____________________
Rights Agreement
____________________
by and between
II-VI INCORPORATED
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
as Rights Agent
____________________
Dated as of August 11, 2001
____________________
TABLE OF CONTENTS
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Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 8
Section 3. Issue of Rights Certificates 8
Section 4. Form of Rights Certificates 11
Section 5. Execution, Countersignature and Registration 13
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed,
Lost Rights or Stolen Certificates 14
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 15
Section 8. Cancellation and Destruction of Rights Certificates 19
Section 9. Reservation and Availability of Capital Stock 20
Section 10. Preferred Stock Record Date 22
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights 23
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 39
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power 40
Section 14. Fractional Rights and Fractional Shares 44
Section 15. Rights of Action 46
Section 16. Agreement of Rights Holders 46
Section 17. Rights Certificate Holder Not Deemed a Shareholder 48
Section 18. Concerning the Rights Agent 48
Section 19. Merger or Consolidation or Change of Name of
Rights Agent 49
Section 20. Duties of Rights Agent 50
Section 21. Change of Rights Agent 53
Section 22. Issuance of New Rights Certificates 55
Section 23. Redemption and Termination 55
Section 24. Notice of Certain Events 57
Section 25. Notices 59
Section 26. Supplements and Amendments 60
Section 27. Successors 61
Section 28. Determinations and Actions by the Board of
Directors, etc. 61
Section 29. Benefits of this Agreement 62
Section 30. Severability 62
Section 31. Governing Law 63
Section 32. Counterparts 63
Section 33. Descriptive Headings 63
Exhibit A Form of resolutions establishing the Series
One Preferred Stock/Statement with Respect to Shares
Exhibit B Form of Rights Certificate
Exhibit C Summary of Rights to Purchase Preferred Stock
RIGHTS AGREEMENT
Rights Agreement, dated as of August 11, 2001 (the
"Agreement"), between II-VI INCORPORATED, a Pennsylvania corporation
(the "Company"), and American Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").
WITNESSETH
WHEREAS, on August 11, 2001 (the "Rights Declaration Date"),
the Company's Board of Directors authorized and declared a distribution
of one Right for each share of Common Stock, no par value, of the
Company (the "Common Stock") outstanding at the close of business on
September 12, 2001 (the "Record Date"), and has authorized the issuance
on the close of business on September 12, 2001 of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock of the Company
issued between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date or the Expiration
Date, whichever shall occur first, each Right initially representing the
right to purchase one one-hundredth (1/100) of a share of Series One
Preferred Stock of the Company having the rights, and preferences set
forth in the Statement With Respect to Shares in substantially the form
attached hereto as Exhibit A (the "Statement With Respect to Shares"),
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein and intending to be legally bound
hereby, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of outstanding shares of Voting Stock
representing twenty percent (20%) or more of the Voting Power, but shall
not include (i) the Company, any Subsidiary of the Company, any employee
benefit plan, employee stock or deferral plan or director compensation
or deferral plan of the Company or of any Subsidiary of the Company, any
Person, trust or other entity organized, appointed or established by the
Company or holding Voting Stock for or pursuant to the terms of any such
plan, (ii) Xxxx X. Xxxxxxx, Ph.D. ("Xxxxxxx") or any Affiliate or
Associate of Xxxxxxx (but only to the extent that Xxxxxxx and his
Affiliates and Associates beneficially own outstanding shares of Voting
Stock representing less than fifty percent (50%) of the Voting Power) or
(iii) any Person, together with Affiliates and Associates of such
Person, who or which would be an Acquiring Person solely by reason of
(A) being the Beneficial Owner of Common Stock of the Company, the
beneficial ownership of which was acquired by such Person (and the
Affiliates and Associates of such Person) pursuant to any action or
transaction, or series of related actions or transactions, approved by
the Board of Directors of the Company, upon the affirmative vote of a
majority of the Disinterested Directors, prior to the Distribution Date
or (B) a reduction in the number of issued and outstanding shares of
Common Stock of the Company pursuant to a transaction or series of
related transactions approved by the Board of Directors of the Company,
upon the affirmative vote of a majority of the Disinterested Directors;
provided, however, that in the event that such Person described in this
clause (iii) does not become an Acquiring Person by reason of clause (A)
or (B) of this clause (iii), such Person nonetheless shall become an
Acquiring Person in the event that such Person, together with all
Affiliates and Associates of such Person, thereafter acquires beneficial
ownership of any additional shares of Common Stock of the Company
(unless the acquisition of such beneficial ownership would not result in
such Person becoming an Acquiring Person by reason of clause (A) or (B)
of this clause (iii) without regard to this proviso) and thereafter such
Person, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 20% or more of the Voting Power.
(b) "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 of this Agreement (the "Exchange
Act").
(c) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights,
exchange rights, rights (other than Rights issuable under
this Agreement), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange thereunder, or (B)
securities issuable upon exercise of the Rights at any time
prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after
the occurrence of a Triggering Event which Rights were
acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) in connection with an adjustment
made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of
(as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding (A)
arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable provisions of the General
Rules and Regulations under the Exchange Act and (B) is not
also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any
voting securities of the Company.
Notwithstanding the foregoing, nothing contained in this paragraph (c)
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 through such Person's participation in a bona
fide firm commitment underwriting pursuant to an underwriting agreement
with the Company for such period of time as shall be determined by the
Board of Directors of the Company.
(d) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of
New York or the Commonwealth of Pennsylvania are authorized or obligated
by law or executive order to close.
(e) "Close of Business" on any given date shall mean
5:00 P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, no
par value, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest aggregate voting power, or the
equity securities or other equity interest having power to control or
direct the management, of such Person.
