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EXHIBIT 1
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SHAREHOLDER RIGHTS AGREEMENT
between
THE STANDARD PRODUCTS COMPANY
and
NATIONAL CITY BANK,
as Rights Agent
Dated as of
January 26, 1999
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions................................................1
Section 2. Appointment of Rights Agent........................................5
Section 3. Issue of Right Certificates........................................6
Section 4. Form of Right Certificates.........................................7
Section 5. Countersignature and Registration..................................8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates.......................................................9
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.....10
Section 8. Cancellation and Destruction of Right Certificates................12
Section 9. Reservation and Availability of Preferred Shares..................12
Section 10. Preferred Share Record Date.......................................13
Section 11. Adjustment of Exercise Price, Number and Kind of Shares or
Number of Rights..................................................14
Section 12. Certificate of Adjusted Exercise Price or Number of Shares........21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.....................................................22
Section 14. Fractional Rights and Fractional Shares...........................25
Section 15. Rights of Action..................................................25
Section 16. Agreement of Right Holders........................................26
Section 17. Right Certificate Holder Not Considered a Shareholder.............26
Section 18. Concerning the Rights Agent.......................................27
Section 19. Merger or Consolidation or Change of Name of Rights Agent.........27
Section 20. Duties of Rights Agent............................................28
Section 21. Change of Rights Agent............................................30
Section 22. Issuance of New Right Certificates................................31
Section 23. Redemption........................................................31
Section 24. Exchange..........................................................32
Section 25. Notice of Certain Events..........................................33
Section 26. Notices...........................................................34
Section 27. Supplements and Amendments........................................35
Section 28. Successors........................................................35
Section 29. Determinations and Actions by the Board of Directors..............35
Section 30. Benefits of this Agreement........................................36
Section 31. Severability......................................................36
Section 32. Governing Law.....................................................36
Section 33. Counterparts......................................................36
Section 34. Descriptive Headings..............................................36
Section 35 Interpretation; Absence of Presumption............................36
EXHIBITS
Exhibit A Form of Certificate of Amendment to the Second Amended and Restated
Articles of Incorporation
Exhibit B Form of Right Certificate
Exhibit C Summary of Rights to Purchase Preferred Shares
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SHAREHOLDER RIGHTS AGREEMENT
THIS SHAREHOLDER RIGHTS AGREEMENT (the "Agreement"), dated as of
January 26, 1999, is made between The Standard Products Company, an Ohio
corporation (the "Company"), and National City Bank, a national banking
association (the "Rights Agent").
RECITALS:
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WHEREAS, the Board of Directors of the Company (the "Board of
Directors") desires to provide shareholders of the Company with the opportunity
to benefit from the long-term prospects and value of the Company and to ensure
that shareholders of the Company receive fair and equal treatment in the event
of any proposed takeover of the Company;
WHEREAS, effective as of January 26, 1999, the Board of Directors
(i) authorized and declared a dividend distribution of one Right (as defined
herein) for each Common Share (as defined herein) of the Company outstanding as
of the close of business on February 16, 1999 (the "Record Date"), and
(ii) authorized the issuance of one Right for each Common Share issued (whether
originally issued or sold from the Company's treasury) between the Record Date
and the earlier of the Distribution Date or the Expiration Date (as defined
herein), with each Right initially representing the right to purchase one
one-thousandth of a Series A Non-Voting Serial Preferred Share, without par
value, of the Company having the rights, powers and preferences set forth in the
Company's Second Amended and Restated Articles of Incorporation, as amended, and
in Exhibit A hereto, upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (as defined herein) who,
together with all Affiliates (as defined herein) and Associates (as defined
herein) of such Person, is the Beneficial Owner (as defined herein) of 15% or
more of the Common Shares then outstanding, but does not include (i) the
Company, (ii) any Subsidiary (as defined herein) of the Company, (iii) any
employee benefit plan or compensation arrangement of the Company or of any
Subsidiary of the Company or (iv) any Person holding Common Shares organized,
appointed or established by the Company or by any Subsidiary of the Company for
or pursuant to the terms of any employee benefit plan or compensation
arrangement described in Section 1(a)(iii) (the Persons described in clauses (i)
through (iv) above are referred to herein as "Exempt Persons").
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Notwithstanding the foregoing, no Person will become an "Acquiring
Person" as a result of an acquisition by the Company of Common Shares that, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person from below 15% to 15% or more of the
Common Shares then outstanding; however, if a Person becomes a Beneficial Owner
of 15% or more of the Common Shares then outstanding by reason of share
purchases by the Company and, after those share purchases are made, becomes the
Beneficial Owner of any additional Common Shares (other than pursuant to a share
split, share dividend or similar transaction) and immediately thereafter is the
Beneficial Owner of 15% or more of the Common Shares then outstanding, then that
Person will be an "Acquiring Person."
In addition, notwithstanding the foregoing, a Person is not an
"Acquiring Person" if the Board of Directors determines that a Person who would
otherwise be an "Acquiring Person," inadvertently acquired the Common Shares
that would otherwise make the Person an "Acquiring Person," if that Person as
promptly as practicable divests a sufficient number of Common Shares so that
that Person is a Beneficial Owner of less than 15% of the Common Shares then
outstanding.
(b) "Adjustment Shares" has the meaning set forth in
Section 11(a)(ii).
(c) "Affiliate" and "Associate" have the respective meanings
ascribed to those terms in Rule 12b-2 of the General Rules and Regulations (the
"Rules") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date of this Agreement, but no Person who is a
director or officer of the Company will be considered an Affiliate or an
Associate of any other director or officer of the Company solely as a result of
his or her position as a director or officer of the Company.
(d) A Person is the "Beneficial Owner" of, and is considered to
"beneficially own," any securities:
(i) which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 of the Rules under the Exchange Act, as in effect
on the date of this Agreement);
(ii) which that Person or any of that Person's Affiliates or
Associates, directly or indirectly, has:
(A) the right to acquire (whether that right is exercisable
immediately or only after the passage of time or upon the
satisfaction of any conditions or both) pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities)
or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants, options, or otherwise; however, a
Person will not be considered the "Beneficial Owner" of, or to
"beneficially own," (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of
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that Person or by or on behalf of any of that Person's Affiliates or
Associates until those tendered securities are accepted for purchase
or exchange; (2) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event; or (3)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by that
Person or by any of that Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a), Section 11(a)(i)
or Section 22; or
(B) the right to vote 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 clause (B) if
the agreement, arrangement or understanding to vote that security
(1) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the Rules under the Exchange Act, and (2) is not
also then reportable by that Person on Schedule 13D or Schedule 13G
under the Exchange Act (or any comparable or successor report); or
(C) the right to dispose of pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than
customary arrangements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which that
Person or any of that Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in Section 1 (d)(ii)(B)) or disposing of any securities
of the Company; however, (1) no Person engaged in business as an
underwriter of securities will be considered the Beneficial Owner of any
securities acquired through that Person's participation as an underwriter
in good faith in a firm commitment underwriting until the expiration of 40
days after the date of that acquisition, and (2) no Person who is a
director or an officer of the Company will be considered, as a result of
his or her position as director or officer of the Company, the Beneficial
Owner of any securities of the Company that are beneficially owned by any
Exempt Person or by any other director or officer of the Company.
(e) "Business Day" means any day other than a Saturday, a Sunday, or
a day on which banking institutions in the City of Cleveland, Ohio or the City
of New York, New York are authorized or obligated by law or executive order to
close.
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(f) "Close of Business" on any date means 5:00 P.M., Cleveland, Ohio
time, on that date, but if that date is not a Business Day, it means 5:00 P.M.,
Cleveland, Ohio time, on the next succeeding Business Day.
(g) "Common Shares" means the Common Shares, $1.00 par value per
share, of the Company or any other shares of capital stock of the Company into
which the Common Shares are reclassified or changed.
(h) "Common Stock," when used with reference to any Person other
than the Company organized in corporate form, means: (i) the capital stock or
other equity interest in that Person with the greatest voting power, (ii) the
equity securities or other equity interest having power to control or direct the
management of that Person, or (iii) if that Person is a Subsidiary of another
Person, the capital stock, equity securities or equity interest described in
clauses (i) and (ii) in the Person or Persons which ultimately control the
first-mentioned Person and which have outstanding any such capital stock, equity
securities or equity interest; "Common Stock," when used with reference to any
Person not organized in corporate form, means units of beneficial interest that
(x) represent the right to participate generally in the profits and losses of
that Person (including without limitation any flow-through tax benefits
resulting from an ownership interest in that Person) and (y) are entitled to
exercise the greatest voting power of that Person or, in the case of a limited
partnership, have the power to remove or otherwise replace the general partner
or partners.
(i) "Current Value" has the meaning set forth in Section 1l(a)(iii).
(j) "Distribution Date" has the meaning set forth in Section 3(a).
(k) "Exercise Price" has the meaning set forth in Section 4(a).
(l) "Expiration Date" and "Final Expiration Date" have the
respective meanings set forth in Section 7(a).
(m) "Fair Market Value" means the value of any securities or other
property determined in accordance with Section 11(d).
(n) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
business trust, government or political subdivision, unincorporated
organization, or any other association or entity, and includes, without
limitation, an unincorporated group of persons who, by formal or informal
agreement, have taken any action with a common purpose, as well as any syndicate
or group that may be considered a single "person" under Section 14(d)(2) of the
Exchange Act.
(o) "Preferred Shares" means the Series A Non-Voting Serial
Preferred Shares, without par value, of the Company having the rights and
preferences set forth in the Exhibit A.
