b)
otherwise in the best interests of the Company and its
stockholders (other than the Person or any Affiliate or
Associate thereof on whose behalf the offer is being made), or
(C) during such time as there is an Acquiring Person,
(1) there is any failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding preferred stock of the Company
(except to the extent such declaration or payment would be
prohibited under the laws of the Company's jurisdiction of
incorporation or as approved by the holders of a majority of
the then outstanding shares of Common Stock beneficially owned
by Persons other than the Acquiring Person or its Affiliates
or Associates), (2) there is any reduction in the annual rate
of dividends paid on the Common Stock (except to reflect any
subdivision of the Common Stock or as required under the laws
of the Company's jurisdiction of incorporation or as approved
by the holders of a majority of the then outstanding shares of
Common Stock beneficially owned by Persons other than the
Acquiring Person or its Affiliates or Associates), (3) there
is a failure to increase the annual rate of dividends as
necessary to reflect any reclassification (including
-18-
any reverse stock split), recapitalization, reorganization or
any similar transaction which has the effect of reducing the
number of outstanding shares of the Common Stock (except to
the extent such increase in the rate of dividends would be
prohibited under the laws of the Company's jurisdiction of
incorporation or as approved by the holders of a majority of
the then outstanding shares of Common Stock beneficially owned
by Persons other than the Acquiring Person or its Affiliates
or Associates), or (4) there is any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions (whether or
not with or into or otherwise involving an Acquiring Person)
which has the effect, directly or indirectly, of increasing by
more than 1% the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Company or any of its Subsidiaries which is directly or
indirectly owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person
then, within five (5) days after the date of the occurrence of an event
described in Section 11(a)(ii)(B) hereof and promptly following the
occurrence of any event described in Section 11(a)(ii)(A) or (C)
hereof, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have a
right to receive, upon exercise thereof at the then current Purchase
Price for the number of one one-hundredths of a share of Preferred
Stock for which such Right is then exercisable in accordance with the
terms of this Agreement, in lieu of shares of Preferred Stock, such
number of shares of the Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-hundredths of a share of Preferred Stock for
which a Right is then exercisable and dividing that product by (y) 50%
of the current market price per share of the Common Stock of the
Company (determined pursuant to Section 11(d)) on the date of the
occurrence of any one of the events listed above in this subparagraph
(ii) (such number of shares are hereinafter referred to as the
"Adjustment Shares") provided, that the Purchase Price and the number
of Adjustment Shares shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of such first
occurrence.
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Amended and Restated Articles of
Incorporation, as amended, but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights and which may
otherwise be legally Issued at such time for such purpose are not
sufficient to permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii), the Company shall (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price
(such excess, the "Spread"), and (B) with respect
-19-
to each Right, make adequate provision to substitute for the Adjustment
Shares, upon exercise of the Rights and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock
which the Board of Directors of the Company have deemed to have the
same value as shares of Common Stock (such shares of preferred stock,
"common stock equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's rights of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board
of Directors of the Company shall determine in good faith that it is
likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement and shall give simultaneous written notice to the Rights
Agent stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect (with prompt notice thereof to
the Rights Agent). For purposes of this Section 11(a)(iii), the value
of the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of the Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock
on such date. The Company shall give the Rights Agent notice of the
selection of any "common stock equivalent" under this Section
11(a)(iii).
