Exhibit 4.2
AMENDED AND RESTATED
RIGHTS AGREEMENT
BETWEEN
THE LUBRIZOL CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
DATED AS OF JULY 26, 1999
TABLE OF CONTENTS
Section 1. Certain Definitions............................................................ 2
Section 2. Appointment of Rights Agent.................................................... 6
Section 3. Issue of Right Certificates.................................................... 7
Section 4. Form of Right Certificate...................................................... 10
Section 5. Countersignature and Registration.............................................. 10
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates .................................................. 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights...................................................................... 12
Section 8. Cancellation and Destruction of Right Certificates............................. 14
Section 9. Reservation and Availability of Common Shares.................................. 14
Section 10. Common Shares Record Date...................................................... 16
Section 11. Adjustment of Purchase Price, Number and Type of
Shares or Number of Rights..................................................... 17
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares...................................................................... 31
Section 13. Notice of Adjusted Purchase Price or Number or Type
of Shares to Holders of Rights................................................. 31
Section 14. Fractional Rights and Fractional Shares........................................ 31
Section 15. Rights of Action............................................................... 33
Section 16. Agreement of Rights Holders.................................................... 33
Section 17. Right Certificate Holder Not Deemed a Shareholder.............................. 34
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Section 18. Concerning the Rights Agent................................................... 35
Section 19. Merger or Consolidation or Change of Name of Rights Agent..................... 35
Section 20. Duties of Rights Agent........................................................ 36
Section 21. Change of Rights Agent........................................................ 39
Section 22. Issuance of New Right Certificates............................................ 40
Section 23. Redemption.................................................................... 40
Section 24. Notice of Certain Events...................................................... 42
Section 25. Notices....................................................................... 43
Section 26. Supplements and Amendments.................................................... 43
Section 27. Successors.................................................................... 44
Section 28. Determinations and Actions by the Directors, etc.............................. 45
Section 29. Benefits of this Agreement.................................................... 45
Section 30. Action by Executive Committee................................................. 46
Section 31. Severability.................................................................. 46
Section 32. Governing Law................................................................. 46
Section 33. Counterparts.................................................................. 46
Section 34. Descriptive Headings.......................................................... 46
Exhibit A -- Form of Rights Certificate .................................................. A-1
Exhibit B -- Form of Summary of Rights.................................................... B-1
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AMENDED AND RESTATED
RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of July 26, 1999
(this "Agreement"), is between THE LUBRIZOL CORPORATION, an Ohio corporation
(the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY (the "Rights
Agent").
RECITALS
WHEREAS, the Company entered into a certain Rights Agreement, dated as of
October 13, 1997 between the Company and Rights Agent (the "1997 Rights
Agreement");
WHEREAS, on September 22, 1997, pursuant to Section 1701.16 of the Ohio
Revised Code, the Board of Directors of the Company authorized and declared a
dividend distribution of one right for each Common Share outstanding at the
close of business on September 22, 1997 (the "Record Date"), entitling the
holder thereof to purchase, upon the terms and subject to the conditions
hereinafter set forth, one-half of one Common Share for each Common Share so
held on the Record Date at an initial purchase price of $170 per share, subject
to adjustment as hereinafter provided (such rights are hereinafter referred to
as the "Rights") and also authorized and granted one Right for each Common Share
issued after the Record Date but prior to the earlier of (i) the Distribution
Date (in the case of Common Shares issued upon conversion of the Company's
convertible securities or upon exercise of employee stock options, prior to the
thirtieth day after the Distribution Date), (ii) the Expiration Date, or (iii)
October 12, 2007 (the "Final Expiration Date"), including, without limitation,
Common Shares issued upon conversion of the Company's convertible securities and
upon exercise of employee stock options and Common Shares which are treasury
shares as of the Record Date and subsequently become outstanding; and
WHEREAS, the Board of Directors of the Company has determined that it is
desirable and in the best interests of the Company and its shareholders for the
Company to amend certain
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provisions of the 1997 Rights Agreement to eliminate requirements that
"Continuing Directors" concur in the taking of certain actions thereunder;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 20% or more of the Common Shares then outstanding, but shall not
include (i) the Company, any Subsidiary or any employee benefit or stock
ownership plan of the Company or any Person or entity organized, appointed
or established by the Company for or pursuant to any such plan, (ii) any
Person who becomes an Acquiring Person solely as a result of a reduction
in the number of Common Shares outstanding due to the repurchase of Common
Shares by the Company, unless and until (x) such time as such Person or
any Affiliate or Associate of such Person shall thereafter become the
Beneficial Owner of any additional Common Shares, other than as a result
of a stock dividend, stock split or similar transaction effected by the
Company in which all holders of Common Shares are treated equally, or (y)
any other Person who is the Beneficial Owner of any Common Shares shall
thereafter become an Affiliate or Associate of such Person, or (iii) any
Person who becomes the Beneficial Owner of 20% or more of the Common
Shares then outstanding in a transaction or series of transactions which
are approved in advance by the affirmative vote of a majority of the Board
of Directors of the Company (an "Approved Transaction"), unless and until
such Person shall purchase or otherwise become the Beneficial Owner of
additional Common Shares in a transaction or series of transactions which
are not approved in advance by the affirmative vote of a majority the
Board of Directors of the Company.