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(p) "Preferred Share Equivalents" has the meaning set forth in
Section 11(b).
(q) "Principal Party" has the meaning set forth in Section 13(b).
(r) "Redemption Price" has the meaning set forth in Section 23.
(s) "Section 11(a)(ii) Event" has the meaning set forth in
Section 11(a)(ii).
(t) "Section 11(a)(ii) Trigger Date" has the meaning set forth in
Section 11(a)(iii).
(u) "Section 13 Event" means any event described in clause (x), (y)
or (z) of Section 13(a).
(v) "Spread" has the meaning set forth in Section 1l(a)(iii).
(w) "Share Acquisition Date" means the date of the first public
announcement (which for purposes of this definition includes, without
limitation, the issuance of a press release or the filing of a
publicly-available report or other document with the Securities and Exchange
Commission or any other governmental agency) that a Person has become an
Acquiring Person, whether that public announcement is made by the Company or
otherwise.
(x) "Subsidiary" of any Person means each entity of which that
Person is the direct or indirect general partner or as to which that Person,
directly or through one or more intermediary entities or Persons, has the right,
in the absence of any contingencies, to elect a majority of the board of
directors or other governing body or as to which that Person has the right to
receive 50% or more of the economic value of any business or other activity in
which that entity is engaged.
(y) "Substitution Period" has the meaning set forth in
Section 11(a)(iii).
(z) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
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 are, prior to the Distribution Date, also the
holders of the Common Shares) in accordance with the terms and conditions set
forth herein, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. If the Company appoints one or more Co-Rights Agents, the respective
duties of the Rights Agent and any Co-Rights Agents will be as the Company
determines.
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Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) From the date of this Agreement until the earlier of (i) the
Close of Business on the tenth calendar day after the Share Acquisition Date, or
(ii) the Close of Business on the tenth Business Day after the date a tender or
exchange offer by any Person, other than an Exempt Person, is first "published
or sent or given" within the meaning of Rule 14d-4(a) of the Exchange Act, or
any successor rule, if, upon consummation thereof, that Person would be the
Beneficial Owner of 15% or more of the Common Shares then outstanding (including
any date after the date of this Agreement and prior to the issuance of the
Rights) (the earliest of (i) and (ii), the "Distribution Date"): (x) the Rights
will be evidenced (subject to Section 3(b)) by the certificates for the Common
Shares registered in the names of the holders of the Common Shares (which
certificates for Common Shares will be considered also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying Common
Shares. As soon as practicable after the Distribution Date, the Rights Agent
will, at the Company's expense, send by first-class, insured, postage prepaid
mail, to each record holder of the Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Company or the Company's transfer agent, one or more certificates, in
substantially the form of Exhibit B (the "Right Certificates"), evidencing one
Right for each Common Share of the Company so held, subject to adjustment as
provided herein. If an adjustment in the number of Rights per Common Share of
the Company has been made pursuant to Section 11(o), the Company may make the
necessary and appropriate rounding adjustments (in accordance with Section
14(a)) at the time of distribution of the Right Certificates, so that Right
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. After the Close of Business on the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) With respect to certificates for the Common Shares issued prior
to the Close of Business on the Record Date, the Rights will be evidenced by
those certificates for the Common Shares on or until the Distribution Date (or
the earlier redemption, expiration or termination of the Rights), and the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the transfer of any of the
certificates for the Common Shares outstanding prior to the close of business on
the date of this Agreement will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate.
(c) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares in
substantially the form of Exhibit C to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company.
(d) Certificates for all Common Shares issued after the Record Date,
but prior to the earlier of the Distribution Date or the redemption, expiration
or termination of the Rights, will be considered also to be certificates for
Rights, and will bear a legend (in addition to any
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other legends required by law or by the Company's governing documents),
substantially in the form set forth below:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Rights Agreement
between The Standard Products Company, an Ohio corporation (the
"Company"), and National City Bank, a national banking association,
as rights agent (the "Rights Agent"), dated as of January 26, 1999
(the "Rights Agreement"), the terms of which are incorporated by
reference herein and a copy of which is on file at the principal
offices of the Company and the stock transfer administration office
of the Rights Agent. The Company will mail a copy of the Rights
Agreement without charge to the holder of this certificate within
five days after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, the Rights will
be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company may redeem the Rights at
a redemption price of $0.01 per Right, subject to adjustment, under
the terms of the Rights Agreement. Under certain circumstances,
Rights issued to or held by Acquiring Persons or by any Affiliates
or Associates thereof (as defined in the Rights Agreement), and any
subsequent holder of such Rights, may become null and void. The
Rights are not exercisable, and are void so long as held, by a
holder in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the
Rights in such jurisdiction has not been obtained.
The Rights associated with the Common Shares represented by certificates
containing the foregoing legend will be evidenced by those certificates alone
until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), and the transfer of any of those certificates will
also constitute the transfer of the Rights associated with the Common Shares
represented by those certificates. If the Company purchases or acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with those Common Shares will be considered canceled and
retired so that the Company is not entitled to exercise any Rights associated
with the Common Shares that are no longer outstanding. The failure to print the
foregoing legend on any certificate representing Common Shares or any defect
therein will not affect in any manner whatsoever the application or
interpretation of Section 7(e).
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to purchase
shares and of assignment and certificate to be printed on the reverse of such
certificates) will be substantially in the form of Exhibit B hereto and may have
any marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may consider appropriate and as are
not inconsistent with this Agreement, or as may be required to comply with any
applicable law, rule or regulation or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
customary usage. The Right Certificates will be in a machine printable format
and in a form reasonably satisfactory to the Rights Agent. Subject to Sections
11 and 22, the Right Certificates, whenever distributed, will be
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dated as of the Record Date, will show the date of countersignature, and on
their face will entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as are set forth therein at the price set
forth therein (the "Exercise Price"), but the number of such shares and the
Exercise Price are subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights beneficially owned by (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) 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 (whether or not in writing)
regarding the transferred Rights, the Common Shares associated with such Rights
or the Company or (B) a transfer that the Board of Directors, in its sole
discretion, has determined is part of a plan, arrangement or understanding that
has as a primary purpose or effect the avoidance of Section 7(e); and any Right
Certificate issued pursuant to Section 6, Section 11 or Section 22 upon
transfer, exchange, replacement or adjustment of any other Right Certificate
referred to in this sentence, will have deleted therefrom the second sentence of
the existing legend on such Right Certificate and in substitution therefor will
contain the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or an Associate of an Acquiring Person (as those
terms are defined in the Rights Agreement). This Right Certificate
and the Rights represented hereby may become null and void under
certain circumstances as specified in Section 7(e) of the Rights
Agreement.
The Company shall give notice to the Rights Agent promptly after it becomes
aware of the existence and identity of any Acquiring Person or any Associate or
Affiliate thereof. The Company shall instruct the Rights Agent in writing of the
Rights that should be so legended. The failure to print the foregoing legend on
any such Right Certificate or any defect therein will not affect in any manner
whatsoever the application or interpretation of the provisions of Section 7(e).
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates will be executed on behalf of the Company
by its Chairman of the Board of Directors, or its President or any Vice
President and by its Treasurer or any Assistant Treasurer, or by its Secretary
or any Assistant Secretary, either manually or by facsimile signature. The Right
Certificates will be manually countersigned by an authorized signatory of the
Rights Agent and will not be valid for any purpose unless so countersigned, and
such countersignature upon any Right Certificate will be conclusive evidence,
and the only evidence, that such Right Certificate has been duly countersigned
as required hereunder. In case
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any officer of the Company who has signed any of the Right Certificates ceases
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, those Right Certificates,
nevertheless, may be countersigned by an authorized signatory of the Rights
Agent, and issued and delivered by the Company with the same force and effect as
though the person who signed such Right Certificates had not ceased to be a
proper officer of the Company; and any Right Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, is a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement was not a
proper officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated as the appropriate place for
surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to Section 4(b), Section 7(e) and Section 14, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Certificates, entitling the registered holder to purchase a
like number of one one-thousandths of a Preferred Share (or following a
Triggering Event, Preferred Shares, Common Shares, cash, property, equity
securities, debt securities, or any combination thereof) as the Right
Certificate or Certificates surrendered then entitled such holder to purchase
and at the same Exercise Price. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Certificates to be transferred, split up, combined or exchanged, with the
form of assignment and certificate duly executed, at the office or offices of
the Rights Agent designated for that purpose. Neither the Rights Agent nor the
Company is obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate until the registered holder has
completed and signed the certificate contained in the form of assignment on the
reverse side of that Right Certificate and has provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company reasonably requests. Thereupon
the Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14,
countersign and deliver to the Person entitled thereto a Right Certificate or
Certificates, as the case may be, as so requested. The Company may require
payment by the registered holder of a Right Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate,
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and, in case of loss, theft or destruction, of indemnity or security
satisfactory to them, and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate, if mutilated, the Company will
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Exercise Price for the total number of
one one-thousandths of a Preferred Share (or other securities, cash or other
assets, as the case may be) for which the surrendered Rights are then exercised,
at or prior to the earlier of (i) the Close of Business on January 26, 2009 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed in
accordance with Section 23, and (iii) the time at which such Rights are
exchanged in accordance with Section 24 (the earlier of (i), (ii) and (iii), the
"Expiration Date"). Except as set forth in Section 7(e) and notwithstanding any
other provision (except Section 7(e)) of this Agreement, any Person who prior to
the Distribution Date becomes a record holder of Common Shares may exercise all
of the rights of a registered holder of a Right Certificate with respect to the
Rights associated with such Common Shares in accordance with the provisions of
this Agreement, as of the date such Person becomes a record holder of Common
Shares.