-20-
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock
(or securities having substantially the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent preferred
stock") or convertible into the Preferred Stock or equivalent preferred
stock) at a price per share of the Preferred Stock or equivalent
preferred stock (or having a conversion price per share, if a security
convertible into the Preferred Stock or equivalent preferred stock)
less than the current market price (as defined in Section 11(d) per
share of the Preferred Stock or equivalent preferred stock, as the case
may be) 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, of which
the numerator shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred
Stock or equivalent preferred stock which the aggregate offering price
of the total number of shares of Preferred Stock or equivalent
preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and of which the denominator
shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of additional shares of Preferred Stock
and/or equivalent preferred stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration, part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent. Shares of Preferred Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, 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 Preferred Stock (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 periodic cash dividend at
a rate not in excess of 125% of the rate of the last cash dividend
theretofore paid or a dividend payable in Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section
11(b)), the Purchase Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, of which the numerator shall
be the current market price per share of Preferred Stock (as defined in
Section 11(d)) on such record date, less the fair market value (as
determined in good faith by the Board of Directors
-21-
of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock and of which the
denominator shall be such current market price per share of Preferred
Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii), the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to, but not including, such date and for
purposes of computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following, but not including, such date; provided, however, that in the
event that the current market price per share of Common Stock is
determined during the period following the announcement by the issuer
of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible
into shares of such Common Stock (other than the Rights) or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite 30 Trading Day or 10 Trading
Day period, as set forth above after the ex-dividend date for such
dividend or distribution or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
current market price shall be appropriately adjusted to take into
account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of
the Common Stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of the Common Stock
are listed or admitted to trading or, if the shares of the Common Stock
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use,
or, if on any such date the shares of the Common Stock are not quoted
by such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making
-22-
a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the
Common Stock, the fair value of such shares on such date shall be as
determined in good faith by the Board of Directors of the Company. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of the Common Stock are not listed or admitted to trading on any
national securities exchange, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not
authorized or obligated by law or executive order to close. If the
Common Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Stock in clause
(i) of this Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
100 (as such number may be appropriate adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by
the current market price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, "current market price" per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market
price" of one one-hundredths of a share of Preferred Stock shall be
equal to the "current market price" of one share of Preferred Stock
divided by 100.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or one-millionth of a share
of Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
-23-
this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to section
11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
shares of Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in Section 11(a) through (o),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable from time to
time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of shares of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after the adjustment of the Purchase Price. The Company
shall make a public announcement and shall give simultaneous written
notice to the Rights Agent of its election to adjust the number of
Rights, indicating the record date for the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or
any
-24-
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 Right
Certificates on such record date Right Certificates evidencing, subject
to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) 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 shares of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share
and the number of shares which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then stated
value, if any, of a share of Preferred Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of
one one-hundredths of a share of such Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer (and shall
promptly notify the Rights Agent of any such election) until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of
the event requiring such adjustment.
-25-
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board of
Directors of the Company shall determine to be advisable in order that
any consolidation or subdivision of shares of Preferred Stock, issuance
wholly for cash of any of shares of Preferred Stock at less than the
current market price, issuance wholly for cash of the Preferred Stock
or securities which by their terms are convertible into or exchangeable
for Preferred Stock, stock dividends or issuance of rights, options or
warrants referred to hereinabove in this Section 11, hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23, 24
and 27 hereof, take (nor will it permit any of its Subsidiaries to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(n)), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(n)), or (iii) sell or transfer (or permit any of its
Subsidiaries to sell or transfer), in one or more transactions, assets
or earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(n)) if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which
would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously
with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare and pay a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution
-26-
Date, shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to
such event by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(q) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date, the Company may, in lieu of
making any adjustment to the Purchase Price, adjust the number of
shares of Preferred Stock eligible for purchase on exercise of each
Right or the number of Rights outstanding, which adjustment would
otherwise be required by Section 11(a)(i), 11(b), 11(c), 11(h) or
11(i), make such other equitable adjustment or adjustments thereto as