(g) "Controlling Person" shall have the meaning
assigned to such term from time to time by Section 2543 of the
Pennsylvania Business Corporation Law of 1988, as it may hereafter be
amended.
(h) "Disinterested Director" shall mean (i) any
member of the Board of Directors of the Company, while such Person is a
member of the Board, who is not an officer or employee of the Company or
any of its Subsidiaries and who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a nominee or a
representative of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the time that the
Acquiring Person became an Acquiring Person, or (ii) any Person who
subsequently becomes a member of the Board to fill a vacancy created by
an increase in the size of the Board, while such Person is a member of
the Board, who is not an officer or employee of the Company or any of
its Subsidiaries and who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a nominee or representative of an
Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election by the shareholders or election to the Board is
recommended or approved by a majority of the Disinterested Directors
then on the Board or (iii) any successor of a Disinterested Director who
is not an officer or employee of the Company or any of its Subsidiaries
and who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a nominee or representative of an Acquiring Person
or of any such Affiliate or Associate, if such Person's nomination for
election by the shareholders or election to the Board is recommended or
approved by a majority of the Disinterested Directors then on the Board.
(i) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated association or other entity and shall
include any successor (by merger or otherwise) of such entity.
(j) "Preferred Stock" shall mean shares of Series
One Preferred Stock, no par value, of the Company. Any reference in
this Agreement to Preferred Stock shall be deemed to include any
authorized fraction of a share of Preferred Stock, unless the context
otherwise requires.
(k) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii)(A) or (B) hereof.
(l) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(m) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to
Section 13(d) under the Exchange Act (as defined in Section 1(b) above))
by the Company or an Acquiring Person that an Acquiring Person has
become an Acquiring Person.
(n) "Subsidiary" shall mean, with reference to any
Person, a Person, a majority of the total outstanding Voting Power of
which is beneficially owned, directly or indirectly by such other Person
or by one or more Subsidiaries of such other Person, or otherwise
controlled by such other Person.
(o) "Triggering Event" shall mean any
Section 11(a)(ii) Event or Section 13 Event.
(p) "Voting Power" shall mean, at any particular
point in time, the total number of votes of the then outstanding shares
of capital stock of a Person that all holders thereof would be entitled
to cast in an annual election of the directors of such Person, voting
together as a single class (if such Person is a corporation), or to
participate in the management and control of such Person (if such Person
is not a corporation).
(q) "Voting Stock" shall mean the Common Stock of
the Company and all other equity securities of the Company that would
entitle the holders thereof to cast votes in an election of directors of
the Company.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common Stock)
in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time
appoint one or more co-Rights Agents as it may deem necessary or
desirable (the term "Rights Agent" being used herein to refer,
collectively, to the Rights Agent together with any such co-Rights
Agents). In the event the Company appoints one or more co-Rights
Agents, the respective duties of the Rights Agent and any co-Rights
Agent shall be as the Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the Close of Business
on the tenth (10th) day after the Stock Acquisition Date (or, if the
tenth day after the Stock Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date), (ii) the Close of
Business on the tenth (10th) Business Day after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan, employee stock or deferral
plan or director compensation or deferral plan of the Company or of any
Subsidiary of the Company, or any Person, trust or other entity
organized, appointed or established by the Company or holding Voting
Stock for or pursuant to the terms of any such plan) is first published
or sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of shares of Voting
Stock representing twenty percent (20%) or more of the Voting Power,
(iii) the Close of Business on the date on which any Triggering Event
occurs, or (iv) the Close of Business on the tenth (10th) day after any
Person becomes a Controlling Person (the earliest of (i), (ii), (iii) or
(iv) 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
Common Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights, including the right to
receive rights certificates as herein provided, will be transferable
only in connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Company will notify the Rights Agent
thereof, the Rights Agent will send by first-class, insured, postage-
prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Distribution Date, at the address of such holder
shown on the records of the Company's transfer agent, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of
the Rights Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights, 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's transfer
agent. With respect to certificates for the Common Stock outstanding as
of the Record Date, until the Distribution Date, the Rights associated
with the Common Stock represented by such certificates 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 earlier of the Distribution Date or the Expiration
Date (as such term is defined in Section 7 hereof), the surrender for
transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares
of Common Stock which are issued after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date. Certificates
issued for shares of Common Stock after the Record Date (including,
without limitation, upon transfer or exchange of outstanding shares of
Common Stock), but prior to the earlier of the Distribution Date or the
Expiration Date, shall also be deemed to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between II-VI Incorporated, (the "Company") and
American Stock Transfer & Trust Company (the "Rights Agent")
dated as of August 11, 2001 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. The Company will mail or cause to be
mailed to the holder of this certificate a copy of the
Rights Agreement without charge after receipt of a written
request therefor addressed to its corporate Secretary at its
principal executive offices. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associates thereof (as such terms are
defined in the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent holder, may
become null and void. Rights will expire on September 12,
2011 unless earlier redeemed or otherwise extended as
described in the Rights Agreement.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates. In the event
that the Company purchases or acquires any Common Stock of the Company
after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock of the Company shall be deemed
cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock of the Company
which are no longer outstanding. The preceding sentence shall not apply
to Rights associated with Common Stock of the Company held by any
employee benefit plan, employee stock or deferral plan or director
compensation or deferral plan of the Company or any Subsidiary of the
Company, or any trust or other entity organized, appointed, established
or holding Common Shares for or pursuant to the terms of any such plan.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase Preferred Stock and of assignment to be printed on
the reverse thereof) shall each be substantially in the form set forth
in 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, 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 applicable stock exchange or the
National Association of Securities Dealers, Inc., or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof,
the Rights Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths (1/100) of a share of
Preferred Stock as shall be set forth therein at the price set forth
therein (such exercise price per one one-hundredth of a share being
hereinafter called the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Notwithstanding any other provision of this
Agreement, any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests
in such Acquiring Person or to any Person with whom such Acquiring
Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in the Rights Agreement.