(b) The Exercise Price for each one one-thousandth of a Preferred
Share that can be purchased upon the exercise of a Right is initially $100.00,
is subject to adjustment from time to time as provided in Section 11 and
Section 13, and is payable in lawful money of the United States of America in
accordance with Section 7(c) below.
(c) As promptly as practicable following the Distribution Date, the
Company shall deposit with a corporation, trust, bank or similar institution in
good standing organized under the laws of the United States of America or any
State of the United States of America, that is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by a federal or state authority (such institution is hereinafter
referred to as the "Depositary Agent"), certificates representing the Preferred
Shares that may be acquired upon exercise of the Rights, and the Company shall
cause such Depositary Agent to enter into an agreement pursuant to which the
Depositary Agent shall issue receipts representing interests in the Preferred
Shares so deposited. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, accompanied by payment of the Exercise
Price for the shares to be purchased and an amount equal to any applicable
transfer tax (as determined by the Rights Agent) in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall,
subject to Section 20(k), thereupon promptly (i) requisition from the Depositary
Agent (or make
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available, if the Rights Agent is the Depository Agent) depository receipts or
certificates for the number of one one-thousandths of a Preferred Share to be
purchased and the Company hereby irrevocably authorizes the Depositary Agent to
comply with all such requests, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in accordance
with Section 14, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate. If the
Company is obligated to issue other securities (including Common Shares) of the
Company, pay cash or distribute other property pursuant to Section 11(a), the
Company will make all arrangements necessary so that such other securities, cash
or other property are available for distribution by the Rights Agent, if and
when appropriate. The payment of the Exercise Price may be made in cash or by
certified or bank check payable to the order of the Company, or by wire transfer
of immediately available funds to the account of the Company (if notice of such
wire transfer is given to the Rights Agent by the holder of the related Right).
(d) If the registered holder of any Right Certificate exercises less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised will be issued by the Rights
Agent and delivered to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or Section 13 Event,
any Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any Associate or Affiliate of an Acquiring Person) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming an
Acquiring Person and receives those Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in that Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, the Common Shares associated with such Rights
or the Company, or (B) a transfer that the Board of Directors, in its sole
discretion, has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section 7(e), will be
null and void without any further action and no holder of such Rights will have
any rights whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company will use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but will have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determination with respect to an
Acquiring Person or any Affiliate or Associate of an Acquiring Person or any
transferee of any of them hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company is obligated to undertake any action
with respect to a registered holder of Rights upon the occurrence of any
purported exercise as set forth in this Section 7
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unless such registered holder has (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side of
the Right Certificate surrendered for such exercise, and (ii) provided all
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, will be canceled by it, and no Right
Certificates will be issued in lieu thereof except as expressly permitted by any
provision of this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company.
Section 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company shall cause to be reserved and kept available out of
its authorized and unissued Preferred Shares or any authorized and issued
Preferred Shares held in its treasury, a number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding and exercisable
Rights. Upon the occurrence of any event resulting in an increase in the
aggregate number of Preferred Shares issuable upon exercise of all outstanding
Rights in excess of the number then reserved, the Company shall make appropriate
increases in the number of Preferred Shares so reserved.
(b) The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all Preferred Shares issued or
reserved for issuance to be listed, upon official notice of issuance, upon the
principal national securities exchange, if any, upon which the Common Shares are
listed or, if the principal market for the Common Shares is not any national
securities exchange, to be eligible for quotation in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or any successor
thereto or other comparable quotation system.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii), or as soon as required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause that registration
statement to become effective as soon as practicable after such filing, and
(iii) cause that registration statement to remain effective (with a prospectus
that at all times meets the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, or (B) the Expiration Date. The Company will also take any
action that is appropriate to ensure compliance with the
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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 determined in accordance
with 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 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 when the suspension is no longer in effect, in
each case with prompt written notice to the Rights Agent. Notwithstanding any
provision of this Agreement to the contrary, the Rights are not exercisable in
any jurisdiction unless the requisite qualification in that jurisdiction has
been obtained.
(d) The Company shall take all actions as may be necessary to ensure
that all Preferred Shares delivered upon the exercise of the Rights are, at the
time of delivery of the certificates or depositary receipts for such shares
(subject to payment of the Exercise Price), duly issued, validly authorized,
fully paid and nonassessable.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates or of any certificates for
Preferred Shares upon the exercise of Rights. The Company is not, however,
required to pay any transfer tax that may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or in respect of the
issuance or delivery of securities in a name other than that of, the registered
holder of the Right Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for securities in a name other than that of
the registered holder upon the exercise of any Rights until such tax has been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. PREFERRED SHARE RECORD DATE. Each Person in whose name
any certificate for Preferred Shares is issued upon the exercise of Rights will
for all purposes be considered to have become the holder of record of the
Preferred Shares represented thereby on, and that certificate will be dated, the
date upon which the Right Certificate evidencing those Rights was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes) was made; however, if the date of that surrender and payment is a date
upon which the Preferred Share transfer books of the Company are closed, that
Person will be considered to have become the record holder of such shares on,
and that certificate will be dated, the next succeeding Business Day on which
the Preferred Share transfer books of the Company are open, but if delivery of
Preferred Shares is delayed pursuant to Section 9(c), that Person will be
considered to have become the record holder of those Preferred Shares only when
those shares first become deliverable. Prior to the exercise of the Right
evidenced thereby, the holder of a Right Certificate is not entitled to any
rights of a shareholder of the Company with respect to shares for which the
Rights are exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and will not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
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Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Exercise 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) If the Company at any time after the date of
this Agreement (A) declares a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivides the outstanding
Preferred Shares, (C) combines the outstanding Preferred Shares into
a smaller number of shares or (D) issues any shares of its capital
stock in a reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) and Section 7(e),
the Exercise Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Share transfer
books of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification, but in no
event may the consideration to be paid upon the exercise of a Right
be less than the aggregate par value of the shares of capital stock
of the Company issuable upon exercise of the Right. If an event
occurs that would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section
11(a)(i) will be in addition to, and will be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24, if any Person, alone or
together with its Affiliates and Associates, becomes an Acquiring
Person (a "Section 11(a)(ii) Event"), then promptly following that
occurrence, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), thereafter has a right to
receive, upon exercise thereof at the then current Exercise Price in
accordance with this Agreement, such number of Preferred Shares of
the Company as equals the result obtained by (x) multiplying the
then current Exercise Price by the number of one one-thousandths of
a Preferred Share for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, whether
or not such Right was then exercisable, and dividing that product by
(y) 50% of the Fair Market Value (as defined herein) of one
one-thousandth of a Preferred Share (determined in accordance with
Section 11(d)) on the date of the occurrence of that
Section 11(a)(ii) Event (such number of shares being referred to as
the "Adjustment Shares").
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(iii) In lieu of issuing any Preferred Shares in
accordance with Section 11(a)(ii), the Company, acting by resolution
of the Board of Directors, may, and if the number of Preferred
Shares which are authorized by the Company's Second Amended and
Restated Articles of Incorporation, as amended (or other instrument
governing its corporate affairs), but not outstanding or reserved
for issuance for purposes other than upon exercise of the Rights is
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, acting by resolution of the Board of Directors,
shall: (A) determine the excess of (X) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value")
over (Y) the Exercise Price attributable to each Right (such excess
being referred to as the "Spread") and (B) with respect to all or a
portion of each Right (subject to Section 7(e)), make adequate
provision to substitute for the Adjustment Shares, upon payment of
the applicable Exercise Price, (1) cash, (2) a reduction in the
Exercise Price, (3) Preferred Share Equivalents which the Board of
Directors has deemed to have the same value as Preferred Shares,
(4) debt securities of the Company, (5) other assets of the Company
or (6) any combination of the foregoing which, when added to any
Preferred Shares issued upon such exercise, has an aggregate value
equal to Current Value, with such aggregate value determined by the
Board of Directors based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors; but if
the Company has not made adequate provision to deliver the value
determined in accordance with clause (B) above within 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 deliver, upon surrender of a Right
for exercise and without requiring payment of the Exercise Price,
Preferred Shares (to the extent available) and then, if necessary,
cash, which shares and cash have an aggregate value equal to the
Spread. If the Board of Directors determines in good faith that it
is likely that sufficient additional Preferred Shares could be
authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent
necessary, but not to more than 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 (that
period, as it may be extended, the "Substitution Period"). To the
extent that the Company determines that some action must be taken
pursuant to the first or second sentence of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e), that such
action will 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 or to decide the appropriate form of distribution to be made
pursuant to that first sentence and to determine the value thereof.
On any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended and another public announcement when the
suspension is no longer in effect. For purposes of this
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Section 11(a)(iii), the value of a Preferred Share will be the Fair
Market Value (as determined pursuant to Section 11(d)) of a
Preferred Share on the Section 11(a)(ii) Trigger Date and the value
of any Preferred Share Equivalent will be considered to have the
same value as a Preferred Share on that date.