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(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding,
whether or not in writing;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (A) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or payment, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence
of a Triggering Event, or (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event which
Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(a) or Section 22 hereof or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any
Rights which such Person or any of such
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Person's Affiliates or Associates has or the right to vote or
dispose of pursuant to any agreement, arrangement or understanding;
or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any securities of the Company; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding
which (A) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations of
the Exchange Act and (B) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or successor report);
provided, however, that nothing in this paragraph (c) shall cause a Person
engaged in the business as an underwriter of securities to be deemed the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a firm commitment
underwriting until the expiration of forty (40) days after the date of
such acquisition.
(d) "Business Day" shall mean any day other than a Saturday, Sunday, or a
day on which banking institutions in the States of Ohio and New York are
closed or are authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., Cleveland,
Ohio time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Cleveland, Ohio time, on the next
succeeding Business Day.
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(f) "Common Shares" when used with reference to the Company shall mean the
Common Shares, without par value, of the Company; provided that, if the
Company is the continuing or surviving corporation in a transaction
described in Section 11(d)(ii) hereof, "Common Shares" when used with
reference to the Company shall mean the capital stock with the greatest
aggregate voting power of the Company, or, if the Company is a subsidiary
of another corporation or business trust, the corporation or business
trust which ultimately controls the Company. "Common Shares" when used
with reference to any corporation or business trust, other than the
Company, shall mean the capital stock with the greatest aggregate voting
power of such corporation or business trust, or, if such corporation or
business trust is a subsidiary of another corporation or business trust,
the corporation or business trust which ultimately controls such
first-mentioned corporation or business trust.
(g) [Intentionally left blank]
(h) "Distribution Date" shall have the meaning ascribed to such term in
Section 3 hereof.
(i) "Expiration Date" shall mean the earlier of (i) the date on which the
Rights are redeemed as provided in Section 23 hereof or (ii) the time at
which all exercisable Rights are exchanged as provided in Section 11(p)
hereof.
(j) "Flip-In Event" shall mean any event described in Section 11(a)(ii)
hereof.
(k) "Flip-Over Event" shall mean any event described in clauses (i), (ii)
or (iii) of Section 11(d) hereof.
(l) "Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
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(m) "Redemption Price" shall mean $.05 per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof.
(n) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release,
filing made with the Securities and Exchange Commission or otherwise) that
an Acquiring Person has become such.
(o) "Subsidiary" shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by the Company.
(p) "Triggering Event" shall mean any Flip-In Event or Flip-Over 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 hereof, shall also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable. Any
actions which may be taken by the Rights Agent pursuant to the terms of this
Agreement may be taken by any such Co-Rights Agent.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the
close of business on the tenth Business Day after the Share Acquisition Date
(or, if the tenth Business Day after the Share Acquisition Date occurs before
the Record Date, the close of business on the Record Date or such later date as
the Board of Directors shall determine), or (ii) the close of business on the
tenth Business Day (or such later date as the Board of Directors shall
determine) after the date that a
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tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 20% or more of the Common Shares then
outstanding (the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for Common Shares
registered in the names of the record holders thereof (which certificates for
Common Shares shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares in the stock
transfer books of the Company maintained by the Company or its appointed
transfer agent. As soon as practicable after the Distribution Date, the Rights
Agent will send, by first-class, insured, postage prepaid mail (or such other
method as the Company shall deem appropriate), to each record holder of Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto, evidencing one Right for each Common
Share so held, subject to adjustment, together with a notice setting forth the
Purchase Price (as defined in Section 4 hereof) as in effect on the Distribution
Date. As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
Any Right Certificate issued pursuant to this Section 3 that represents
Rights which are beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate, and any Right
Certificate issued pursuant to Sections 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and (to the extent feasible) contain the following
legend or such similar legend as the Company may deem appropriate and as is not
inconsistent with the provisions of this Agreement, or as may be
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required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage:
The Rights represented by this Right Certificate were
issued to or acquired by a Person who was an Acquiring
Person or an Affiliate or an Associate of an Acquiring
Person (as such terms are defined in the Rights
Agreement). This Right Certificate and the Rights
represented hereby may become null and void in the
circumstances specified in the Rights Agreement.
provided, however, the failure of the Company to cause any Right Certificate to
contain such legend or any defect therein, shall not affect the legality or
validity of any provision of this Agreement, including provisions voiding Rights
held by any such Person.
(b) On the Record Date or as soon as reasonably practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Common Shares,
in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail (or such other method as the
Company shall deem appropriate), 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 as of such date. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for Common Shares registered
in the names of the holders thereof. Until the Distribution Date (or the earlier
of the Expiration Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates for Common Shares issued (including, without limitation,
any certificates for Common Shares issued upon conversion of the Company's
convertible securities or upon exercise of employee stock options) or
surrendered for transfer or exchange after the Record Date but prior to the
earlier of the Distribution Date, the Expiration Date or the Final Expiration
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Date, shall have stamped on, impressed on, printed on, written on or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Common Shares or the Rights may from time to time be
listed, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Rights
Agreement between The Lubrizol Corporation and American Stock
Transfer & Trust Company, dated as of July 26, 1999 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive
offices of The Lubrizol Corporation. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
Certificate. The Lubrizol Corporation will mail to the holder of
this Certificate a copy of the Rights Agreement without charge
within five business days after receipt of a written request
therefor. Under certain circumstances, Rights beneficially owned by
an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and any subsequent holder
of such Rights may become null and void.