The failure of any Rights Certificate to be legended as set
forth in this Section 4(b) shall not be deemed to waive the voiding of
any Rights pursuant to Section 7(e).
Section 5. Execution, Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer or Treasurer, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or the
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by a
duly authorized officer of the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company
who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates, and the Certificate Number and the date of each of the
Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-hundredths (1/100) of a share of Preferred
Stock (or, following a Triggering Event, Common Stock, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a valid Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate
of like tenor to the Rights Agent for countersignature and delivery to
the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof and except as
otherwise provided in this Agreement, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 23(a) hereof) or any portion thereof at
any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with
respect to the total number of one one-hundredths (1/100) of a share of
Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of (i) the Close of Business on September 12, 2011
unless otherwise extended (the "Final Expiration Date"), or (ii) the
time at which the Rights are redeemed as provided in Section 23 hereof
(the earlier of (i) and (ii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one one-hundredth
(1/100) of a share of Preferred Stock pursuant to the exercise of a
Right shall initially be $100, and shall be subject to adjustment from
time to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below (the "Purchase Price").
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase
and the certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price per one one-hundredth
(1/100) of a share of Preferred Stock (or other shares, securities, cash
or other assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) hereof, thereupon as soon as practicable
(i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for
such shares) certificates for the total number of one one-hundredths
(1/100) of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent under a depositary agreement,
requisition from the depositary agent depositary receipts representing
such number of one one-hundredths (1/100) of a share 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 will direct
the depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof, (iii) as
soon as practicable 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 Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) when appropriate,
after receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made (x) in cash or by certified bank
check or money order, in lawful money of the United States of America,
payable to the order of the Company, or (y) if the Company shall in its
sole discretion so consent, by delivery of a certificate or certificates
(w/appropriate stock powers executed in blank attached thereto)
evidencing a number of shares of Common Stock equal to the then Purchase
Price divided by the closing price (as determined pursuant to Section
11(d) hereof) per share of Common Stock on the Trading Day immediately
preceding the date of such exercise. In the event that the Company is
obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary
so that such other securities, cash and/or other property are available
for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered
to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person, or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person
or to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(e), shall
become null and void without any further action and no holder of such
Rights (including any subsequent holder) shall have any rights
whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to
any holder of Rights Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person
or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder of
any Rights Certificate upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split-up, combination or exchange shall, if
surrendered to the Company or any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if surrendered
to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the
Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of 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
held in its treasury), free from preemptive rights or any right of first
refusal, the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement including Section 11(a)(iii) hereof,
will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange or with a
registered securities association, the Company covenants and agrees to
use its reasonable best efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange or with such association upon official notice
of issuance upon such exercise.
(c) The Company shall use its reasonable best
efforts to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights
has been determined in accordance with Section 11(a)(iii) hereof, or as
soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Securities Act of 1933 (the
"Act"), with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities, and (B) the date of the expiration of the Rights.
The Company will also take such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in
any jurisdiction unless the requisite qualification 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 one one-
hundredths (1/100) of a share of 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 federal and state transfer
taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a number
of one one-hundredths (1/100) of a share of 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 to pay any transfer
tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery
of a number of one one-hundredths (1/100) of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) in respect
of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one one-hundredths (1/100) of a
share of Preferred Stock (or Common Stock and/or other securities, as
the case may be) in a name other than that of the registered holder upon
the exercise of any Rights until such tax shall have been paid (any such
tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-hundredths (1/100) of
a share 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
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 Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase
Price (and all applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
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 (fractional or
otherwise) 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
Rights Certificate shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend, or
make a distribution, on the outstanding Preferred Stock
payable in shares of Preferred Stock, (B) subdivide (by
stock split or otherwise) or split the outstanding Preferred
Stock into a larger number of shares, (C) combine (by a
reverse stock split or otherwise) the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification or change
of the outstanding Preferred Stock (including any such
reclassification or change in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such
event, 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 distribution 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
Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books
of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend or distribution, 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) hereof, 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) hereof.