(b) If the Company fixes a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them (for a
period expiring within 45 calendar days after that record date) to subscribe for
or purchase Preferred Shares (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Shares ("Preferred Share
Equivalents")) or securities convertible into Preferred Shares or Preferred
Share Equivalents at a price per Preferred Share or per Preferred Share
Equivalent (or having a conversion price per share, if a security convertible
into Preferred Shares or Preferred Share Equivalents) less than the Fair Market
Value (as determined pursuant to Section 11(d)) per Preferred Share on that
record date, the Exercise Price to be in effect after that record date will be
determined by multiplying the Exercise Price in effect immediately prior to that
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on that record date, plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares or Preferred Share Equivalents to be offered (and the aggregate initial
conversion price of the convertible securities to be so offered) would purchase
at that Fair Market Value and the denominator of which shall be the number of
Preferred Shares outstanding on that record date, plus the number of additional
Preferred Shares and Preferred Share Equivalents to be offered for subscription
or purchase (or into which the convertible securities to be so offered are
initially convertible), but in no event will the consideration to be paid upon
the exercise of a Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of the Right. If the
subscription price may be paid in a consideration part or all of which is in a
form other than cash, the value of such consideration will be the Fair Market
Value thereof determined in accordance with Section 11(d). Preferred Shares
owned by or held for the account of the Company will not be considered
outstanding for the purpose of any such computation. Those adjustments will be
made successively whenever any such record date is fixed; and if any such rights
or warrants are not so issued, the Exercise Price will be adjusted to be the
Exercise Price that would then be in effect if the applicable record date had
not been fixed.
(c) If the Company fixes a record date for the making of a
distribution to all holders of Preferred Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend), assets (other than a dividend payable in
Preferred Shares, but including any dividend payable in capital stock other than
Preferred Shares) or convertible securities, subscription rights or warrants
(excluding those referred to in Section 11(b)), the Exercise Price to be in
effect after that record date will be determined by multiplying the Exercise
Price in effect immediately prior to that record date by a fraction, the
numerator of which will be the Fair Market Value (as determined pursuant to
Section 11(d)) of one one-thousandth of a Preferred Share on that record date,
less the Fair Market Value (as determined pursuant to Section 11(d)) of the
portion of the cash, assets or evidences of indebtedness to be so distributed or
of such convertible securities, subscription
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rights or warrants applicable to one one-thousandth of a Preferred Share and the
denominator of which will be the Fair Market Value (as determined pursuant to
Section 11(d)) of one one-thousandth of a Preferred Share, but in no event will
the consideration to be paid upon the exercise of a Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of the Right. Those adjustments will be made successively whenever any
such record date is fixed, and if any such distribution is not so made, the
Exercise Price will again be adjusted to be the Exercise Price that would be in
effect if the applicable record date had not been fixed.
(d) For the purpose of this Agreement, the "Fair Market Value" of
any Preferred Share, Common Share or any other share or any Right or other
security or any other property will be determined as provided in this
Section 11(d).
(i) In the case of a publicly-traded stock or other security,
the Fair Market Value on any date will be the average of the daily
closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as defined herein)
immediately prior to such date; however, if the Fair Market Value
per share of any share of stock is determined during a period
following the announcement by the issuer of such stock of (x) a
dividend or distribution on such stock payable in shares of such
stock or securities convertible into shares of such stock or (y) any
subdivision, combination or reclassification of such stock, and
prior to the expiration of the 30 Trading Day period 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 Fair Market Value will be properly
adjusted to take into account ex-dividend trading. The closing price
for each day will be the last sale price, regular way, or, if 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 securities 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 such
security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the last quoted
high bid and low asked prices) in the over-the-counter market, as
reported by NASDAQ or such other system then in use; or, if on any
such date no bids for such security are 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 such
security selected by the Board of Directors. If on any such date no
market maker is making a market in such security, the Fair Market
Value of such security on such date will be determined reasonably
and with utmost good faith to the holders of the Rights by the Board
of Directors, but if at the time of such determination there is an
Acquiring Person, the Fair Market Value of such security on such
date will be determined by a nationally recognized investment
banking firm selected by the
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Board of Directors, which determination will be described in a
statement filed with the Rights Agent and will be binding on the
Rights Agent and the holders of the Rights. The term "Trading Day"
means a day on which the principal national securities exchange on
which such security is listed or admitted to trading is open for the
transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a Business
Day.
(ii) If a security is not publicly held or not so listed or
traded, "Fair Market Value" means the fair value per share of stock
or per other unit of such security, determined reasonably and with
utmost good faith to the holders of the Rights by the Board of
Directors, but if at the time of such determination there is an
Acquiring Person, the Fair Market Value of such security on such
date will be determined by a nationally recognized investment
banking firm selected by the Board of Directors, which determination
will be described in a statement filed with the Rights Agent and
will be binding on the Rights Agent and the holders of the Rights.
(iii) In the case of property other than securities, the Fair
Market Value thereof will be determined reasonably and with utmost
good faith to the holders of Rights by the Board of Directors, but
if at the time of such determination there is an Acquiring Person,
the Fair Market Value of such property on such date will be
determined by a nationally recognized investment banking firm
selected by the Board of Directors, which determination will be
described in a statement filed with the Rights Agent and will be
binding upon the Rights Agent and the holders of the Rights.
(e) Anything herein to the contrary notwithstanding, no adjustment
in the Exercise Price will be required unless that adjustment would require an
increase or decrease of at least 1% in the Exercise Price, but any adjustment
that by reason of this Section 11(e) is not required to be made will be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 will be made to the nearest cent or to the nearest
hundred-thousandth of a Common Share or ten-millionth of a Preferred Share, as
the case may be, or to such other figure as the Board of Directors considers
appropriate. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 must be made no later than the earlier of
(i) three (3) years from the date of the transaction that mandates that
adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a) or Section
13(a), the holder of any Right becomes entitled to receive any shares of capital
stock of the Company other than Preferred Shares, thereafter the number of such
other shares so receivable upon exercise of any Right will be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Section 11(a), (b), (c), (d), (e), (g) through (k) and (m), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
will apply on like terms to any such other shares.
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(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder will evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
Preferred Share (or other securities or amount of cash or combination thereof)
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of one one-thousandths of
a Preferred Share (calculated to the nearest one ten-millionth) obtained by
(i) multiplying (x) the number of one one-thousandths of a Preferred Share for
which a Right may be exercisable immediately prior to this adjustment by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price and (ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of
the Exercise Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights will be exercisable for the number of one one-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one hundred-thousandth)
obtained by dividing the Exercise Price in effect immediately prior to
adjustment of the Exercise Price by the Exercise Price in effect immediately
after adjustment of the Exercise 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 Exercise
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14, the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders are entitled after such
adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Exercise Price) and shall be registered in the
names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price
or the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the
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Right Certificates theretofore and thereafter issued may continue to express the
Exercise Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder without prejudice to any adjustment
or change.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below the then stated value, if any, of the number of one
one-thousandths of a Preferred Share issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its counsel,
be reasonably necessary in order that the Company may validly and legally issue
duly authorized, validly issued, fully paid and nonassessable Preferred Shares
at the adjusted Exercise Price.
(l) In any case in which this Section 11 requires that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of one one-thousandths of a Preferred Share or other capital stock or securities
of the Company, if any, issuable upon such exercise over and above the number of
one one-thousandths of a Preferred Share and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the Exercise
Price in effect prior to such adjustment; however, the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Shares, issuance wholly for cash of any Preferred
Shares at less than Fair Market Value, issuance wholly for cash of Preferred
Shares or securities which by their terms are convertible into or exchangeable
for Preferred Shares, share dividends or issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of the
Preferred Shares, shall not be taxable to such shareholders.
(n) The Company shall not, at any time after the Distribution Date
and so long as the Rights have not been redeemed pursuant to Section 23 or
exchanged pursuant to Section 24, (i) consolidate with (other than with a
Subsidiary of the Company in a transaction which complies with the last sentence
of this Section 11(n)), (ii) merge with or into, 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 50% or more of the
assets or earning power of the Company and its Subsidiaries taken as a whole, to
any other Person or Persons (other than the Company or any of its Subsidiaries
in one or more transactions each of which complies with the last sentence of
this Section 11(n)) if (x) at the time of or immediately after such
consolidation, merger or sale there are any rights, warrants or other
instruments outstanding or agreements or arrangements 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 a Person who
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constitutes, or would constitute, the "Principal Party" for the purposes of
Section 13(a) have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates; however, this Section 11(n)
shall not affect the ability of any Subsidiary of the Company to consolidate
with, merge with or into, or sell or transfer assets or earning power to, any
other Subsidiary of the Company. The Company further covenants and agrees that
after the Distribution Date it will not, except as permitted by Section 23 or
Section 27, 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
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) Notwithstanding anything in this Agreement to the contrary, if
the Company at any time after the date of this Agreement and prior to the
Distribution Date (i) declares or pays any dividend on the outstanding Common
Shares payable in Common Shares or (ii) effects a subdivision, combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares) into a greater or lesser number
of Common Shares, then in any such case (A) the number of one one-thousandths of
a Preferred Share purchasable after such event upon proper exercise of each
Right will be determined by multiplying the number of one one-thousandths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Shares outstanding immediately
prior to such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share of the
Company outstanding immediately after such event will have issued with respect
to it that number of Rights which each Common Share of the Company outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(o) will be made successively whenever any such
dividend is declared or paid or any such subdivision, combination or
consolidation is effected.
(p) The exercise of Rights under Section 11(a)(ii) will only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised and
will not otherwise affect the rights of holders of Right Certificates under this
Rights Agreement, including rights to purchase securities of the Principal Party
following a Section 13 Event that has occurred or may thereafter occur, as set
forth in Section 13. Upon exercise of a Right Certificate under Section
11(a)(ii), the Rights Agent shall return such Right Certificate duly marked to
indicate that such exercise has occurred.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or Section 13,
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 Shares and the Common Shares a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing Common Shares)
in accordance with Section 26. The Rights Agent will be fully protected in
relying on any such certificate and on any adjustment contained therein and will
not be considered to have knowledge of any such adjustment unless and until it
has received such certificate.