the Board of Directors of the Company (whose determination shall be
conclusive) deems appropriate in the circumstances and not inconsistent
with the objectives of the Board of Directors of the Company in
adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or Number
------------------------------------------------
of Shares. Whenever an adjustment is made as provided in Section 11 or 13, the
---------
Company shall (a) within a reasonable time after such adjustment prepare a
certificate setting forth such adjustment, and a brief, reasonably detailed,
statement of the facts and computations accounting for such adjustment and the
adjusted Purchase Price, (b) within a reasonable time after such adjustment file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 26. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained. The Rights Agent shall have no duty with respect
to and shall not be deemed to have knowledge of any such adjustment unless and
until it shall have received such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
--------------------------------------------
Assets or Earning Power. (a) In the event that, following the Shares Acquisition
-----------------------
Date, directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n)) and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n)) shall consolidate, merge with and into the Company and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or
-27-
otherwise transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(n) hereof), then, and in each such case (except as may
be contemplated by Section 13(d) hereof) proper provision shall be made so that
(i) each holder of a Right (except as provided in Section 7(e)) shall thereafter
have the right to receive, upon the exercise thereof at the then-current
Purchase Price in accordance with the terms of this Agreement, such number of
validly issued, fully paid, non-assessable and freely tradable shares of Common
Stock of the Principal Party (as hereinafter defined), not subject to any liens,
encumbrances, rights of call or first refusal, or other adverse claims as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the then number of one one-hundredths of a share of Preferred Stock for
which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such one one-
hundredths of a share for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in Effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the current market price per share of the Common Stock of such
Principal Party (determined in the manner described in Section 11(d)) on the
date of consummation of such consolidation, merger, sale or transfer; (ii) the
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall thereafter apply to such Principal Party and (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with Section 9) 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 shares of its Common Stock thereafter
deliverable upon the exercise of the Rights and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Section 13 Event. otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of
the first sentence of Section 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to the merger or
consolidation; and
-28-
(ii) in the case of any transaction described in (z) of the
first sentence in this Section 13, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
-------- -------
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation; (y) in case such Person is a Subsidiary, directly or indirectly, of
more than one corporation, the Common Stocks of two or more of which are and
have been so registered, "Principal Party" shall refer to whichever of such
corporations is the issuer of the Common Stock having the greatest market value.
(c) The Company shall not consummate any Section 13 Event
unless all regulatory approvals for the consummation of such Section 13 Event
and the exercise of the Rights in accordance with the terms of this Agreement
have been obtained and the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which are neither outstanding nor reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, will use its best efforts to
cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Act) until the Expiration
Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of
-29-
Common Stock pursuant to a tender offer or exchange offer for all outstanding
shares of Common Stock, which complies with the provisions of Section
11(a)(ii)(B)(2) hereof (or a wholly-owned Subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
Common Stock whose shares were purchased pursuant to such tender offer or
exchange offer, and (iii) the form of consideration being offered to the
remaining holders of Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights hereunder shall
expire.
Section 14. Fractional Rights and Fractional Shares. (a) The
---------------------------------------
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company shall pay 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. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares (other than
fractions which are integral multiples of one one-hundredth of a share of
Preferred Stock). In lieu of fractional shares that are not integral multiples
of one one-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Right Certificates at the time the Rights evidenced
thereby are exercised as herein provided an
-30-
amount in cash equal to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d)(ii)) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may 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 (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as otherwise permitted by this Section
14.
(e) The Rights Agent shall have no duty or obligation with
respect to this Section 14 unless and until it has received specific
instructions (and sufficient cash, if required) from the Company with respect to
its duties and obligations under such Section.
Section 15. Rights of Action. All rights of action in respect
----------------
of this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a
--------------------------
Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
-31-
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates fully
executed, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request;
(c) subject to Section 6(a), Section 7(e) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be required to be
affected by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, judgment or ruling (whether interlocutory or final) issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation
or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its reasonable best
-------- -------
efforts to have any such order, decree, judgment or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
-------------------------------------------------
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any 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 stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or
-32-
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to
---------------------------
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the preparation,
delivery, administration, execution and amendment of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent (as finally determined by a court of competent
jurisdiction) (including the reasonable fees and expenses of counsel), for any
action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, without limitation,
the costs and expenses of defending against any claim of liability in the
premises. The indemnity provided herein shall survive the termination of this
Agreement and the termination and the expiration of the Rights.