(ii) 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, shall merge into the Company or otherwise
combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall
remain outstanding and unchanged, or
(B) any Person (other than the Company,
any Subsidiary of the Company, any employee benefit
plan, employee stock or deferral plan or director
compensation or deferral plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for
or pursuant to the terms of any such plan), alone or
together with its Affiliates and Associates, shall, at
any time after the Rights Declaration Date, become the
Beneficial Owner of shares of Voting Stock
representing twenty percent (20%) or more of the
Voting Power of the Company, other than (i) pursuant
to any transaction set forth in Section 13(a) hereof
or (ii) solely by reason of (x) being the Beneficial
Owner of Common Stock of the Company, the beneficial
ownership of which was acquired by such Person (and
the Affiliates and Associates of such Person) pursuant
to any action or transaction, or series of related
actions or transactions, approved by the Board of
Directors of the Company, upon the affirmative vote of
a majority of the Disinterested Directors, or (y) a
reduction in the number of issued and outstanding
shares of Common Stock of the Company pursuant to a
transaction or series of related transactions approved
by the Board of Directors of the Company, upon the
affirmative vote of a majority of the Disinterested
Directors; provided, however, that in the event that a
Person, together with its Affiliates and Associates,
shall not be deemed to have become the Beneficial
Owner of shares of Voting Stock representing twenty
percent (20%) or more of the Voting Power for the
purposes of this Section 11(a)(ii)(B) by reason of
clause (x) or (y) of this Section 11(a)(ii)(B)(ii)
such Person nonetheless shall be deemed to have become
the Beneficial Owner of shares of Voting Stock
representing twenty percent (20%) or more of the
Voting Power in the event that such Person, together
with all Affiliates and Associates of such Person,
thereafter acquires Beneficial Ownership of any
additional shares of Common Stock of the Company
(unless the acquisition of such Beneficial Ownership
would not result in such Person becoming the
Beneficial Owner of such twenty percent (20%) or more
of the Voting Power by reason of clause (x) or (y) of
this Section 11(a)(ii)(B)(ii) without regard to this
proviso) and thereafter such Person, together with all
Affiliates and Associates of such Person, shall be the
Beneficial Owner of shares of Voting Stock
representing twenty percent (20%) or more of the
Voting Power,
then, promptly following 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 an event described in Section 11(a)(ii)(A)
hereof, proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of a number of one one-hundredths (1/100) of a share of Preferred Stock,
such number of shares of 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 (1/100) of a share of Preferred
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to
as the "Purchase Price" for each Right and for all purposes of this
Agreement) by fifty percent (50%) of the current market price
(determined pursuant to Section 11(d) hereof) per share of Common Stock
on the date of such first occurrence (such number of shares hereinafter
referred to as the "Adjustment Shares").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's articles
of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights
are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of
this Section 11(a), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities
of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value
as shares of Common 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 right 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. In
the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 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.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants (other than the Rights) to
all holders of Preferred Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar days
after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or
equivalent preferred stock at a price per share of Preferred Stock or
per share of equivalent preferred stock (or having a conversion price
per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/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 the denominator of which 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 may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock or
equivalent 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 or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for
a distribution to all holders of Preferred Stock or equivalent 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, cash (other than a
regular periodic cash dividend), assets (other than a dividend payable
in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock and the denominator of which shall be such
current market price (as determined pursuant to Section 11(d) hereof)
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 be adjusted
to be the Purchase Price which would have been 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) hereof, the "current market price" per
share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common
Stock for the thirty (30) consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date,
and for purposes of computations made pursuant to
Section 11(a)(iii) hereof, the "current market price" per
share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common
Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event
that the current market price per share of the Common Stock
is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common
Stock, and prior to the expiration of the requisite thirty
(30) Trading Day or ten (10) Trading Day period, as set
forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such
case, the "current market price" shall be properly adjusted
to take into account ex-dividend trading. The closing price
for each Trading Day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated
transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange
or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System ("Nasdaq") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock
are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share
as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be
conclusive for all purposes.
(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 one hundred
(100) (as such number may be appropriately 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-hundredth
(1/100) of a share of Preferred Stock shall be equal to the
"current market price" of one share of Preferred Stock
divided by one hundred (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 one percent
(1%) in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent
or to the nearest ten-thousandth of a share of Common Stock or other
share or ten-thousandth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) 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)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than 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 Preferred Stock contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
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 (1/100) 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 Sections 11(b)
and (c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths (1/100) of a
share of Preferred Stock (calculated to the nearest one-millionth)
obtained by (i) multiplying (x) the number of one one-hundredths (1/100)
of a share covered by a Right immediately prior to this adjustment, by
(y) the Purchase Price in effect immediately prior to such adjustment of
the Purchase Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of one one-hundredths (1/100) of a
share of Preferred Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-hundredths (1/100) of a
share 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 one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least ten (10) days later than the date of
the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed
to holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths (1/100) of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth (1/100) of a share and the
number of one one-hundredth of a share which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if
any, of the number of one one-hundredths (1/100) 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 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
until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of one one-hundredths
(1/100) of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths (1/100) of a share 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
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment the Board of Directors of the Company shall determine to
be advisable in order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more
than fifty percent (50%) of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if
(x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the Person who
constitutes the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if
at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share
of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Preferred Stock and the Common
Stock, a copy of such certificate, and (c) mail or cause to be mailed a
summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, following the Stock
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(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common
Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than
fifty percent (50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons (other than
the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof), then, and in each
such case, proper provision shall be made so that: (i) each holder of a
valid Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to
the result obtained by (1) multiplying the then current Purchase Price
by the 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 (1/100) 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 (2) 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 fifty percent (50%) of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common
Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a),
the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such
merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or
consolidation; and
(ii) in the case of any transaction described
in clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two (2) or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value.
(c) The Company shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of
this Section 13, the Principal Party will
(i) prepare and file a registration statement
under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with
a prospectus at all times meeting the requirements of the
Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of
a Section 11 (a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in
Section 13(a).