With respect to certificates containing the legend described above, until
the Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto with such
changes, marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to
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conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates, whenever issued and on their face shall entitle the holders
thereof to purchase such number of Common Shares as shall be set forth therein
at the price per whole share set forth therein (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, President or
any Vice President, either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at one of its offices in New York, New York, 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.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the close of business
on the Distribution Date, and at or prior to the close of business on the
earlier of the Expiration Date or the Final Expiration Date, any Right
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling the registered
holder to purchase a like number of Common Shares as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent in New York, New York or in Cleveland, Ohio. Thereupon, the Rights
Agent shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) 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 and at or prior to the Close of business on
the earlier of the Expiration Date or the Final
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Expiration Date upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at an office of the Rights Agent designated for such purpose, together
with an amount in cash, in lawful money of the United States of America, by
certified check or bank draft payable to the order of the Company, equal to the
Purchase Price for each Common Share as to which such surrendered Rights are
exercised, or, if applicable, the exercise price per Right specified in Sections
11(a)(ii) or 11(d) hereof, as the case may be, together with an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof; provided, however, that after
the later of the first occurrence of a Triggering Event and the Distribution
Date, in lieu of the cash payment payable to the Company referred to in this
sentence, the registered holder of a Right Certificate evidencing exercisable
Rights (which shall not include Rights that have become void pursuant to Section
11(a)(ii) hereof) may, at the option of the Company, exercise the Rights
evidenced thereby in whole or in part in accordance with this Section 7(a) upon
surrender of the Right Certificate as described above, together with the
election to exercise such Rights duly completed. With respect to any Rights as
to which such an election to exercise without payment of cash is made, the
holder shall receive, upon exercise, a number of Common Shares or other
securities, as the case may be, having a current per share market price
(determined pursuant to Section 11(e) hereof as of the date of the first
occurrence of any Triggering Event) equal to the excess of (i) the aggregate
current per share market price of the Common Shares or other securities
(determined pursuant to Section 11(e) hereof as of the date of the first
occurrence of any Triggering Event) that would have been issuable upon payment
of the cash amount as described above over (ii) the amount of cash that would
have been payable to the Company upon exercise absent such election.
(b) The Purchase Price shall initially be $170 per Common Share purchased,
(equivalent to $85 for each one-half of a Common Share), and shall be subject to
adjustment from time to time as provided in Section 11 hereof.
(c) Subject to Sections 7(d), 11(a)(ii), and 11(d) hereof, upon receipt of
a Right Certificate representing exercisable Rights with the form of election to
purchase duly executed,
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accompanied by either payment as described above or a duly completed election to
exercise without payment of cash, the Rights Agent shall promptly (i)
requisition from any transfer agent of the Common Shares (or make available, if
the Rights Agent is the transfer agent) certificates representing the number of
whole Common Shares to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (ii) promptly
after receipt of such certificates, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) if appropriate,
requisition from the Company the amount of cash to be paid or depository
receipts to be issued in lieu of the issuance of fractional shares in accordance
with Section 14 hereof or in lieu of the issuance of Common Shares in accordance
with Section 11(a)(iii) or 11(d) hereof, and (iv) if appropriate, after receipt,
promptly deliver such cash (or depository receipts, when appropriate) to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 hereof or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate shall have (i) completed and signed the certificate following
the form of assignment or the form of election to purchase, as applicable, set
forth on the reverse side of the Right Certificate surrendered for such
transfer, split up, combination, exchange or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall have
reasonably requested.
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Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Common Shares or any authorized and issued Common
Shares held in its treasury, the number of Common Shares that will be sufficient
to permit the exercise pursuant to Section 7 hereof of all outstanding Rights;
such number of Common Shares reserved and kept available shall be adjusted from
time to time, if and to the extent required, upon the occurrence of any of the
events described in Section 11 hereof.
So long as the Company's Common Shares are listed on a national securities
exchange, the Company shall endeavor to cause, from and after such time as the
Rights become exercisable, all Common Shares reserved for issuance upon exercise
of the Rights to be listed on such exchange upon official notice of issuance.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Common Shares delivered upon exercise of Rights
shall be, at the time of delivery of the certificates for such shares (subject
to payment of the Purchase Price, if required), duly and validly authorized and
issued, fully paid, nonassessable and freely tradeable shares, free and clear of
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any liens, encumbrances and other adverse claims and not subject to any rights
of call or first refusal.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Common Shares in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
The Company further consents and agrees to use its best efforts to (i)
file on an appropriate form, as soon as practicable following the later to occur
of a Triggering Event or the Distribution Date, a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the securities issuable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earliest of (A) the date as of which the Rights are no longer exercisable
for such securities, (B) the Expiration Date, and (C) the Final Expiration Date.
The Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective and upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Rights shall not
be
17
exercisable in any jurisdiction if the requisite registration or qualification
in such jurisdiction shall not have been effected or the exercise of the Rights
shall not be permitted under applicable law.
Notwithstanding anything in this Agreement to the contrary, the Company
covenants and agrees that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take any action if at the time
such action is taken it is reasonably foreseeable that such action will diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
In the event that the Company is obligated to pay cash and/or distribute
other property pursuant to Sections 11, 13, and 14 hereof, it will make all
arrangements necessary so that such cash and/or property are available for
distribution by the Rights Agent, if and when appropriate.
Section 10. Common Shares Record Date. Each person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price, if required (and any applicable transfer taxes), was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Shares transfer books of the Company are open. Prior to the exercise pursuant to
Section 7 hereof of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
18
Section 11. Adjustment of Purchase Price, Number and Type of Shares or
Number of Rights. The Purchase Price, the number and type of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Common 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) or in Section 11(d) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and/or
the number and/or 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 Common Shares transfer books of the Company were
open, he would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification; provided,
however, that if the record date for any such dividend, subdivision, combination
or reclassification shall occur prior to the Distribution Date, the Company
shall make an appropriate adjustment to the Purchase Price (taking into account
any additional Rights which may be issued as a result of such dividend,
subdivision, combination or reclassification), in lieu of adjusting (as
described above) the number of Common Shares (or capital shares, as the case may
be) issuable upon exercise of the Rights. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof or
Section 11(d) hereof, the adjustment provided for in this Section 11(a)(i) shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii) or Section 11(d) hereof.