The Rights Agent shall be protected and shall incur no
liability (other than such liabilities incurred through the Rights Agent's
negligence, bad faith or willful misconduct) for, or in respect of, any action
taken, suffered or omitted by it in connection with the acceptance and
administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, instruction, adjustment notice certificate,
statement, or other paper or document believed by it to be genuine (upon any of
which the Rights Agent is authorized to rely) and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action taken,
suffered or omitted by it in connection with the acceptance and administration
of this Agreement in reliance upon (i) the proper execution of the certification
concerning beneficial ownership (upon which the Rights Agent is authorized to
rely) appended to the Form of Assignment and the Form of Election to Purchase
included as part of Exhibit B hereto (the "Certification"), unless the Rights
Agent shall have actual knowledge that, as executed, the Certification is untrue
or (ii) the non-execution or failure to complete the Certification including,
without limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution or failure.
The Rights Agent is not deemed to have knowledge, a duty, or
notice unless the Company has given it actual notice.
Section 19. Merger or Consolidation or Change of Name of
--------------------------------------------
Rights Agent. Any Person into which the Rights Agent or any successor Rights
------------
Agent may be merged or
-33-
with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes only the duties and obligations imposed by the express terms of this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with the legal counsel (who
may be legal counsel for the Company), and the advice or opinion of
such counsel shall be full and complete authorization and protection to
the Rights Agent, and the Rights Agent shall incur no liability for or
in respect of any action taken, suffered or omitted by it in good faith
and without negligence and in accordance with such advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking, omitting 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 Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall
be full authorization and protection to the Rights Agent, and the
-34-
Rights Agent shall incur no liability for or in respect of any action
taken, omitted or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct (as finally determined
by a court of competent jurisdiction), and the issuance or non-issuance
of a Right Certificate or Preferred Stock or other security issued in
lieu of Preferred Stock in accordance with instructions given to the
Rights Agent by the Company pursuant to Section 20(k) hereof or in
accordance with the terms hereof shall not constitute negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any liability for, or be
under any responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence
of facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual
notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any shares of Preferred Stock or Common Stock to be
issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock or Common Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept the advice or instructions with respect to the performance of
its duties hereunder and certificates delivered pursuant to any
provision hereof from any one of the Chairman of the Board, the
President, any Vice President, the Secretary or the Treasurer of the
Company, and is authorized to apply to such officers for advice or
instructions in connection with its
-35-
duties, and such advice or instructions shall be full authorization and
protection to the Rights Agent and the Rights Agent shall incur no
liability for or in respect of any action taken, omitted or suffered to
be taken by it in good faith in accordance with the advice or
instructions of any such officer (the Rights Agent may conclusively
rely on the most recent advice or instructions given by any such
officer). An application by the Rights Agent for advice or instructions
may set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent with respect to its duties and obligations
under this Agreement and the date on and/or after which such action
shall be taken, and the Rights Agent shall not be liable for any action
taken, suffered or omitted in accordance with a proposal included in
any such application on or after the date specified therein (which date
shall not be less than one Business Day after the Company receives such
application) without the consent of the Company unless prior to taking,
suffering or omitting such action, the Rights Agent has received
written instructions in response to application specifying the actions
to be taken, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either by itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company or any other Person resulting from any such
act, default, neglect or misconduct, absent negligence, bad faith or
willful misconduct on the part of the Rights Agent in the selection
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if it reasonably believes that repayment of such
funds or adequate indemnification against such risk or liability is not
assured it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been properly completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not
-36-
take any further action with respect to such requested exercise or
transfer without first consulting the Company. The Company shall give
the Rights Agent prompt written instructions as to the action to be
taken regarding the Rights Certificates involved. The Rights Agent
shall not be liable for acting in accordance with such instructions.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company and to
each transfer agent of the Preferred Stock and the Common Stock by registered or
certified mail, and, at the Company's expense, to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Preferred Stock and the Common Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the Company shall become
the temporary Rights Agent and 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 Person 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 Person is authorized to do business in the State
of New York), in good standing and subject to supervision or examination by
federal or state authority or which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $25 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 Preferred Stock and the Common Stock, 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 Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board
-37-
of Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
-------- -------
Right Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of
---------------------------
Directors of the Company may, at its option, at any time prior to the earlier of
(x) the close of business on the tenth calendar day following the Shares
Acquisition Date (or if the Shares Acquisition Date shall have occurred prior to
the Record Date, the close of business on the tenth day following the Record
Date), or (y) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.01 per Right as 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"), and the Company may, at its option, pay
the Redemption Price either in shares of its Common Stock (valued at their
current market price as defined in Section 11(d)(i) on the date of the
redemption), other securities, cash or other assets. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired. The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) In deciding whether or not to exercise the Company's right
of redemption hereunder, the Board of Directors of the Company shall act in good
faith, in a manner they reasonably believe to be in the best interests of the
Company and with such care, including reasonable inquiry, skill and diligence,
as a person of ordinary prudence would use under similar circumstances, and they
may consider the long-term and short-term effects of any action upon employees,
customers and creditors of the Company and upon communities in which offices or
other establishments of the Company are located, and all other pertinent
factors.