(d) In the event that the Rights become exercisable
under Section 13(a), the Company, by action of a majority of the Board
of Directors, may authorize that the Rights either (i) will only be, or
(ii) may, at the option of the Principal Party be, exercisable for, in
either case fifty percent (50%) of the number of shares of Common Stock
of the Principal Party that would otherwise be purchasable under
Section 13(a), in consideration of the surrender to the Principal Party,
as the successor to the Company under Section 13(a)(ii), of the Rights
so exercised and without other payment of the Purchase Price. Rights
exercised under this Section 13(d) shall be deemed to have been
exercised in full and shall be cancelled.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided
in Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights Certificates with
regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be the last 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 automated quotation system
then in use or, if the Rights are listed or admitted to trading on the
New York Stock Exchange, 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 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
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 may, but shall not be required to,
issue fractions of shares of Preferred Stock upon exercise of the Rights
or to distribute certificates which evidence fractional shares of
Preferred Stock. In lieu of fractional shares of Preferred Stock, the
Company may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one one-
hundredth (1/100) of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth (1/100) of
a share of Preferred Stock shall be one one-hundredth (1/100) of the
closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) 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
Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one (1) share of Common Stock. For purposes of this
Section 14(c), the current market value of one (1) 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 provided by
this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders
of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the earlier of the Distribution Date
and the Expiration Date, the Rights will be transferable only in
connection with the transfer of Common Stock; provided, however, that no
transfer of Common Stock to a Controlling Person pursuant to the
Pennsylvania Business Corporation Law of 1988 SS 2541 et seq. shall
effect a transfer of the Rights;
(b) after the Distribution Date, the Rights
Certificates are transferable, subject to Section 7(e) hereof, only on
the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the person in whose
name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use
its reasonable best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the
holder of the number of one one-hundredths (1/100) of a share 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 Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such,
any of the rights of a shareholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in
Section 24 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements
incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for any
action taken, suffered or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock
or Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
business or stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that
such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name
of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer or
Treasurer of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or Preferred Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this
Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer or Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and
freely as though it were not Rights Agent under this Agreement. Nothing
herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to
the Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or
in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates
an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed to
the Company, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who
shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of any other state
of the United States so long as such corporation is authorized to
conduct a stock transfer or corporate trust business in the State of New
York, in good standing, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time
of its appointment as Rights Agent a combined capital and surplus of at
least Fifty Million Dollars ($50,000,000) or (b) an Affiliate controlled
by a corporation described in clause (a). After appointment, the
successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the 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 Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights Certificate shall
be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the Close of
Business on the tenth (10th) day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the
Record Date, the Close of Business on the tenth (10th) day following the
Record Date), or (ii) the Final Expiration Date, order the redemption of
all but not fewer than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or distribution or
similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price") and the
Company, at its option, may pay the Redemption Price either in cash or
Common Stock or other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at least
equivalent in value to the Redemption Price; provided, however, that if,
following the occurrence of a Stock Acquisition Date and following the
expiration of the right of redemption hereunder but prior to any
Triggering Event, (x) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock
in one transaction, or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did
not result in the occurrence of a Triggering Event such that such Person
is not thereafter a Beneficial Owner of shares of Voting Stock
representing more than twenty percent (20%) of the Voting Power, and
(y) there are no other Persons, immediately following the occurrence of
the event described in clause (x), who are Acquiring Persons, then the
right of redemption shall be reinstated and thereafter be subject to the
provisions of this Section 23. 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.
(b) 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 so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each holder's last
address as it appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer
agent for the Common Stock. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
Any notice which is mailed in the manner herein provided shall be
conclusively deemed to have been given, whether or not the holder
receives the notice. In any case, failure to give such notice by mail,
or any defect in the notice, to any particular holder of Rights shall
not affect the sufficiency of the notice to other holders of Rights.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a regular
periodic cash dividend), or (ii) 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 (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding shares of Preferred Stock), or (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other
transfer), in one transaction or a series of related transactions, of
more than fifty percent (50%) of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the
holders of the shares of 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 (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of 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 shares of Preferred Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur,
then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, a notice of the
occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to Preferred
Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of
any Rights 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:
II-VI Incorporated
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Treasurer
with copies to:
Xxxxxxxx Ingersoll Professional Corporation
One Oxford Centre
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
and
Xxxxxxxx, German & Xxxxxx, P. C.
Free Markets Center, 35th Floor
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. German, Esq.
Subject to the provisions of Section 21, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of
any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxx Xxxxxx
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights Certificate
(or, if prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books
of the transfer agent for the Common Stock.
Section 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 26, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Agreement
(including, without limitation, the date on which the Distribution Date
shall occur, the time during which the Rights may be redeemed or any
provision of the Statement With Respect to Shares with respect to the
Preferred Stock) without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution
Date, and subject to the penultimate sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs,
supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) to
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 Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person), (iv) to suspend the effectiveness of Section 7(e), or (v) to
shorten or lengthen any time period hereunder; provided, this Agreement
may not be supplemented or amended to lengthen, pursuant to clause (v)
of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable or (B) any
other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits
to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which (i) changes the Redemption
Price, the Purchase Price or the number of one one-hundredths (1/100)
of a share of Preferred Stock for which a Right is exercisable or (ii)
shortens the Final Expiration Date. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 28. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock or of any other class of capital
stock outstanding at any particular time, including for purposes of
determining the particular percentage of outstanding shares of Common
Stock or of Voting Power of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Disinterested
Directors) shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Disinterested Directors) or to the Company, or as may
be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to
supplement or amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause
(y) below, all omissions with respect to the foregoing) which are done
or made by the Board (with, where specifically provided for herein, by
the concurrence of the Disinterested Directors) in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y) not subject the
Board or the Disinterested Directors to any liability to the holders of
the Rights.
Section 29. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 30. 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 hereof shall be reinstated and shall not expire
until the Close of Business on the tenth (10th) day following the date
of such determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the Commonwealth of Pennsylvania and for
all purposes shall be governed by and construed in accordance with the
laws of such Commonwealth applicable to contracts made and to be
performed entirely within such Commonwealth.
Section 32. 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 33. 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.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested as of the day and year first above
written.