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Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) If, following the Share Acquisition Date, directly or
indirectly, (x) the Company consolidates with, or merges with and into, an
Acquiring Person (or any Affiliate or Associate of an Acquiring Person), and the
Company is not the continuing or surviving corporation of such consolidation or
merger, (y) an Acquiring Person (or any Affiliate or Associate of an Acquiring
Person) consolidates with the Company, or merges with and into the Company and
the Company is the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares are changed into
or exchanged for stock or other securities of an Acquiring Person (or of any
Affiliate or Associate of an Acquiring Person) or cash or any other property, or
(z) the Company sells, mortgages or otherwise transfers (or one or more of its
Subsidiaries sells, mortgages or otherwise transfers), in one transaction or a
series of related transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to an Acquiring Person (or to any Affiliate or Associate of an Acquiring
Person), then, and in each such case, the Company shall cause proper provision
to be made so that: (i) each holder of a Right, except as provided in Section
7(e), has the right to receive, upon the exercise thereof at the then current
Exercise Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as defined herein), free and
clear of rights of call or first refusal, liens, encumbrances, transfer
restrictions or other adverse claims, as are equal to the result obtained by
(1) multiplying the then current Exercise Price by the number of one
one-thousandths of a Preferred Share for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event, and dividing
that product by (2) 50% of the Fair Market Value (determined pursuant to Section
11(d)) per share of the Common Stock of such Principal Party on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party is thereafter liable for, and assumes, by virtue of such
consolidation, merger, sale, mortgage or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company"
thereafter refers to such Principal Party, it being specifically intended that
Section 11 apply to such Principal Party; and (iv) such Principal Party takes
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock to permit exercise of all outstanding
Rights in accordance with this Section 13(a) and the making of payments in cash
or other securities in accordance with Section 11(a)(iii)) in connection with
such consummation as may be necessary to assure that the provisions hereof are
thereafter applicable, as nearly as reasonably may be, in relation to the shares
its Common Stock thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" means:
(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 Common Shares are converted in
such merger or consolidation, or, if there is more than one such
issuer, the issuer of Common Stock that has the highest
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aggregate Fair Market Value (determined pursuant to Section 11(d)),
and if no securities are so issued, the Person that is the other
party to the merger or consolidation, or, if there is more than one
such Person, the Person the Common Stock of which has the highest
aggregate Fair Market Value (determined pursuant to Section 11(d));
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, or, if
each Person that is a party to such transaction or transactions
receives the same portion of the assets or earning power transferred
pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot
be determined, that Person the Common Stock of which has the highest
aggregate Fair Market Value (determined pursuant to Section 11(d));
but 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 12-month period registered
under Section 12 of the Exchange Act ("Registered Common Stock"), or such Person
is not a corporation, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person who has Registered Common Stock outstanding,
"Principal Party" refers to such other Person; (2) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person but is not a
direct or indirect Subsidiary of another Person which has Registered Common
Stock outstanding, "Principal Party" refers to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal Party"
refers to whichever of such other Persons is the issuer of the Registered Common
Stock having the highest aggregate Fair Market Value (determined pursuant to
Section 11(d)); and (4) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other Persons
has Registered Common Stock outstanding, "Principal Party" refers to whichever
ultimate parent entity is the corporation having the greatest stockholders'
equity or, if no such ultimate parent entity is a corporation, "Principal Party"
refers to whichever ultimate parent entity is the entity having the greatest net
assets.
(c) The Company shall not consummate any consolidation, merger, sale
or transfer referred to in Section 13(a) unless prior thereto (x) the Principal
Party has 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 (y) the Company and each
Principal Party and each other Person who may become a Principal Party as a
result of such consolidation, merger, sale or transfer shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in Section 13(a) and (b)
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and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in Section 13(a),
the Principal Party at its own expense will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
cause such registration statement to become effective as soon as
practicable after such filing and cause such registration statement
to remain effective (with a prospectus that at all times meets the
requirements of the Securities Act) until the Expiration Date;
(ii) qualify or register the Rights and the securities
purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate;
(iii) list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on a national
securities exchange or to meet the eligibility requirements for
quotation on NASDAQ; and
(iv) 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.
(d) If the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue (other than to holders of Rights pursuant
to this Section 13), in connection with, or as a consequence of, the
consummation of a transaction referred to in this Section 13, Common Stock of
such Principal Party at less than the then current Fair Market Value (determined
pursuant to Section 11(d)) or securities exercisable for, or convertible into,
Common Stock of such Principal Party at less than such Fair Market Value, or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the Common Stock of such Principal Party pursuant to the
provisions of this Section 13, then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party have executed and delivered to the Rights Agent a supplemental
agreement providing that that provision of such Principal Party has been
canceled, waived or amended, or that the authorized securities will be redeemed,
so that that provision will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction.
This Section 13 will similarly apply to successive mergers or
consolidations or sales or other transfers.
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Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company is not required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(o), or to distribute
Right Certificates which evidence fractional Rights. If the Company elects not
to issue such fractional Rights, the Company shall pay, in lieu of such
fractional Rights, to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the Fair Market Value of a whole Right, as
determined pursuant to Section 11(d).
(b) The Company is not required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company may pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the Fair Market Value
of one one-thousandth of a Preferred Share. For purposes of this Section 14(b),
the Fair Market Value of one one-thousandth of a Preferred Share shall be
determined pursuant to Section 11(d) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives the holder's right to receive any fractional Right or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent pursuant
to Sections 18 and 20, are vested in the respective registered holders of the
Right Certificates (or, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Right Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares), may, in such registered holder's
own behalf and for such registered holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Right
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and are 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.
Holders of Rights are entitled to recover the reasonable costs and expenses,
including attorneys' fees, incurred by them in any action to enforce this
Agreement.
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Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, each Right will be transferable
only simultaneously and together with the transfer of Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f), the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (or, prior
to the Distribution Date, the associated certificate representing Common Shares)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates
or the associated certificate representing Common Shares made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and, subject
to the last sentence of Section 7(e), neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any holder
of a Right or other Person as the 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 obligations; 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. RIGHT CERTIFICATE HOLDER NOT CONSIDERED A SHAREHOLDER.
No holder, as such, of any Right Certificate is entitled to vote, receive
dividends or be considered for any purpose a holder of Preferred Shares or any
other securities of the Company that may at any time be issuable on the exercise
of the Rights represented thereby, nor will anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate has been exercised in accordance with the provisions hereof.
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Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent such compensation
as is agreed to in writing between the Company and the Rights Agent 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 gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. This Section 18(a) will
survive the expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent is protected and will incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate representing Common Shares, Preferred Shares, or 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 and executed by the proper Person or Persons.
(c) The Rights Agent will not be liable for consequential damages
under any provision of this Agreement or for any consequential damages arising
out of any act or failure to act hereunder.
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 is a party, or any corporation succeeding to the
corporate trust or shareholder services business of the Rights Agent or any
successor Rights Agent, will 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, if such corporation would be eligible for
appointment as a successor Rights Agent under Section 21. If at the time such
successor Rights Agent succeeds to the agency created by this Agreement, any of
the Right Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver the Right Certificates so countersigned; and if at that time
any of the Right Certificates have not been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
those Right Certificates will have the full force provided in the Right
Certificates and in this Agreement.
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(b) If at any time the name of the Rights Agent is changed and at
such time any of the Right Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates have not been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement upon the following
terms and conditions, by which the Company and the holders of Right
Certificates, by their acceptance thereof, are bound:
(a) The Rights Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of that counsel will
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 considers it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Fair Market Value) be proved or established by the Company
prior to taking or suffering any action hereunder, that fact or matter (unless
other evidence in respect thereof is herein specifically prescribed) may be
considered to be conclusively proved and established by a certificate signed by
a person believed by the Rights Agent to be the Chairman of the Board of
Directors, the President, a Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company and delivered
to the Rights Agent. Any such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under this
Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent is not liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or required to verify the
same, but all such statements and recitals are and will be considered to have
been made by the Company only.
(e) The Rights Agent is not under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereon); nor is
it responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor is it responsible
for any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 7(e)) or any adjustment required under
Section 11, Section 13 or Section 24(c) or
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responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate describing any such adjustment furnished in
accordance with Section 12); nor is it responsible for any determination by the
Board of Directors of the Fair Market Value of the Rights or Preferred Shares;
nor will it by any act hereunder be considered to make any representation or
warranty as to the authorization or reservation of any Common Shares or
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares or Preferred Shares will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company 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 this
Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, the President,
a Vice President, the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it will 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. Any application by the Rights
Agent for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on or after which that action
will be taken or such omission will be effective. The Rights Agent will not be
liable for any action taken by, or omission of, the Rights Agent in accordance
with a proposal included in such application on or after the date specified in
such application (which date may not be less than five Business Days after the
date any officer of the Company actually receives such application, unless any
such officer has consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent has received written instructions in response to such application
specifying the action to be taken or omitted.
(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 the Rights
Agent under this Agreement. Nothing herein precludes 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.
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(j) No provision of this Agreement requires 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 are 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 Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or clause (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company by
first class mail. The Company may remove the Rights Agent or any successor
Rights Agent (with or without cause) 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 Shares and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent resigns or is removed or otherwise becomes incapable
of acting, the Company shall appoint a successor to the Rights Agent. If the
Company fails to make such appointment within a period of thirty (30) days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit that
holder's Right Certificate for inspection by the Company), then the incumbent
Rights Agent or the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
must be (a) a corporation organized and doing business under the laws of the
United States of America or of the State of Ohio (or of any other state of the
United States of America so long as such corporation is authorized to do
business as a banking institution in the State of Ohio), in good standing, which
is authorized under such laws to exercise stock transfer or corporate trust
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent will be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and the Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, will 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.