-38-
(c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right held. Within 10 days after the action of the
Board of Directors of the Company ordering the redemption of the Rights, the
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption 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, and other than in connection with the repurchase of Common Stock prior to
the Distribution Date.
Section 24. Exchange.
--------
(a) The Board of Directors of the Company 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 null and void pursuant to the provisions of Section 7(e)
hereof) for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of the holders of such
Rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Board of Directors of the Company ordering an
exchange of the Rights, the Company shall promptly give notice of any such
exchange to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent; provided, however, that the
-------- -------
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights
-39-
(other than Rights which have become null and void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute shares of Preferred Stock (or equivalent preferred
stock, as such term is defined in Section 11(b) hereof) for shares of Common
Stock exchangeable for the Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock (or equivalent preferred stock) for each share of
Common Stock, as appropriately adjusted to reflect adjustments in the dividend
rights of the Preferred Stock pursuant to the terms thereof.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued, but not outstanding, or authorized but
unissued, to permit any exchange of Rights as contemplated in accordance with
this Section 24 or that any regulatory actions or approvals are required in
connection therewith, the Company shall take all such action as may be necessary
to authorize additional Common Stock or Preferred Stock for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractional
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock pursuant to this Section 24. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of this
Section 24(e), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
The Rights Agent shall have no duty or obligation with respect
to this Section 24(e) unless and until it has received specific instructions
(and sufficient cash, if required) from the Company with respect to its duties
and obligations under such Section.
(f) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute for any share of Common Stock exchangeable for a
Right (i) common stock equivalents (ii) cash, (iii) debt securities of the
Company, (iv) other assets, or (v) any combination of the foregoing, having an
aggregate value which the Board of Directors of the Company shall have
determined in good faith to be equal to the current market price of one share of
Common Stock (determined pursuant to Section 11(d) hereof) on the Trading Day
immediately preceding the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company
------------------------
shall propose at any time following the Distribution Date (a) to pay any
dividend payable in stock of any class to the holders of Preferred Stock or to
make any other distribution to the holders of Preferred
-40-
Stock (other than a regular periodic cash dividend at a rate not in excess of
125% of the rate of the last cash dividend theretofore paid), or (b) to offer to
the holders of Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (c) to effect any
reclassification of Preferred Stock (other than a reclassification involving
only the subdivision of outstanding Preferred Stock), or (d) to effect any
consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(n) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to, any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with Section
11(n) hereof), or (e) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company shall give to the Rights Agent
and to each holder of a Right, in accordance with Section 26, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or Rights, 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 Preferred Stock, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(a) or (b) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Stock, whichever shall be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to the
Rights Agent and to each holder of a Right, to the extent feasible and in
accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii) and all references in the preceding paragraph to
Preferred Stock shall be deemed to thereafter refer to Common Stock and/or other
securities, as the case may be.
Section 26. Notices. Notices or demands authorized by this
-------
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Westar Industries, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: [ ]
-41-
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
[ ]
[ ]
[ ]
Attention: [ ]
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Prior to the earlier
--------------------------
of the Distribution Date or the Shares Acquisition Date and subject to the
penultimate sentence of this Section 27, the Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates or Common Stock. From and after the earlier of the Distribution
Date or the Shares Acquisition Date, and subject to the penultimate sentence of
this Section 27, the Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to 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 lengthen the time period during which the Rights may be redeemed
following the Shares Acquisition Date for up to an additional twenty days beyond
the time period set forth in Section 23(a) or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Right Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment unless the Rights Agent shall have determined in
good faith that such supplement or amendment would adversely affect the Rights
Agent's interests under this Agreement. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of shares of Preferred Stock for which a Right is then exercisable.