Attest: II-VI INCORPORATED
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxxx Name: Xxxx X. Xxxxxxx
Title: Treasurer Title: Chairman and Chief
Executive Officer
Attest: AMERICAN STOCK TRANSFER &
TRUST COMPANY
as Rights Agent
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Assistant Secretary Title: Vice President
Microfilm Number
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Secretary of the Commonwealth
STATEMENT WITH RESPECT TO SHARES
OF
SERIES ONE PREFERRED STOCK
OF
II-VI INCORPORATED
Pursuant to Section 1522 of the Business Corporation Law
of the Commonwealth of Pennsylvania
In compliance with the requirements of SS 1522(b) and (c) of the
Business Corporation Law of the Commonwealth of Pennsylvania (relating
to statement with respect to shares), the undersigned corporation,
desiring to state the designation and voting rights, preferences,
limitations, and special rights, if any, of a class or series of its
shares, hereby states that:
1. The name of the corporation is II-VI Incorporated (the
"Corporation").
2. The resolution amending the Articles under 15 Pa.C.S.
S 1522(b) (relating to divisions and determinations by the board), set
forth in full, is as follows:.
RESOLVED that pursuant to the authority conferred upon
the Board of Directors by Article 5.3 of the Corporation's
Articles of Incorporation, as amended and restated, there is
hereby established a series of the Preferred Stock of the
Corporation with the designation and relative rights and
preferences thereof to be as follows:
Section 1. Designation. The shares of such series
shall be designated as "Series One Preferred Stock" and the number
of shares constituting such series shall initially be Three
Hundred Thousand (300,000). Shares of this series shall be issued
pursuant to the exercise of rights to purchase Series One
Preferred Stock distributed to the holders of Common Stock, no par
value (the "Common Stock"), of the Corporation.
Section 2. Dividends and Distributions. Subject to
the rights and preferences of the holders of any shares of any
class or series of Preferred Stock ranking senior as to dividends
to this Series One Preferred Stock, as such may be established by
the Board of Directors, the holders of shares of Series One
Preferred Stock, in preference to the holders of Common Stock and
shares of stock ranking junior as to dividends to the Series One
Preferred Stock, shall be entitled to receive, when and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the 15th
day of September, December, March and June in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of
Series One Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to, subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends plus 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common
Stock, or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), paid on the Common Stock at
any time during the quarter year immediately preceding the quarter
year ending on the day immediately preceding such Quarterly
Dividend Payment Date. In the event the Corporation shall at any
time after August 11, 2001 (the "Rights Declaration Date") during
any quarter year immediately preceding the quarter year ending on
the day immediately preceding a Quarterly Dividend Payment Date
(i) declare any dividend on Common Stock payable in shares of
Common Stock, or (ii) subdivide the outstanding Common Stock or
combine the outstanding Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the
amounts to which holders of shares of Series One Preferred Stock
were entitled immediately prior to such event under the preceding
sentence shall be adjusted by multiplying each such amount by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Dividends shall begin to accrue and be cumulative on
outstanding shares of Series One Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue
of such shares of Series One Preferred Stock, unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series
One Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares
of Series One Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares
of Series One Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights.
(A) Each share of Series One Preferred Stock shall
entitle the holder thereof to 100 votes (and each one one-
hundredth of a share of Series One Preferred Stock shall entitle
the holder thereof to one vote) on all matters submitted to a vote
of the stockholders of the Corporation. In the event that the
Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then and in each such
event, the number of votes per share to which holders of shares of
Series One Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event, and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by
applicable law, the holders of shares of Series One Preferred
Stock and the holders of shares of Common Stock shall vote
together as one class for the election of directors of the
Corporation and on all other matters submitted to a vote of
stockholders of the Corporation.
(C) Except as provided herein or by applicable law,
holders of Series One Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
set forth herein) for authorizing or taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series One Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series One Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or as to assets) to the Series One Preferred
Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a
parity (either as to dividends or as to assets) with the
Series One Preferred Stock, except dividends paid ratably on
the Series One Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either
as to dividends or as to assets) to the Series One Preferred
Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or as to assets) to
the Series One Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series One Preferred Stock, or
any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series One Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under Paragraph (A) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series
One Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of Series One Preferred Stock and may be reissued as part
of the same or a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
Subject to the rights and preferences of the holders of any shares
of any class or series of Preferred Stock ranking senior as to
assets to this Series One Preferred Stock, upon any involuntary or
voluntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or as to
assets) to the Series One Preferred Stock unless, prior thereto,
the holders of shares of Series One Preferred Stock shall have
received an amount per share equal to the Per Share Series One
Liquidation Preference. Following the payment of the full amount
of the Series One Liquidation Preference, holders of shares of
Common Stock shall receive the remaining assets to be distributed.
The "Per Share Series One Liquidation Preference"
shall be equal to the sum of (x) $100.00 plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, plus (y) the
Participation Preference. The "Participation Preference" is an
amount per each share of Series One Preferred Stock outstanding,
equal to the product of (A) the Excess Distribution Amount (as
hereinafter defined) times (B) a fraction the numerator of which
is 100 and the denominator of which is the sum of (i) the product
of 100 times the number of outstanding shares of Series One
Preferred Stock, plus (ii) the product of 100 times a fraction the
numerator of which is the number of outstanding shares of Common
Stock and the denominator of which is the Adjustment Number;
provided, however, if the foregoing computation results in a
negative number, then the Participation Preference shall be 0.
The "Excess Distribution Amount" is an amount equal to
the amount available for distribution to stockholders of the
Corporation after payment of all debts and liabilities less the
sum of (i) the liquidation preferences in respect of all shares of
Preferred Stock of the Corporation other than the Series One
Preferred Stock, (ii) the product of 100 times the number of
outstanding shares of Series One Preferred Stock, and (iii) the
product of the number of outstanding shares of Common Stock times
a fraction the numerator of which is 100 and the denominator of
which is the Adjustment Number.