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Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any
provision of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in any form as may
be approved by its Board of Directors to reflect any adjustment or change in the
Exercise Price per share and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
Common Shares 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 hereafter issued by the Company, and (b) may, in any
other case, if considered necessary or appropriate by the Board of Directors,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; however, (i) no such Right Certificate
will be issued if, and to the extent that, the Company will be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the person to whom such Right Certificate
would be issued, and (ii) no such Right Certificate will be issued if, and to
the extent that, appropriate adjustments otherwise have been made in lieu of the
issuance thereof.
Section 23. REDEMPTION.
(a) The Board of Directors may, at its option, redeem all but not
less than all of the then outstanding Rights at a redemption price of $0.01 per
Right, appropriately adjusted to reflect any dividend declared or paid on the
Common Shares in Common Shares or any subdivision or combination of the
outstanding Common Shares or similar event occurring after the date of this
Agreement (such redemption price, as adjusted from time to time, being
hereinafter referred to as the "Redemption Price"). The Rights may be redeemed
only until the earliest to occur of (i) 5:00 P.M., Cleveland, Ohio time, on the
calendar day after the Share Acquisition Date or (ii) the Final Expiration Date.
(b) Immediately upon the action of the Board of Directors 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 will 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 the Rights Agent and to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Shares. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,
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34
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or Section 24 or in connection
with the purchase of Common Shares prior to the Distribution Date.
(c) The Company may, at its option, pay the Redemption Price in
cash, Common Shares (based on the Fair Market Value of the Common Shares as of
the time of redemption) or any other form of consideration considered
appropriate by the Board of Directors.
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time on or
after the occurrence of a Section 11(a)(ii) Event, exchange all or part of the
then outstanding and exercisable Rights (which will not include Rights that have
become void pursuant to the provisions of Section 7(e)) for Common Shares at an
exchange ratio of one Common Share of the Company per Right, appropriately
adjusted to reflect any share split, share dividend or similar transaction
occurring after the date hereof (that exchange ratio, the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors is not empowered to effect
such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Shares.
(b) Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
will be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give notice of any such exchange in accordance with Section 26, but the
failure to give, or any defect in, such notice will not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice that is mailed in the manner
herein provided will be considered given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Shares for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange will be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e)) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Preferred Share Equivalents) for
Common Shares exchangeable for Rights, at the initial rate of one one-thousandth
of a Preferred Share (or Preferred Share Equivalents) for each Common Share, as
appropriately adjusted to reflect adjustments in the economic rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share will have the same
economic rights as one Common Share.
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35
(d) If the Company elects to make any exchange pursuant to this
Section 24 and, at the time of that exchange, there are not sufficient Common
Shares or Preferred Shares (or Preferred Share Equivalents) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
actions as may be necessary to authorize additional Common Shares or Preferred
Shares (or Preferred Share Equivalents) for issuance upon exchange of the
Rights.
(e) The Company will not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. If
the Company elects not to issue those fractional Common Shares, the Company
shall pay, in lieu of those fractional Common Shares, to the registered holders
of the Right Certificates with regard to which those fractional Common Shares
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Common Share of the Company. For the purposes of
this paragraph (e), the Fair Market Value of a whole Common Share of the Company
shall be the closing price of a Common Share of the Company (as determined
pursuant to the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) If the Company proposes at any time after the Distribution Date
(i) to pay any dividend payable in shares of any class to the holders of
Preferred Shares or to make any other distribution to the holders of Preferred
Shares (other than a regular periodic cash dividend), or (ii) to offer to the
holders of Preferred Shares rights or warrants to subscribe for or to purchase
any additional Preferred Shares or shares of capital stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), or (iv) to effect any
consolidation or merger into or with, or to effect any sale, mortgage or other
transfer (or to permit one or more of its Subsidiaries to effect any sale,
mortgage or other transfer), in one transaction or a series of related
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than a
Subsidiary of the Company in one or more transactions each of which is not
prohibited by the last sentence of Section 11(n)), or (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
then in each such case, the Company shall give to each holder of a Right
Certificate and to the Rights Agent, in accordance with Section 26, a notice of
that proposed action, that specifies the record date for the purposes of that
share dividend, distribution of rights or warrants, or the date on which that
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares or Preferred Shares, if any record
date is to be fixed, and that 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 Preferred Shares for purposes of that
action, and in the case of any other similar action, at least twenty (20) days
prior to the date of the taking of that proposed
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36
action or the date of participation therein by the holders of the Common Shares
or Preferred Shares, whichever is earlier; but no notice shall be required
pursuant to this Section 25 if any Subsidiary of the Company effects a
consolidation or merger with or into, or effects a sale or other transfer of
assets or earnings power to, any other Subsidiary of the Company in a manner not
inconsistent with the provisions of this Agreement.
(b) If any Section 11(a)(ii) Event occurs, then the Company shall as
soon as practicable thereafter give to each registered holder of a Right
Certificate and to the Rights Agent, in accordance with Section 26, a notice of
the occurrence of that event, which will specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii).
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company will be sufficiently given or made if sent by
first-class mail, postage prepaid, facsimile transmission or by nationally
recognized overnight courier addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Standard Products Company
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Subject to Section 21, any notice or demand authorized by this Agreement to be
given or made by the Company or by the holder of any Right Certificate to or on
the Rights Agent will be sufficiently given or made if sent by first-class mail,
postage prepaid, facsimile transmission or by nationally-recognized overnight
courier addressed (until another address is filed in writing with the Company)
as follows:
National City Bank
Corporate Trust Administration
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx, Vice President
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, prior to
the Distribution Date, to the holder of any certificate representing Common
Shares) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to that holder at the address of that holder as shown on the
registry books of the Company.
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37
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date, the Company and the Rights Agent will, if the Company so directs,
supplement or amend any provision of this Agreement as the Company may deem
necessary or desirable without the approval of any holders of certificates
representing Common Shares. From and after the Distribution Date, the Company
and the Rights Agent will, if the Company so directs, supplement or amend this
Agreement without the approval of any holder of Right Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which will not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or any Affiliate
or Associate of an Acquiring Person); however, from and after the Distribution
Date this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at the time the Rights are not redeemable or (B) any other time
period unless that lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and the benefits to, the holders of Rights (other than
an Acquiring Person or any Affiliate or Associate of an Acquiring Person). Upon
the delivery of a certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment is in compliance with this
Section 27, the Rights Agent shall execute the proposed supplement or amendment.
Prior to the Distribution Date, the interests of the holders of Rights will be
considered coincident with the interests of the holders of Common Shares.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 27 that
alters the Rights Agent's rights or duties.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of the outstanding Common Shares of which any Person
is the Beneficial Owner, will be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the Rules under the Exchange Act as in effect on the date
hereof. The Board of Directors has the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or not
redeem the Rights or to 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
of Directors in good faith will (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
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38
any member of the Board of Directors to any liability to the holders of the
Rights or to any other person.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
will be construed to give to any person or corporation other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement is for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement will remain in
full force and effect and will in no way be affected, impaired or invalidated;
but notwithstanding anything in this Agreement to the contrary, if any term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors determines in its good
faith judgment that severing the invalid language from the Agreement would
adversely affect the purpose or effect of the Agreement, the right of redemption
set forth in Section 23 will be reinstated and will not expire until the Close
of Business on the tenth day following the date of that determination by the
Board of Directors.
Section 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder will be considered to be a contract made under the
laws of the State of Ohio and for all purposes will be governed by and construed
in accordance with the laws of that State applicable to contracts to be made and
to be performed entirely within Ohio.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each counterpart will for all purposes be considered
to be an original, and all counterparts will together constitute but one and the
same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and will
not control or affect the meaning or construction of any of the provisions of
this Agreement.
Section 35. INTERPRETATION; ABSENCE OF PRESUMPTION.
(a) For the purposes hereof, (i) words in the singular include the
plural and vice versa and words of one gender shall be held to include the other
gender as the context requires, (ii) the terms "hereof," "herein," and
"herewith" and words of similar import, unless otherwise stated, refer to this
Agreement as a whole (including all of the Exhibits hereto) and not to any
particular provision of this Agreement, and Section, paragraph, and Exhibit
references are to the Sections, paragraphs and Exhibits in and to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
import when used in this Agreement mean "including,
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39
without limitation," unless otherwise specified, and (iv) the word "or" shall
not be exclusive, but means "and/or."
(b) This Agreement will be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been executed in one or more
counterparts by or on behalf of each of the parties hereto as of the date first
above written.
THE STANDARD PRODUCTS
COMPANY, an Ohio corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice Chairman &
Chief Executive Officer
NATIONAL CITY BANK, a national
banking association, as Rights Agent
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Vice President
41
EXHIBIT A
FORM OF
CERTIFICATE OF AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE STANDARD PRODUCTS COMPANY
Xxxxxxxx X. Xxxxxxxx, President, and Xxxxxxx X. Xxxxxxxx, Secretary,
of The Standard Products Company, an Ohio corporation (the "Company"), do hereby
certify that at a meeting of the Board of Directors of the Company held on
January 26, 1999, the following resolution to amend the Second Amended and
Restated Articles of Incorporation, as amended, of the Company was adopted
pursuant to the authority granted by Section 1701.70(B)(1) of the Ohio Revised
Code:
RESOLVED, that the Second Amended and Restated Articles of
Incorporation, as amended, of the Company be, and they hereby are, amended by
adding at the end of Division B of Article FOURTH a new Section 7 that reads as
follows:
SECTION 7. SERIES A NON-VOTING SERIAL PREFERRED SHARES.