Prior to the earlier of the Shares Acquisition Date or the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
-42-
Section 28. Successors. All the covenants and provisions of
----------
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the Board of
------------------------------------------
Directors, etc. For all purposes of this Agreement, any calculation of the
---------------
number of shares of Voting Stock outstanding at any particular time, including
for purposes of determining the particular percentage of such outstanding shares
of Voting Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the provisions of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Company or the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for the purpose of clause (ii) below, all omissions
with respect to the foregoing) which are done or made by the Board of Directors
of the Company in good faith, shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all other
Persons, and (ii) not subject the Board of Directors of the Company to any
liability to the holders of the Right Certificates. The Rights Agent is entitled
to assume that the Board of Directors of the Company acted in good faith in
making such actions, calculations, interpretations and determinations.
Section 30. Benefits of This Agreement. Nothing in this
--------------------------
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
-------- -------
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23
-43-
hereof shall be reinstated (and the Company shall promptly notify the Rights
Agent of such reinstatement) and shall not expire until the close of business on
the tenth day following the date of such determination by the Board of
Directors.
Section 32. Governing Law. This Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Kansas and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State except that the rights, duties
and obligations of the Rights Agent under this Agreement shall be governed by
the laws of the State of [ ].
Section 33. Counterparts. This Agreement may be executed in
------------
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
--------------------
the several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 35. Western Resource Distribution. Notwithstanding any
-----------------------------
provision herein to the contrary, prior to the date of the final separation of
Western Resources' electric utilities from the Company (the "Final Separation"),
neither Western Resources nor any of its Affiliates or Associates shall be
considered an Acquiring Person under this Agreement and no Shares Acquisition
Date or Distribution Date has occurred or will occur, in any such case as a
result of the consummation of the transactions contemplated under the Final
Separation.
-44-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
[SEAL]
WESTAR INDUSTRIES, INC.
Attest:
By: _________________________ By: _________________________
Name: [ ] Name: [ ]
Title: [ ] Title: [ ]
[SEAL]
Attest:
By: _________________________ By: _________________________
Name: Name:
Title: Title:
EXHIBIT B
[Form of Right Certificate]
-------------------------
Certificate No. R- _______Rights
NOT EXERCISABLE AFTER [ ], [2011] OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]/2/
WESTAR INDUSTRIES, INC.
Right Certificate
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 [ ], [2001] (the "Rights Agreement") between
Westar Industries, Inc., a Kansas corporation (the "Company"), and [ ],
a [ ] [limited liability company/corporation] (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 City time)
on [ ], [2011] at the designated office of the Rights Agent, or its
successors as Rights Agent, in New York, New York, one one-hundredth of a
________________________________
2 The portion of the legend in brackets shall be inserted only if applicable.
B-1
fully paid nonassessable share of the Series A Junior Participating Preferred
Stock, without par value (the "Preferred Stock"), of the Company, at a purchase
price of $[ ] per one one-hundredth of a share (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase and related certificate duly executed, along with a
signature guarantee and such other and further documentation as the Rights Agent
may reasonably request. The number of Rights evidenced by this Right Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the number
and Purchase Price as of [ ], 2001, based on the Preferred Stock of the
Company as constituted at such date.
Upon the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who after such transfer, became an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Triggering Event.
Notwithstanding anything herein to the contrary, prior to the
date of the final separation of Western Resources, Inc.'s ("Western Resources")
electric utilities from the Company (the "Final Separation"), neither Western
Resources nor any of its Affiliates or Associates is an "Acquiring Person" and
no "Shares Acquisition Date" or "Distribution Date" has occurred or shall occur
as a result of the consummation of the transactions contemplated under the Final
Separation.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock (or, in certain circumstances,
common stock and/or other securities) which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events, including Triggering Events
(as such term is defined in the Rights Agreement).