The "Adjustment Number" shall initially be 100 and
shall be subject to adjustment as provided in this paragraph. In
the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted
by multiplying such Adjustment Number by a fraction the numerator
of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares
of Series One Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times
the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time (i) declare any dividend
on Common Stock payable in shares of Common Stock, or (ii)
subdivide the outstanding Common Stock or combine the outstanding
Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series One Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
Section 8. Redemption. The outstanding shares of
Series One Preferred Stock may be redeemed at the option of the
Board of Directors as a whole, but not in part, at any time, or
from time to time, at a cash price per share equal to (i) the
product of the Adjustment Number times the Average Market Value of
the Common Stock, plus (ii) all dividends which on the redemption
date have accrued on the shares to be redeemed and have not been
paid or declared and a sum sufficient for the payment thereof set
apart, without interest; provided, however, that if and whenever
any quarter-yearly dividend shall have accrued on the Series One
Preferred Stock which has not been paid or declared and a sum
sufficient for the payment thereof set apart, the Corporation may
not purchase or otherwise acquire any shares of Series One
Preferred Stock unless all shares of such stock at the time
outstanding are so purchased or otherwise acquired. The "Average
Market Value" is the average of the closing sale prices of the
Common Stock during the 30 day period immediately preceding the
date before the redemption date on Nasdaq or any system then in
use, or if no such quotations are available, the fair market value
of the Common Stock as determined by the Board of Directors in
good faith.
Section 9. Fractional Shares. Series One Preferred
Stock may be issued in fractions of a share which shall entitle
the holder, in proportion to such holder's fractional shares, to
exercise voting rights, if applicable, receive dividends,
participate in distributions and to have the benefit of all other
rights of holders of Series One Preferred Stock.
4. Said resolutions were adopted at a meeting of the Board of
Directors of the Corporation duly called and held on August 11, 2001, at
which meeting a quorum was present and acting throughout.
5. Said resolution shall be effective at the close of business on
September 12, 2001.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this
statement to be signed by a duly authorized officer thereof this ___ day
of _______________, 2001.
II-VI INCORPORATED
By:
Title:
EXHIBIT B
[Form of Rights Certificate]
Certificate No.____________ ________________Rights
NOT EXERCISABLE AFTER SEPTEMBER 12, 2011 (UNLESS OTHERWISE EXTENDED) OR
EARLIER IF REDEEMED BY THE CORPORATION. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $0.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. IF THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE ISSUED TO A PERSON WHO IS AN ACQUIRING PERSON OR AN
ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON OR A TRANSFEREE OF THE
RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
II-VI INCORPORATED
This certifies that __________________________, or
registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement dated as of
August 11, 2001 ("Rights Agreement") between II-VI Incorporated, a
Pennsylvania corporation (the "Corporation"), and American Stock
Transfer & Trust Company, a _______________ (the "Rights Agent"), to
purchase from the Corporation at any time after the Distribution Date
(as that term is defined in the Rights Agreement) and prior to the close
of business on September 12, 2011 (unless otherwise extended) (the
"Final Expiration Date") at the principal office of the Rights Agent, or
its successors as Rights Agent, in Pittsburgh, Pennsylvania, one one-
hundredth (1/100) of a fully paid and nonassessable share of Series One
Preferred Stock, no par value ("Series One Preferred Stock"), of the
Corporation at a purchase price of $100 per one one-hundredth of a
share, as the same may from time to time be adjusted in accordance with
the Rights Agreement (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to
Purchase duly executed.
As provided in the Rights Agreement, the Purchase Price and
the number of one one-hundredths of a share of Series One Preferred
Stock which may be purchased upon the exercise of the Rights evidenced
by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain
events, securities other than shares of Series One Preferred Stock, or
other property, may be acquired upon exercise of the Rights evidenced by
this Rights Certificate, as provided by the Rights Agreement.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are incorporated herein by reference and made
a part hereof, and reference to the Rights Agreement is made for a full
description of the rights, limitations of rights, obligations, duties
and immunities of the Rights Agent, the Corporation and the holders of
record of Rights Certificates. Copies of the Rights Agreement are on
file at the principal executive office of the Corporation.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the shareholder services office of the
Rights Agent designated for that purpose, may be exchanged for another
Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder of record to purchase the same
aggregate number of shares of Series One Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered
entitled that holder to purchase. If this Rights Certificate is
exercised in part, the holder shall be entitled to receive, upon
surrender hereof, another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Corporation
by action of the Board of Directors at its option at a redemption price
of $0.01 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as
that term is defined in the Rights Agreement) and (ii) the Final
Expiration Date.
No fractional shares of Series One Preferred Stock or other
securities of the Corporation are required to be issued upon the
exercise of any Right or Rights evidenced hereby, and in lieu thereof,
as provided in the Rights Agreement, a cash payment may be made.
No holder of this Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
Series One Preferred Stock or of any other securities of the Corporation
which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting
thereof, or to receive notice of meetings or other actions affecting
shareholders or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Corporation and its corporate seal. Dated as of ________________,
20__.
ATTEST: II-VI INCORPORATED
___________________________ By: ___________________________
Title: Title:
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent
By: ___________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if that holder desires
to transfer the Rights represented by the Rights Certificate)
FOR VALUE RECEIVED, ______________________________ hereby
sells, assigns and transfers unto______________________________________
_______________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________
Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint ___________________________ as Attorney to transfer this Rights
Certificate on the books of II-VI Incorporated, with full power of
substitution.
Date: __________________________ __________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being sold, assigned and transferred by or on behalf
of a Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as those terms are defined in
the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from a Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Date: __________________________ __________________________
Signature
Signature Guaranteed:
Note: The signature to the foregoing Assignment must correspond to the
name as written upon the face of this Rights Certificate in every
particular, without alteration, enlargement or any other change.