19
(ii) In the event that any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) who or
which, together with all Affiliates and Associates of such Person, shall become
the Beneficial Owner of 20% or more of the Common Shares then outstanding (other
than in an Approved Transaction), then, and in each such case, the Company shall
make adjustments in the terms of the Rights so that each holder of a Right,
except as provided below, shall thereafter have a right to receive, upon
exercise thereof in accordance with the terms of this Agreement, at an exercise
price per Right equal to the product of two times the then-current Purchase
Price multiplied by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event,
such number of Common Shares as shall equal the result obtained by (x)
multiplying the product of two times the then-current Purchase Price by the
number of Common Shares for which a Right was exercisable immediately prior to
the first occurrence of a Triggering Event and dividing that product by (y) 50%
of the current per share market price of the Common Shares (determined pursuant
to Section 11(e) hereof) on the date of the first occurrence of a Triggering
Event. Notwithstanding anything in this Agreement to the contrary, from and
after the later of the Distribution Date and the first occurrence of a Flip-In
Event, any Rights that are or were acquired or beneficially owned (1) by any
Acquiring Person (or any Affiliate or Associate of such Acquiring Person or any
transferee thereof) or (2) pursuant to a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this sentence, shall
become null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of the preceding sentence are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
20
(iii) Upon the occurrence of a Flip-In Event, if there shall not be
sufficient authorized but unissued Common Shares or authorized and issued Common
Shares held in treasury to permit the exercise in full of the Rights in
accordance with the foregoing subsection (ii), the Directors of the Company
shall use their best efforts promptly to authorize and, subject to the
provisions of Section 9 hereof, make available for issuance additional Common
Shares; provided, however, that if at any time after 90 calendar days after the
first occurrence of a Flip-In Event, there shall not be sufficient Common Shares
available for issuance upon the exercise of a Right, then the Company shall
deliver, upon the surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available), and then cash or other
property or securities (to the extent permitted by applicable law and any
agreements or instruments to which the Company is a party in effect immediately
prior to the first occurrence of any Flip-In Event), which Common Shares and
cash shall have an aggregate value equal to the excess of (x) the aggregate
current per share market price (determined pursuant to Section 11(e) hereof) of
all the Common Shares issuable in accordance with subsection (ii) of this
Section 11(a) upon the exercise of a Right over (y) the product of the
then-current Purchase Price multiplied by the number of Common Shares for which
a Right was exercisable immediately prior to the first occurrence of a
Triggering Event. To the extent that any legal or contractual restrictions
prevent the Company from paying the full amount of cash payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a pro rata basis. The Company shall continue to make payments on a pro rata
basis as funds become available until such payments have been paid in full.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or shares having the same
rights, privileges and preferences as the Common Shares ("equivalent common
shares")) or securities convertible into Common Shares or equivalent common
shares at a price per Common Share or equivalent common share (or having a
conversion price per share, if a security convertible into Common Shares or
equivalent common shares) less than the current per
21
share market price of the Common Shares (as determined pursuant to Section 11(e)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Common Shares outstanding on such record date plus the
number of Common Shares which the aggregate offering price of the total number
of Common Shares and/or equivalent common shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Common Shares outstanding on such record date plus
the number of additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
Common Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of the Common 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 at a rate not in
excess of 125% of the rate of the last cash dividend theretofore paid), assets,
stock (other than a dividend payable in Common Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price of the Common Shares (as determined pursuant to Section 11(e) hereof) on
such record date, less the fair market value (as
22
determined in good faith by the Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes) of the portion of the cash, assets, stock or
evidences of indebtedness so to be distributed (in the case of regular periodic
cash dividends at a rate in excess of 125% of the rate of the last cash dividend
theretofore paid, only that portion in excess of 125% of such rate) or of such
subscription rights, options or warrants applicable to one Common Share, and the
denominator of which shall be such current per share market price of the Common
Shares. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) In the event that, following the Share Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with or into, any
other Person and the Company shall not be the continuing or surviving
corporation of such merger or consolidation; or
(ii) any Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property; or
(iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation, securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing in the aggregate more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons;
then, and in each such case, proper provision shall be made so that (A) each
holder of a Right (except for Rights which are or become void as provided
herein) shall thereafter have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement at an exercise
23
price per Right equal to the product of two times the then-current Purchase
Price multiplied by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event,
such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable Common Shares of the Issuer (as such term is hereinafter
defined), free and clear of any liens, encumbrances and other adverse claims and
not subject to any rights of call or first refusal, as shall be equal to the
result obtained by (x) multiplying the product of two (2) times the then-current
Purchase Price by the number of Common Shares for which a Right is exercisable
immediately prior to the first occurrence of a Triggering Event and dividing
that product by (y) 50% of the current per share market price of the Common
Shares of the Issuer (determined pursuant to Section 11(e) hereof), on the date
of consummation of such Flip-Over Event; (B) the Issuer shall thereafter be
liable for, and shall assume, by virtue of the consummation of such Flip-Over
Event, all the obligations and duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be deemed to refer to the Issuer; and
(D) the Issuer shall take such steps (including, without limitation, the
reservation of a sufficient number of its Common Shares to permit the exercise
of all outstanding Rights) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be possible, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights. For purposes of this
Section 11(d), "Issuer" shall mean (A) in the case of any Flip-Over Event
described in Sections 11(d)(i) or (ii) above, the Person that is the continuing,
surviving, resulting or acquiring Person (including the Company as the
continuing or surviving corporation of a transaction described in Section
11(d)(ii) above), and (B) in the case of any Flip-Over Event described in
Section 11(d)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
provided, however, that, in any such case, (x) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term "Issuer" shall mean
such other Person; and
24
(y) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, a class of equity security of two or more of which are and have been
so registered, the term "Issuer" shall mean whichever of such Persons is the
issuer of the equity security having the greatest aggregate market value.