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 above-mentioned office of the
Rights Agent, and at the executive offices of the Company.
B-2
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent, along
with a signature guarantee and such other and further documentation as the
Rights Agent may reasonably request, 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 one one-hundredths
of a share of Preferred Stock as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, along with a signature guarantee and
such other and further documentation as the Rights Agent may reasonably request,
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be (i) redeemed by the Company at a redemption
price of $.0l per Right or (ii) exchanged by the Company in whole or in part for
shares of common stock or Preferred Stock.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of a share of Preferred Stock), 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
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
B-3
CERTIFICATE
-----------
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of , 20[ ].
[SEAL]
ATTEST: WESTAR INDUSTRIES, INC.
By: By:
-------------------------- --------------------------
Name: Name:
Title: Title:
Countersigned:
[ ],
as Rights Agent
By:
---------------------------------
Authorized Signature
Date:
B-4
[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 Certificates.)
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 commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-5
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ________, ____
--------------------------------------------
Signature
Signature Guaranteed:
---------------------------------------------------------
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-6
NOTICE
------
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.
B-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To Westar Industries Inc.:
The undersigned hereby irrevocably elects to exercise
_________ Rights represented by this Right Certificate to purchase the shares of
the Preferred Stock issuable upon the exercise of such Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of:
Please insert social security or
other taxpayer identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
B-8
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 taxpayer identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Dated: ________, ____
--------------------------------------------
Signature
Signature Guaranteed:
---------------------------------------------------------
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-9
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ________, ____
-----------------------------------
Signature
B-10
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-11
EXHIBIT C
Summary of Rights To Purchase Preferred Stock
---------------------------------------------
On [ ], 2001 the Board of Directors of Westar
Industries, Inc. declared a dividend distribution of one Right for each
outstanding share of Common Stock, $.01 par value (the "Common Stock"), of the
Company. The distribution was payable on [ ], 2001 (the "Record Date")
to the stockholders of record on the Record Date. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock (the "Preferred Stock"), at a
price of $[ ] per one one-hundredth share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in the Rights
Agreement between the Company and the Rights Agent.
Until the earlier to occur of (i) ten calendar days following
the date (the "Shares Acquisition Date" of public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person" (which term
shall not include, prior to the date of the final separation of Western
Resources, Inc.'s ("Western Resources") electric utilities from the Company (the
"Final Separation"), Western Resources or any of its respective "Affiliates" and
"Associates" which may otherwise become Acquiring Persons solely by reason of
the consummation of the transactions contemplated under the Final Separation))
acquired, or obtained the right to acquire, beneficial ownership of Common Stock
or other voting securities ("Voting Stock") that have [15]% or more of the
voting power of the outstanding shares of the Voting Stock (a "Substantial
Block") or (ii) ten calendar days following the commencement or announcement of
an intention to make a tender offer or exchange offer if, upon consummation
thereof, such person would be an Acquiring Person (the earlier of such dates
being called the "Distribution Date", the Rights will be evidenced with respect
to any of the Company's Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificates. A Person shall not be deemed the
beneficial owner of a Substantial Block if such person, together with all
affiliates and associates of such person, (a) beneficially own less than 20% of
the outstanding shares of Common Stock, (b) acquired all of such shares without
the intention of effecting control of the Company, and (c) dispose of enough
shares within ten calendar days of having acquired a Substantial Block such that
they would no longer beneficially own [15]% or more of the outstanding shares of
Common Stock. The Rights Agreement provides that, until the Distribution Date,
the Rights will be transferred with and only with the Company's Common Stock.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
new Common Stock certificates issued after the Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any of
the Company's Common Stock certificates outstanding as of the Record Date will
also constitute the transfer of the Rights associated
C-1
with the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Company's
Common Stock as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on [ ], [2011] unless earlier
redeemed or exchanged by the Company as described below.