ELECTION TO PURCHASE
(To be executed by the registered holder if that holder desires
to exercise the Rights represented by the Rights Certificate)
To: II-VI Incorporated
The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Rights Certificate to
purchase the shares of Series One Preferred Stock issuable upon the
exercise of those Rights and requests that certificates for those
share(s) be issued in the name:
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
(Please insert Social Security or other identifying number)
If the number of Rights exercised does not constitute all of the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the
balance of Rights remaining shall be registered in the name of and
delivered to:
________________________________________________________________
(Please print name and address)
________________________________________________________________
________________________________________________________________
(Please insert Social Security or other identifying number)
Date: __________________________ __________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as those terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who is
or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or any transferee of such Persons.
Date: __________________________ __________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Rights Certificate)
Signature Guaranteed:
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
The Board of Directors of II-VI Incorporated (the "Company")
declared a distribution of one Right for each outstanding share of
Common Stock of the Company to shareholders of record at the close of
business on September 12, 2001 and to each share of Common Stock that
may be issued by the Company prior to the Distribution Date described
below (or the earlier redemption or expiration of the Rights).
Operation of the Rights
Upon the occurrence of certain events described below, each Right
would entitle its holder to purchase from the Company one one-hundredth
of a share of Series One Preferred Stock, no par value (the "Preferred
Stock"), at a purchase price of $100 (the "Purchase Price"). Until the
Rights separate from the Common Stock, they cannot be exercised.
The Rights will separate from the Common Stock upon the earlier to
occur of (i) ten days following a public announcement that a person or
group of affiliated or associated persons has acquired, or obtained the
right to acquire, beneficial ownership of shares of the Company's
capital stock representing 20% or more of the voting power of all
outstanding shares of capital stock of the Company, (ii) ten business
days following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning outstanding shares
of the Company's capital stock representing 20% or more of the voting
power of all outstanding shares of capital stock of the Company,
(iii) the date on which a Flip-In or Flip-Over Event occurs as described
below, or (iv) ten days after any person becomes a Controlling Person as
that term is defined in Pennsylvania's control transaction statute
(Section 2543 of the Pennsylvania Corporation Law of 1988, as amended).
In each case, such person or group is referenced as an "Acquiring
Person." The date upon which the Rights separate from the Common Stock,
and are thereby freely tradable, is called the "Distribution Date." The
Distribution Date can be delayed by an action of the Board of Directors.
If after the Distribution Date, (i) the Company is the surviving
corporation in a merger with an Acquiring Person and its Common Stock is
not changed or exchanged, or (ii) a Person becomes the beneficial owner
of shares of the Company's capital stock representing 20% or more of the
voting power of all outstanding shares of capital stock of the Company,
each holder of a Right (instead of having the right to receive Preferred
Stock) will thereafter have the right to receive, upon exercise, Common
Stock of the Company having a value equal to two times the exercise
price of the Right. This is known as a "Flip-In Event." However, any
Rights held by an Acquiring Person would not receive these benefits.
In the event that, at any time following the Distribution Date,
(i) the Company is acquired in certain merger or other business
combination transactions (other than a merger described above) in which
it does not survive or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (instead of
having the right to purchase Preferred Stock) will 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. This
is known as a "Flip-Over Event."
For example, at the exercise price of $100 per Right, each Right
not owned by an Acquiring Person (or by certain related parties)
following a Flip-In or Flip Over Event would entitle its holder to
purchase $200 worth of common stock for $100. This would be Company
Common Stock following a Flip-In Event, or the Acquiring Person's common
stock following a "Flip-Over" Event.
Redemption of the Rights
At any time until the Distribution Date, the Board of Directors
may unilaterally redeem the Rights at a price of $.01 per Right. This
amount would be paid to you and would mean that the Rights could no
longer be exercised. After the redemption period has expired, the
Company's right of redemption may be reinstated if an Acquiring Person
reduces his beneficial ownership to 20% or less of the voting power of
the capital stock of the Company in a transaction not involving the
Company. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.01 per Right
redemption price.
Board's Ability to Amend the Rights Plan
Under the Rights Plan, the Board has broad powers to amend the
Rights Plan. Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board prior to the Distribution Date.
After the Distribution Date, amendments may not adversely affect Right
holders interests. Under certain circumstances, an amendment would
require the concurrence of the Disinterested Directors.
Other Miscellaneous Provisions under the Rights Plan
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property 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) if holders of the
Preferred Stock are granted certain rights or warrants to subscribe for
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 quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments amount to at least one percent
of the Purchase Price.
Significance of Rights Until Exercised
Until a Right is exercised, its holder has no claim as a
shareholder of the Company arising from the Right itself, including,
without limitation, the right to vote or to receive dividends. While
the initial declaration and distribution of the Rights will not be
taxable to the shareholders or the Company, shareholders may, depending
upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of an Acquiring Person as set forth
above.
Evidence of Ownership of Rights
Until the Distribution Date, (i) the Rights will be evidenced by
the Common Stock certificates and will be transferred only with such
Common Stock certificates, (ii) new Common Stock certificates issued
after September 12, 2001, will contain a notation incorporating the
Rights Agreement by reference, and (iii) the surrender for transfer of
any certificates for Common Stock will also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificate. To repeat, no separate Rights Certificates will be
distributed unless and until a Distribution Date occurs. The Rights
will expire at the close of business on September 12, 2011, unless
extended or earlier redeemed by the Board.
After the Distribution Date (except as otherwise provided above),
Rights Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, such separate Rights Certificates alone will represent the
Rights.
Other Information Available
This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement which is incorporated herein by reference.