Notwithstanding the foregoing, if the Issuer in any of the Flip-Over Events
listed above is not a corporation or other legal entity having outstanding
equity securities, then, and in each such case, (A) if the Issuer is directly or
indirectly wholly owned by a corporation or other legal entity having
outstanding equity securities, then all references to Common Shares of the
Issuer shall be deemed to be references to the Common Shares of the corporation
or other legal entity having outstanding equity securities which ultimately
controls the Issuer, and (B) if there is no such corporation or other legal
entity having outstanding equity securities, (1) proper provision shall be made
so that the Issuer shall create or otherwise make available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have been
entitled to receive if the Issuer had been a corporation or other legal entity
having outstanding equity securities; and (2) all other provisions of this
Agreement shall apply to the issuer of such securities as if such securities
were Common Shares. The Company shall not consummate any Flip-Over Event unless
the Issuer shall have a sufficient number of authorized Common Shares (or other
securities as contemplated above) which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 11(d), and unless prior to such consummation the Company and the Issuer
shall have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Section 11(d) and further providing that as
promptly as practicable after the consummation of any Flip-Over Event, the
Issuer shall:
(A) prepare and file a registration statement under the Securities Act,
with respect to the Rights and the securities issuable upon exercise of the
Rights on an appropriate form, and shall use its best efforts to cause such
registration statement to (1) become effective as soon as practicable after such
filing and (2) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of the Expiration Date and
the Final Expiration Date;
25
(B) take all such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(C) deliver to holders of the Rights historical financial statements for
the Issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
The provisions of this Section 11(d) shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Flip-Over
Event occurs at any time after the occurrence of a Flip-In Event, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in this Section 11(d).
In the event that the Company shall be the continuing or surviving
corporation in a merger or consolidation referred to in subparagraph (ii) above
and Common Shares of the Company are required to be issued upon exercise of the
Rights following such merger or consolidation, and if there shall not be
sufficient authorized but unissued Common Shares or authorized and issued Common
Shares held in treasury to permit the exercise in full of the Rights in
accordance with the foregoing, the Directors of the Company shall use their best
efforts promptly to authorize and, subject to the provisions of Section 9
hereof, make available for issuance additional Common Shares; provided, however,
that if at any time after 90 calendar days after the first occurrence of a
Triggering Event, there shall not be sufficient Common Shares available for
issuance upon the exercise of a Right, then the Company shall deliver, upon the
surrender of such Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available), and then cash or other property or
securities (to the extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect immediately prior to the
first occurrence of any Triggering Event), which Common Shares and cash shall
have an aggregate value equal to the excess of (x) the aggregate current per
share market price (determined pursuant to Section 11(e)
26
hereof) of all the Common Shares issuable in accordance with this Section 11(d)
upon the exercise of a Right over (y) the product of the then-current Purchase
Price multiplied by the number of Common Shares for which a Right was
exercisable immediately prior to the occurrence of the merger or consolidation
referred to in subparagraph (ii) above. To the extent that any legal or
contractual restrictions prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the Company shall pay to
holders of the Rights as to which such payments are being made all amounts which
are not then restricted on a pro rata basis. The Company shall continue to make
payments on a pro rata basis as funds become available until such payments have
been paid in full.
(e) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current per share
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares (i) of a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the "current market price" shall be appropriately adjusted to
take into account ex-dividend trading or to reflect the current market price per
Common Share equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Common Shares are listed or admitted to trading or, if the Common
Shares are not listed or admitted to trading on any
27
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on any such
date the Common Shares are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Shares selected by the Directors of the Company.
The term "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in the State of New
York are not authorized or obligated by law or executive order to close. If the
Common Shares are not publicly held or not so listed or traded, or not the
subject of available bid and asked quotes, "current per share market price"
shall mean the fair value per share as determined in good faith by the Directors
of the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(f) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 11(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
thousandth of a share, as the case may be. Notwithstanding the first sentence of
this Section 11(f), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(g) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so
28
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 11 and the
provisions of Sections 7, 9, 10 and 14 hereof with respect to the Common Shares
shall apply on like terms to any such other shares. In the event that the Rights
become exercisable under both Section 11(a)(ii) and Section 11(d) hereof, a
holder may, at his or her option, elect to exercise Rights under either
provision, but each Right may be exercised only once.
(h) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(i) Unless the Company shall have exercised its election as provided
in Section 11(j) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares (calculated to the nearest thousandth) obtained by (i) multiplying (x)
the number of shares covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(j) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares 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 thousandth) obtained by dividing the Purchase
Price in effect immediately prior to
29
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 calendar 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(j), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(k) Irrespective of any adjustment or change in the Purchase Price
or the number or type of shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per whole share and the number of shares which were expressed in
the initial Right Certificate issued hereunder.
(l) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Common Shares
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Common Shares
at such adjusted Purchase Price.