In the event that (i) the Company is the surviving corporation
in a merger with an Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of more than 10% of the
then outstanding shares of Common Stock (except pursuant to an offer for all
outstanding shares of Voting Stock which the Board of Directors of the Company
determines to be fair to and otherwise in the best interests of the Company and
its shareholders), (iii) an Acquiring Person engages in one or more
"self-dealing" transactions as set forth in the Rights Agreement, or (iv) during
such time as there is an Acquiring Person, an event occurs which results in such
Acquiring Person's ownership interest being increased by more than 1% (e.g., a
reverse stock split), at any time following the Distribution Date, each holder
of a Right will thereafter have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction (other than a merger described in the immediately
preceding paragraph or a merger which follows an offer described in the
immediately preceding paragraph), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
which previously have been annulled and voided as set forth above) shall
thereafter have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the Exercise Price of the
Right. The events set forth in this paragraph and in the preceding paragraph are
referred to as the "Triggering Events."
The Purchase Price payable, and the number of shares of
Preferred Stock (or Common Stock, cash, property or other securities, as the
case may be) issuable upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for shares of the Preferred Stock or convertible securities at less
than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or
C-2
retained earnings or dividends payable in the Preferred Stock) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares will be issued (other than
fractional shares which are integral multiples of one one-hundredth of a share
of Preferred Stock) and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Preferred Stock on the last trading date prior
to the date of exercise.
At any time after there is an Acquiring Person, the Board of
Directors may exchange the Rights (other than Rights owned by the Acquiring
Person which shall have become null and void), in whole or in part, at an
exchange ratio of one share of Common Stock (or a fraction of a share of
Preferred Stock having the same market value) per Right (subject to adjustment).
At any time prior to 5:00 P.M. New York City time on the tenth
calendar day following the Shares Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.0l per Right (the "Redemption
Price"). Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make announcement thereof, and
upon such action, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Preferred Stock will rank junior to all series of the
Company's cumulative preferred stock with respect to payment of dividends and as
to distribution of assets in liquidation. Each share of Preferred Stock will
have a quarterly dividend rate per share equal to the greater of $1.00 or 100
times the per share amount of any dividend (other than a dividend payable in
shares of Common Stock or a subdivision of the Common Stock) declared from time
to time on the Common Stock, subject to certain adjustments. The Preferred Stock
will not be redeemable. In the event of liquidation, the holders of the
Preferred Stock will be entitled to receive a preferred liquidation payment per
share of $[ ] (plus accrued and unpaid dividends) or, if greater, an amount
equal to 100 times the payment to be made per share of Common Stock, subject to
certain adjustments. Generally, each share of Preferred Stock will vote together
with the Common Stock and any series of cumulative preferred or preferred stock
entitled to vote in such manner and will be entitled to 100 votes, subject to
certain adjustments. In the event of any merger, consolidation, combination or
other transaction in which shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or other property, each share of
Preferred Stock will be entitled to receive 100 times the aggregate amount of
stock, securities, cash and/or other property, into which or for which
C-3
each share of Common Stock is changed or exchanged, subject to certain
adjustments. The foregoing dividend, voting and liquidation rights of the
Preferred Stock are protected against dilution in the event that additional
shares of Common Stock are issued pursuant to a stock split or stock dividend or
distribution. Because of the nature of the Preferred Stock's dividend, voting,
liquidation and other rights, the value of the one one-hundredth of a share of
Preferred Stock purchasable with each Right is intended to approximate the value
of one share of Common Stock.
Other than those provisions relating to the principal economic
terms of the Rights and the time period within which to redeem the Rights, any
of the provisions of the Rights Agreement may be amended by the Board of
Directors of the Company prior to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may be amended by the Board of
Directors of the Company in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or, with
certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
So long as the Rights are attached to the Common Stock, the
Company will issue one Right with each new share of Common Stock so that all
such shares will have attached Rights. [ ] shares of Preferred Stock have been
reserved for issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person who attempts to acquire the Company
without conditioning his offer on a substantial number of Rights being acquired.
The Rights will not affect a transaction approved by the Company prior to the
existence of an Acquiring Person, because the Rights can be redeemed before the
consummation of such transaction.
C-4