(a) DESIGNATION AND AMOUNT. Of the 6,000,000 authorized Non-Voting
Serial Preferred Shares, 1,000,000 are designated as a series designated as
"Series A Non-Voting Serial Preferred Shares" (the "Series A Preferred Shares").
The Series A Preferred Shares have the express terms set forth in this Division
as being applicable to all Non-Voting Serial Preferred Shares as a class and, in
addition, the following express terms applicable to all Series A Preferred
Shares as a series of Preferred Shares. The number of Series A Preferred Shares
may be increased or decreased by resolution of the Board of Directors and by the
filing of a certificate of amendment pursuant to the provisions of the General
Corporation Law of the State of Ohio stating that such increase or reduction has
been so authorized; however, no decrease shall reduce the number of Series A
Preferred Shares to a number less than that of the Series A Preferred Shares
then outstanding plus the number of Series A Preferred Shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
(b) DIVIDENDS AND DISTRIBUTIONS.
(1)(i) Subject to the rights of the holders of any series of
preferred shares (or any similar shares) ranking prior to the Series A
Preferred Shares with respect to dividends, the holders of Series A
Preferred Shares, in preference to the holders of Common Shares and of any
other junior shares, will be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends
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42
payable in cash on the fifteenth day of March, June, September and
December 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 Series A Preferred
Share or fraction thereof, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) subject to the provisions
for adjustment hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all noncash dividends or other distributions
other than a dividend payable in Common Shares or a subdivision of the
outstanding Common Shares (by reclassification or otherwise), declared on
the Common Shares after the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, after the first issuance of any Series A Preferred Share or fraction
thereof. The multiple of cash and noncash dividends declared on the Common
Shares to which holders of the Series A Preferred Shares are entitled,
which is 1,000 initially but which will be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Dividend
Multiple." If the Company at any time after January 26, 1999 (the "Rights
Declaration Date"): (i) declares or pays any dividend on the Common Shares
payable in Common Shares, or (ii) effects a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the Dividend
Multiple thereafter applicable to the determination of the amount of
dividends that holders of Series A Preferred Shares are entitled to
receive will be the Dividend Multiple applicable immediately prior to that
event multiplied by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after that event and the denominator
of which is the number of Common Shares that were outstanding immediately
prior to that event.
(ii) Notwithstanding anything else contained in this paragraph (1),
the Company shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Shares as
provided in this paragraph (1) immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend payable in Common
Shares); but if no dividend or distribution has been declared on the
Common Shares during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share on the Series A Preferred Shares shall nevertheless
accrue on such subsequent Quarterly Dividend Payment Date.
(2) Dividends will begin to accrue and be cumulative on outstanding
Series A Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such Series A Preferred Shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares will begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of Series A Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends will begin to accrue and be cumulative
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43
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends will not
bear interest. Dividends paid on the Series A Preferred Shares in an amount less
than the total amount of such dividends at the time accrued and payable on such
shares will be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix in accordance
with applicable law a record date for the determination of holders of Series A
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date will be not more than such number of days
prior to the date fixed for the payment thereof as may be allowed by applicable
law.
(c) REACQUIRED SHARES. Any Series A Preferred Shares purchased or
otherwise acquired by the Company in any manner whatsoever will be retired and
canceled promptly after the acquisition thereof. All such shares will upon their
cancellation become authorized but unissued preferred shares and may be reissued
as part of a new series of Series A Non-Voting Serial Preferred Shares to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
(d) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Company, no
distribution may be made (x) to the holders of shares ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares
shall have received an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
plus an amount equal to the greater of (1) $1,000.00 per share or (2) an
aggregate amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount to be distributed per share
to holders of Common Shares, or (y) to the holders of shares ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Shares, except distributions made ratably on the Series A
Preferred Shares and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Company at any time after the
Rights Declaration Date (i) declares or pays any dividend on Common Shares
payable in Common Shares, or (ii) effects a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater or lesser number
of Common Shares, then in each such case the aggregate amount per share to which
holders of Series A Preferred Shares were entitled immediately prior to such
event under clause (x) of the preceding sentence will be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event.
Neither the consolidation of nor merging of the Company with or into
any other corporation or corporations, nor the sale or other transfer of all or
substantially all of the assets of the Company, will be considered to be a
liquidation, dissolution or winding up of the Company within the meaning of this
paragraph (d).
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44
(e) CONSOLIDATION, MERGER, ETC. If the Company shall enter into any
consolidation, merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other shares, stock or securities, cash
or any other property, then in any such case the Series A Preferred Shares will
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 1,000
times the aggregate amount of shares, stock, securities, or other property, as
the case may be, into which or for which each Common Share is changed or
exchanged, plus accrued and unpaid dividends, if any, payable with respect to
the Series A Preferred Shares. If the Company at any time after the Rights
Declaration Date (i) declares or pays any dividend on Common Shares payable in
Common Shares, or (ii) effects a subdivision or combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise than by payment
of a dividend in Common Shares) into a greater or lesser number of Common
Shares, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of Series A Preferred Shares will be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
(f) REDEMPTION. The Series A Preferred Shares are not redeemable,
but the foregoing does not limit the ability of the Company to purchase or
otherwise deal in the Series A Preferred Shares to the extent otherwise
permitted hereby and by law.
(g) AMENDMENT. The Second Amended Articles of Incorporation of the
Company, as amended, may not be amended in any manner that would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Shares so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding Series A Preferred Shares,
voting separately as a class.
(h) FRACTIONAL SHARES. Series A Preferred Shares may be issued in
whole shares or in any fraction of a share that is one one-thousandth
(1/1,000th) of a share or any integral multiple of such fraction, which will
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and have
the benefit of all other rights of holders of Series A Preferred Shares. In lieu
of fractional shares, the Company may elect to make a cash payment as provided
in that certain Rights Agreement dated as of January 26, 1999, between the
Company and National City Bank, a national banking association, as rights agent,
for fractions of a share smaller than one one-thousandth (1/1,000th) of a share
or any integral multiple thereof.
________________________________________________________________________________
Page A-4
45
IN WITNESS WHEREOF, we have executed this instrument in one or more
counterparts as of January ____, 1999.
THE STANDARD PRODUCTS
COMPANY, an Ohio corporation
--------------------------------------------------
Xxxxxxxx X. Xxxxxxxx, President
--------------------------------------------------
Xxxxxxx X. Xxxxxxxx, Secretary
________________________________________________________________________________
Page A-5
46
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER JANUARY 26, 2009 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE STANDARD
PRODUCTS COMPANY, AN OHIO CORPORATION (THE "COMPANY") AT $0.01 PER RIGHT ON THE
TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN THE COMPANY AND
NATIONAL CITY BANK, A NATIONAL BANKING ASSOCIATION, AS RIGHTS AGENT, DATED AS OF
JANUARY 26, 1999 (THE "RIGHTS AGREEMENT"). THE COMPANY WILL MAIL A COPY OF THE
RIGHTS AGREEMENT WITHOUT CHARGE TO THE HOLDER OF THIS CERTIFICATE WITHIN FIVE
DAYS AFTER THE RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHT AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
This certifies ________________________that or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Shareholder Rights Agreement dated as of January 26, 1999 (the "Rights
Agreement") between The Standard Products Company, an Ohio corporation (the
"Company"), and National City Bank, a national banking association, as rights
agent (the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as defined in the Rights Agreement) and prior to the close of
business on January 26, 2009 at the office or offices of the Rights Agent, or
its successors as Rights Agent, designated for that purpose, one-thousandth of a
fully paid, nonassessable Series A Non-Voting Serial Preferred Share, without
par value (the "Preferred Shares"), of the Company, at a purchase price of $___
per one one-thousandth of a Preferred Share (the "Exercise Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and the related Certificate duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares that may be
purchased upon exercise thereof) set forth above, and the Exercise Price per
share set forth above, are the number and Exercise Price as of _____________,
____, based on the Preferred Shares as constituted at that date.
Upon the occurrence of a Section 11(a)(ii) Event (as defined in the
Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Person (as those terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate or Affiliate, or
________________________________________________________________________________
Page B-1
47
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person, such Rights will become null
and void and no holder hereof will have any right with respect to such Rights
from and after the occurrence of that Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Exercise Price and the
number of Preferred Shares or other securities that may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are incorporated by reference herein and made a part hereof and to which Rights
Agreement reference is made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal office of the Company and the designated
office of the Rights Agent. The Company will mail a copy of the Rights Agreement
without charge to the holder of this certificate within five days after the
receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Certificates surrendered entitled such holder to purchase. If
this Right Certificate is exercised in part, the holder is entitled to receive
upon surrender hereof another Right Certificate or Certificates for the number
of whole Rights not exercised. If this Right Certificate is exercised in whole
or in part pursuant to Section 11(a)(ii) of the Rights Agreement, the holder is
entitled to receive this Right Certificate duly marked to indicate that such
exercise has occurred as set forth in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors at its option may exchange all or any part of
the Rights evidenced by this Certificate for the Company's common shares, $1.00
par value per share (the "Common Shares"), or Preferred Shares at an exchange
ratio (subject to adjustment) of one Common Share for one one-thousandth of a
Preferred Share per Right.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Board of Directors at its
option at a redemption price of $0.01 per Right (payable in cash, Common Shares
or other consideration considered appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares upon the
exercise of any Right or Rights evidenced hereby (other than fractions that are
integral multiples of one one-
________________________________________________________________________________
Page B-2
48
thousandth of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts). If the Company elects not to issue such
fractional shares, in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.