30
(m) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(n) Anything in Sections 11 (a) through (m), inclusive, hereof to
the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision
of the Common Shares, issuance wholly for cash of any of the Common Shares at
less than the current market price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or exchangeable for Common
Shares, stock dividends or issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to holders of its
Common Shares shall not be taxable to such shareholders.
(o) Notwithstanding any other provision of this Agreement, no
adjustment to the Purchase Price (other than pursuant to Section 11(n)), the
number of Common Shares (or fractions of a share) for which a Right is
exercisable or the number of Rights outstanding shall be made or be effective if
such adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11(a)(ii) and 11(d) hereof, unless the
terms of this Agreement are amended so as to preserve such benefits.
31
(p) Notwithstanding the provisions of Sections 11(a)(ii) and 11(d)
hereof, the Directors of the Company may, at their option, at any time after the
later of the Distribution Date and the first occurrence of a Triggering Event,
exchange all or part of the then-outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Immediately upon the action of
the Directors of the Company ordering the exchange of any Rights pursuant to
this Section 11(p), and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right with respect to
such Rights thereafter of the holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. Promptly after the action of the Directors of
the Company ordering the exchange of any Rights pursuant to this Section 11(p),
the Company shall publicly announce such action, and within 10 calendar days
thereafter shall give 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; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. Any notice which is
mailed or transmitted in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
shall state the method by which the exchange of the Common Shares for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii)) held by each holder of Rights. In any
exchange pursuant to this Section 11(p), the Company, at its option, may
substitute for any Common Share exchangeable for a Right, (i) cash, (ii) debt
securities of the Company, (iii) other assets, or (iv) any combination of the
foregoing, in any event having an aggregate value which the Directors of the
Company shall have determined in good faith to be equal to the current per share
market price of one Common Share (determined pursuant to Section 11(e) hereof)
on the Trading Day immediately preceding the date of exchange pursuant to this
Section 11(p). The Company shall not be required to issue fractions of Common
32
Shares or to distribute certificates which evidence fractional Common Shares
upon the exchange of a Right. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current per share market price
of a whole Common Share (determined pursuant to Section 11(e) hereof) on the
Trading Day immediately preceding the date of exchange pursuant to this Section
11(p).
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 hereof, the Company
shall promptly prepare a certificate setting forth such adjustment, (including a
description of any Rights which have become void as a result thereof), and a
brief statement of the facts accounting for such adjustment and promptly file
with the Rights Agent and with each transfer agent for the Common Shares a copy
of such certificate.
Section 13. Notice of Adjusted Purchase Price or Number or Type of Shares
to Holders of Rights. Whenever an adjustment is made as provided in Section 11
hereof after the Distribution Date, the Company shall mail or transmit a brief
summary of such adjustment to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall
not be required to issue fractions of Rights or to distribute any Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid as promptly as practicable to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
33
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Directors of the Company. If on any such date no such market
maker is making a market in the Rights the fair value of the Rights on such date
as determined in good faith by the Directors of the Company shall be used and
shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares upon
exercise of the Rights or to distribute certificates which evidence fractional
shares. Fractions of Common Shares may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Common Shares. In lieu of fractional shares, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For purposes of this Section 14(b), the
current market value of a Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Section 11(e) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
34
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificates (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under this Agreement, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent in New York, New York, or Cleveland,
Ohio, duly endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby
35
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Share certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company must use
reasonable efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No 6
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable upon exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with Section 7
hereof or exchanged pursuant to the provisions of Section 11(p) hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on
36
demand of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, suit, action, proceeding or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability. If the Rights Agent asserts or intends to assert
a right of indemnification under this Section 18 in connection with a suit,
action or proceeding, the Company shall have the right, but not the obligation,
to assume the responsibility for the defense of any such suit, action or
proceeding.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent
37
may adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief
38
Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 hereof (including any adjustment which results in
Rights becoming void) or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment or voidance); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any Common
Shares will, when issued, be validly authorized and issued, fully paid and
nonassessable.
39
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer, or the Secretary of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Rights Agent shall not be under any duty
or responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
40
(j) The Rights Agent shall promptly remit to the Company any funds
paid to it upon exercise of the Rights pursuant to Section 7 hereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed or
otherwise transmitted to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares by registered or
certified mail (or such other method as the Company shall deem appropriate), and
to the holders of the Right Certificates by first-class mail (or such other
method as the Company shall deem appropriate). If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the States of Ohio or New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of Ohio or New York), in good standing, having a
principal office in the States of Ohio or New York, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $10
million and which shall otherwise meet any requirements imposed by the New York
Stock Exchange on transfer agents and registrars. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights
41
Agent shall deliver and transferto 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 mail or transmit a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption. (a) Prior to the earlier of the Expiration Date
and the Final Expiration Date, the Directors of the Company may, at their
option, redeem all but not less than all of the then-outstanding Rights at the
Redemption Price at any time prior to the Close of business on the later of (i)
the Distribution Date and (ii) the Share Acquisition Date.
(b) Immediately upon the action of the Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Promptly after the action of the Directors ordering the redemption of the
Rights, the Company shall publicly announce such action. Within 10 calendar days
after ordering the redemption of the Rights, the Company shall give notice of
such redemption to the holders of the then outstanding Rights by mailing or
transmitting such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
42
Distribution Date, on the registry books of the transfer agent for the Common
Shares; provided, however, that the failure to give, or any defect in, any such
notice shall not affect the validity of the redemption of the Rights. Any notice
which is mailed or transmitted in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed or transmitted to the holders of Rights shall state the method by which
the payment of the Redemption Price will be made. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based upon the current
per share market price of the Common Shares (determined pursuant to Section
11(e) hereof) at the time of redemption) or any other form of consideration
deemed appropriate by the Directors of the Company (based upon the fair market
value of such other consideration, determined by the Directors of the Company in
good faith) or any combination thereof.