No holder of this Right Certificate, as such, is entitled to vote or
receive dividends or be considered for any purpose the holder of Preferred
Shares, Common Shares or any other securities of the Company that may at any
time be issuable on the exercise hereof, nor will anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to 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 the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate have been exercised as provided in the Rights Agreement.
This Right Certificate will not be valid or obligatory for any
purpose until it has been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the
Company. Dated as of ____________, ____.
THE STANDARD PRODUCTS
COMPANY, an Ohio corporation
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Countersigned:
National City Bank, a national
banking association
By: _________________________________
Name: _______________________________
Title:_______________________________
________________________________________________________________________________
Page B-3
49
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED hereby sells, assigns and transfers
unto ___________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________________________
as attorney-in-fact, to transfer the Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ________________, ____ ________________________________________
Signature
Social Security or other identifying
taxpayer number of transferee:
_____________________________________
Signature Guaranteed:
________________________________________________________________________________
Page B-4
50
CERTIFICATE
(Applicable to Form of Assignment)
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such 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 directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: ________________, ____ ________________________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
Page B-5
51
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To The Standard Products Company:
The undersigned hereby irrevocably elects to exercise ___________
Rights represented by this Right Certificate to purchase the Preferred Shares
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
________________________________________________________________________________
(Please print name and address of transferee)
Please insert social security
or other identifying taxpayer number: __________________________________________
If such number of Rights are not all of the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11(a)(ii) of the Rights Agreement, a new Right Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address of transferee)
Please insert social security
or other identifying taxpayer number: __________________________________________
Signature Guaranteed:
________________________________________________________________________________
Page B-6
52
CERTIFICATE
(Applicable to Form of Election to Purchase)
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such 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 directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated: ________________, ____ ________________________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
________________________________________________________________________________
Page B-7
53
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On January 26, 1999, the Board of Directors of The Standard Products
Company, an Ohio corporation (the "Company"), adopted a Shareholder Rights
Agreement (the "Rights Agreement"). A copy of the Rights Agreement has been
filed with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights Agreement, including
the exhibits thereto, is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement.
SUMMARY OF THE RIGHTS
Pursuant to the Rights Agreement, the Board of Directors declared a
dividend distribution of one Preferred Share Purchase Right (a "Right") for each
outstanding common share, $1.00 par value per share, of the Company (the "Common
Shares") to shareholders of record as of the close of business on February 16,
1999 (the "Record Date"). In addition, one Right will automatically attach to
each Common Share issued between the Record Date and the Distribution Date (as
defined herein). Each Right entitles the registered holder thereof to purchase
from the Company a unit (a "Preferred Unit") consisting of one one-thousandth of
a Series A Non-Voting Serial Preferred Share, without par value (the "Preferred
Shares"), at a cash exercise price of $100.00 per Preferred Unit (the "Exercise
Price"), subject to adjustment.
Initially, the Rights are not exercisable and are attached to and trade
with the Common Shares outstanding as of, and all Common Shares issued after,
the Record Date. The Rights will separate from the Common Shares as separate
certificates distributed to holder of the Common Shares and become exercisable
upon the earlier of (i) the close of business on the 10th calendar day following
the first public announcement (the date of that announcement, the "Share
Acquisition Date") that a person or a group of affiliated or associated persons
has acquired beneficial ownership of 15% or more of the outstanding Common
Shares (an "Acquiring Person"), or (ii) the close of business on the 10th
business day following the commencement of a tender offer or exchange offer that
would result, upon its consummation, in a person or group becoming the
beneficial owner of 15% or more of the outstanding Common Shares (the earlier of
(i) and (ii), the "Distribution Date"). The Rights Agreement exempts from the
definition of Acquiring Person any person who the Board of Directors determines
acquired in excess of 15% of the Common Shares inadvertently, if that person
promptly divests itself of enough Common Shares to reduce the number of shares
beneficially owned by that person to below the 15% threshold.
Until the Distribution Date (or the earlier redemption, exchange or
expiration of the Rights): (i) the Rights will be evidenced by the Common Share
certificates and will be transferred with and only with such Common Share
certificates, (ii) new Common Share certificates issued after the Record Date
will include a notation incorporating the Rights
________________________________________________________________________________
Page C-1
54
Agreement by reference, and (iii) the surrender for transfer of any certificates
for Common Shares will also constitute the transfer of the Rights associated
with the Common Shares represented by that certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on January 26, 2009, unless previously redeemed or
exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Right Certificates will
be mailed to holders of record of Common Shares as of the close of business on
the Distribution Date and, thereafter, the separate Right Certificates alone
will represent the Rights. Except as otherwise determined by the Board of
Directors, only Common Shares issued prior to the Distribution Date will be
issued with Rights.
If a Share Acquisition Date occurs, proper provision will be made so that
each holder of a Right (other than an Acquiring Person or associates or
affiliates thereof, whose Rights will become null and void) thereafter has the
right to receive upon exercise that number of Preferred Units having a market
value of two times the exercise price of the Right (that right being referred to
as the "Subscription Right"). If, at any time following the Share Acquisition
Date: (i) the Company consolidates with, or merges with and into, any Acquiring
Person or any associate or affiliate thereof, and the Company is not the
continuing or surviving corporation, (ii) any Acquiring Person or any associate
or affiliate thereof consolidates with the Company, or merges with and into the
Company and the Company is the continuing or surviving corporation of such
merger and, in connection with such merger, all or part of the Common Shares are
changed into or exchanged for stock or other securities of any other person or
cash or any other property, or (iii) 50% or more of the Company's assets or
earning power is sold, mortgaged or otherwise transferred, each holder of a
Right will thereafter have the right to receive, upon exercise, common stock of
the acquiring company having a market value equal to two times the exercise
price of the Right (such right being referred to as the "Merger Right"). Each
holder of a Right will continue to have the Merger Right whether or not that
holder has exercised the Subscription Right, but Rights that are or were
beneficially owned by an Acquiring Person may (under certain circumstances
specified in the Rights Agreement) become null and void.
At any time after a Share Acquisition Date occurs, the Board of Directors
may, at its option, exchange Common Shares or Preferred Units for all or any
part of the then outstanding and exercisable Rights (which excludes Rights held
by an Acquiring Person) at an exchange ratio of one Common Share or one
Preferred Unit per Right. However, the Board of Directors generally will not be
empowered to effect such exchange at any time after any person becomes the
beneficial owner of 50% or more of the Common Shares.
The Exercise Price payable, and the number of Preferred Units 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 share
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the
________________________________________________________________________________
Page C-2
55
current market price of the Preferred Shares, or (iii) upon the distribution to
holders of the Preferred Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to in (i) and (ii)).
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments amount to at least 1% of the Exercise
Price. The Company is not obligated to issue fractional Preferred Units. If the
Company elects not to issue fractional Preferred Units, in lieu thereof an
adjustment in cash will be made based on the fair market value of the Preferred
Shares on the last trading date prior to the date of exercise.
The Rights may be redeemed in whole, but not in part, at a price of $0.01
per Right (payable in cash, Common Shares or other consideration considered
appropriate by the Board of Directors) by the Board of Directors only until the
earliest of (i) the close of business on the calendar day after the Share
Acquisition Date, or (ii) the expiration date of the Rights Agreement.
Immediately upon any action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and thereafter the only right of the holders
of Rights will be to receive the redemption price.
The Rights Agreement may be amended by the Board of Directors in its sole
discretion until the Distribution Date. After the Distribution Date, the Board
of Directors may, subject to certain limitations set forth in the Rights
Agreement, amend the Rights Agreement only to cure any ambiguity, defect or
inconsistency, to shorten or lengthen any time period, or to make changes that
do not adversely affect the interests of Rights holders (excluding the interests
of an Acquiring Person or associates or affiliates thereof).
Until a Right is exercised, the holder will have no rights as a shareholder
of the Company (beyond those as an existing shareholder), including the right to
vote or to receive dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income if the Rights become exercisable for
Preferred Units, other securities of the Company or other consideration, or for
common shares of an acquiring company.
DESCRIPTION OF PREFERRED SHARES
The Preferred Shares that may be acquired upon exercise of the Rights will
not be redeemable and will generally rank on par with any other outstanding
preferred shares of the Company. Each Preferred Unit will have a preferential
quarterly dividend of the greater of (i) $.001 per Preferred Unit and (ii) an
amount equal to any higher dividend per share declared on the Common Shares.
If the Company liquidates, each holder of a Preferred Unit will receive a
preferred liquidation payment equal to the greater of (i) $1.00 per Preferred
Unit and (ii) an amount equal to the amount distributed on each Common Share.
________________________________________________________________________________
Page C-3
56
The Preferred Shares have the right to vote together as a class on certain
limited matters (such as voting rights that arise upon the nonpayment of
dividends and the right to vote on a merger of the Company into another entity),
but the Preferred Shares do not vote with the Common Shares on matters presented
to the holders of the Common Shares (such as the election of directors).
On any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Unit will be entitled to receive the per share
amount paid in respect of each Common Share.
The rights of holders of the Preferred Shares to dividends and upon
liquidation, and in connection with mergers and consolidations, are protected by
customary anti-dilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation
rights, the economic value of each Preferred Unit issuable upon the exercise of
a Right should approximate the economic value of a Common Share.
________________________________________________________________________________
Page C-4