(c) At any time following the Share Acquisition Date, the Directors
of the Company may relinquish their rights to redeem the Rights under paragraph
(a) above, or both, by duly adopting a resolution to that effect. Immediately
upon adoption of such resolution, the rights of the Directors under the portions
of this Section 23 specified in such resolution shall terminate without further
action and without any notice.
(d) Notwithstanding anything in this Section 23 to the contrary, all
rights of, and requirements for, redemption set forth above shall terminate
immediately and automatically upon the occurrence of any one or more of the
events set forth in Sections 11(a)(ii) or Sections 11(d)(i), (ii) or (iii),
hereof.
Section 24. Notice of Certain Events. In case, after the Distribution
Date, the Company shall propose (a) to pay any dividend payable in stock of any
class to the holders of Common Shares or to make any other distribution to the
holders of Common Shares (other than a regular periodic cash dividend at a rate
not in excess of 125% of the rate of the last cash dividend theretofore paid) or
(b) to offer to the holders of Common Shares rights, options or warrants to
subscribe for or to purchase any additional Common Shares or shares of stock of
any class or any other securities,
43
rights or options, or (c) to effect any reclassification of its Common Shares
(other than a reclassification involving only the subdivision of outstanding
Common Shares), or (d) to effect any consolidation or merger, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or warning power of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 25
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution or offering of rights,
options or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the Common Shares, if
any such date is to be fixed, and such notice shall be so given, in the case of
any action covered by clause (a) or (b) above, at least 20 calendar days prior
to the record date for determining holders of the Common Shares for purposes of
such action, and, in the case of any such other action, at least 20 calendar
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares, whichever shall be
the earlier.
In case any of the events set forth in Section 11(a)(ii) or Section 11(d)
hereof shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of the event to
holders of Rights.
Section 25. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
The Lubrizol Corporation
00000 Xxxxxxxx Xxxxxxxxx
00
Xxxxxxxxx, Xxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
(or if given such other method as the Company shall deem appropriate). Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to the holder of any Right Certificate shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Rights Agent (or if given such other method as the Company shall deem
appropriate).
Section 26. Supplements and Amendments. Prior to the Distribution Date,
the Board of Directors of the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing Common Shares. From and
after the Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent may at any time and from time to
time supplement or amend this Agreement without the approval of any holders of
Rights solely in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, to shorten or lengthen any time period hereunder or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and the Rights Agent may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), as such;
provided, this Agreement may not be supplemented or
45
amended to lengthen a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable or any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of Common Shares for which a Right is exercisable;
provided, however, that at any time prior to (i) a Share Acquisition Date or
(ii) the date that a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, or any Person or entity organized, appointed
or established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 20% or more of the Common
Shares then outstanding, the Board of Directors of the Company may amend this
Agreement to increase the Purchase Price or extend the Final Expiration Date.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 27. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder. The Company
covenants and agrees that it shall not (i) consolidate with, (ii) merge with or
into, or (iii) sell or transfer to, in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries, taken as a whole, any Acquiring Person or its
Affiliates or Associates if at the time of or after such consolidation, merger
or sale there would be any charter or by-law provisions or any rights, options,
warrants or other instruments or securities outstanding or agreements in effect
or any other actions taken which would eliminate or otherwise diminish the
benefits intended to be afforded by the Rights.
46
Section 28. Determinations and Actions by the Directors. etc. 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 such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3d(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect as of the date hereof and as hereinafter amended but only to the extent
that any amendment thereto does not diminish the rights of holder of the Rights
other than any Acquiring Person or an Affiliate or Associate of an Acquiring
Person. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (ii)
below, all omissions with respect to the foregoing) which are done or made by
the Directors in good faith, shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(ii) not subject the Directors to any liability to the holders of the Right
Certificates.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the 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 shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates.
Section 30. Action by Executive Committee. Whenever any action hereunder
or in connection with the Rights is required or permitted to be taken by the
Board of Directors of the
47
Company, such action may be taken by the Executive Committee of the Board or by
any other duly authorized committee thereof.
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, to
the extent such terms, provisions, covenants and restrictions do not adversely
affect the interests of the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person), as such.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, this 26th day of July, 1999.
THE LUBRIZOL CORPORATION
48
By:________________________________________
Name: _____________________________________
Title:_____________________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: _______________________________________
Name:______________________________________
Title:_____________________________________
49
EXHIBIT A
[Form of Right Certificate]
Certificate No. R-
____________ Rights
NOT EXERCISABLE AFTER OCTOBER 12, 2007 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.05 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO OR ACQUIRED BY
A PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 11(a)(ii)
OR SECTION 11(d) OF THE RIGHTS AGREEMENT.](1)
Right Certificate
THE LUBRIZOL CORPORATION
This certifies that , or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Amended and
Restated Rights Agreement dated as of July 26, 1999 (the "Rights Agreement")
between The Lubrizol Corporation, an Ohio corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M. (Cleveland, Ohio time) on October
12, 2007 at the principal office of the Rights Agent, or its successors as
Rights Agent, in New York, New York or Cleveland, Ohio, one-half of one fully
paid nonassessable Common Share, without par value (a "Common Share") of the
Company, at a purchase price of $170 per whole Common Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of July 26, 1999, based on the Common Shares as
constituted at such date.
---------------------
(1) The portion of the legend in brackets shall be inserted only if applicable
and if the Company is able to identify the holder as an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
A-1
As provided in the Rights Agreement, the Purchase Price and the number of
Common Shares which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent in New York, New York or
Cleveland, Ohio, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at a redemption price of $.05
per Right, payable, at the election of the Company, in cash, Common Shares of
the Company or such other consideration as may be determined by the Directors of
the Company.
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby (other than fractions which may, at the election of
the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Common Shares or of any
other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to 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 shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-2
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ___________.
THE LUBRIZOL CORPORATION
Attest: ______________ By: ____________________________
Name: _______________________
Title: __________________________
Countersigned:
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: ____________________________
Name: ___________________
Title: _________________________
A-3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED, ____________________________________ hereby sells,
assigns and transfers unto __________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ____________
___________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
A-4
(1) This Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ______________
______________________
Signature
Signature Guaranteed:
A-5
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
A-6
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To The Lubrizol Corporation:
The undersigned hereby irrevocably elects to exercise_____________ Rights
represented by this Right Certificate to purchase the Common Shares issuable
upon the exercise of such Rights and requests that certificates for such shares
be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _____________
______________________
Signature
Signature Guaranteed:
A-7
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) The Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________
_____________________
Signature
Signature Guaranteed:
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.
A-8
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 22, 1997, the Directors of The Lubrizol Corporation (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding Common Share, without par value (the "Common Shares"), of the
Company. The distribution is payable on October 13, 1997 to the shareholders of
record as of the close of business on September 22, 1997 (the "Record Date").
Each Right initially entitles the registered holder to purchase from the Company
one-half of one Common Share at a price of $170 per whole share, subject to
adjustment (the "Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement dated as of October 13, 1997 (the "Rights
Agreement") between the Company and American Stock Transfer & Trust Company, as
Rights Agent (the "Rights Agent").
Until the earlier of (i) ten Business Days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding Common Shares, or (ii) ten Business Days
following the commencement of a tender offer or exchange offer for 20% or more
of such outstanding Common Shares (in each case without the prior approval of
the Board of Directors)(the earlier of such dates being hereinafter called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with a copy of this Summary of Rights attached thereto. The
Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without a copy of this Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date (as defined above), separate certificates
evidencing the Rights (the "Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 12, 2007, unless earlier redeemed by the Company as
described below.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of certain rights,
options or warrants to subscribe for Common Shares or convertible securities at
less than the current market price of the Common Shares, or (iii) upon the
distribution to holders of the Common Shares of evidences of indebtedness, cash
(excluding regular periodic cash dividends at a rate not in excess of
125% of the rate of the last cash dividend theretofore paid) assets, stock
(other than dividends payable in Common Shares) or of subscription rights,
options or warrants (other than those referred to above).
In the event that an Acquiring Person merges into the Company and the
Company's Common Shares are not changed or exchanged or a person or group of
affiliated or associated persons become the beneficial owner of 20% or more of
the Company's Common Shares, proper provision shall be made so that each holder
of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person after the date upon which the Acquiring Person became such
(which will thereafter be void), will thereafter have the right to receive upon
exercise thereof at the then current Purchase Price, that number of Common
Shares having a market value of two times the Purchase Price (or, under certain
circumstances, an amount of cash or other property or securities having a value
equal to the Purchase Price). In the event that the Company is acquired by an
Acquiring Person in a merger or other business combination transaction or 50% or
more of its assets or earning power are sold to an Acquiring Person (other than
in a transaction approved by the Company's shareholders), proper provision shall
be made so that each holder of a Right, other than Rights that are or were
beneficially owned by the Acquiring Person after the date upon which the
Acquiring Person became such (which will thereafter be void), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, that number of Common Shares (or, under certain circumstances,
an economically equivalent security or securities) of the surviving, resulting
or acquiring person which at the time of such transaction would have a market
value of two times the Purchase Price (or, under certain circumstances, an
amount of cash equal to the Purchase).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued (other than fractions
which may, at the election of the Company, be evidenced by depositary receipts),
and in lieu thereof, a payment in cash will be made based on the market price of
the Common Shares on the last trading day prior to the date of exercise.
The Company may redeem the Rights in whole, but not in part, at a price of
$0.05 per Right (the "Redemption Price") at any time prior to the later of (i)
the Distribution Date and (ii) a public announcement that a person or group of
affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding Common Shares (or such later date as the Directors may
specify), and, under certain circumstances, upon a merger or consolidation of
the Company with or into a corporation which is not an Acquiring Person. At the
election of the Company, the Redemption Price may be payable in cash, Common
Shares, or such other consideration as the Company deems appropriate.
Immediately upon the action of the Directors of the Company authorizing
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Company will give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear on the Registry Books of the Rights Agent.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A-10
Prior to the Rights becoming exercisable, the Rights Agreement may be
amended or supplemented by the Company and the Rights Agent, without the
approval of any holders of Rights, in any manner, except for an amendment or
supplement which would change the Redemption Price, accelerate the Final
Expiration Date, reduce the Purchase Price or change the number of Common Shares
for which a Right is then exercisable. After the Distribution Date, the Rights
Agreement may be so amended or supplemented to cure ambiguity, correct or
supplement defective or inconsistent provisions or otherwise as the Company and
the Rights Agent may deem necessary or desirable and shall not adversely affect
the interests of the Rights holders.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available 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, which is hereby
incorporated herein by reference.
A-11
