EXHIBIT 4.1
RIGHTS AGREEMENT
Dated as of February 7, 1999
By and Between
AEROQUIP-XXXXXXX, INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Rights Agent
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TABLE OF CONTENTS
Page
1. Certain Definitions; Effective Date 1
2. Appointment of Rights Agent 4
3. Issue of Right Certificates 5
4. Form of Right Certificates 6
5. Countersignature and Registration 7
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates 7
7. Exercise of Rights; Purchase Price; Expiration Date of Rights 8
8. Cancellation and Destruction of Right Certificates 9
9. Company Covenants Concerning Securities and Rights 9
10. Record Date 11
11. Adjustment of Purchase Price, Number and Kind of Securities or Number of
Rights 11
12. Certificate of Adjusted Purchase Price or Number of Securities 19
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 19
14. Fractional Rights and Fractional Securities 22
15. Rights of Action 23
16. Agreement of Rights Holders 24
17. Right Certificate Holder Not Deemed a Xxxxxxxxxxx 00
00. Concerning the Rights Agent 25
19. Merger or Consolidation or Change of Name of Rights Agent 25
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20. Duties of Rights Agent 26
21. Change of Rights Agent 27
22. Issuance of New Right Certificates 28
23. Redemption 29
24. Exchange 29
25. Notice of Certain Events 30
26. Notices 31
27. Supplements and Amendments 31
28. Successors; Certain Covenants 32
29. Benefits of This Agreement 32
30. Governing Law 32
31. Severability 32
32. Descriptive Headings, Etc 33
33. Determinations and Actions by the Directors 33
34. Counterparts 33
Exhibit A A-1
Exhibit B B-1
Exhibit C C-1
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of February 7, 1999 (this "Agreement"),
is made and entered into by and between Aeroquip-Xxxxxxx, Inc., an Ohio
corporation (the "Company"), and First Chicago Trust Company of New York (the
"Rights Agent").
RECITALS
WHEREAS, on December 10, 1998, the Directors of the Company authorized
and declared a dividend distribution of one right (a "Right") for each Common
Share, par value $5.00 per share, of the Company (a "Common Share")
outstanding as of the Close of Business (as hereinafter defined) on February
7, 1999 (the "Record Date"), each Right initially representing the right to
purchase one one-hundredth of a Preferred Share (as hereinafter defined), on
the terms and subject to the conditions herein set forth, and further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter defined) or as
provided in Section 22. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not take effect until 12:01 a.m. on February 7,
1999.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. Certain Definitions; Effective Date. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (other than the Company or any
Related Person) who or which, together with all Affiliates and Associates of
such Person, is the Beneficial Owner of 20% or more of the then-outstanding
Common Shares; provided, however, that a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of
Common Shares outstanding unless and until such time as (i) such Person or any
Affiliate or Associate of such Person thereafter becomes the Beneficial Owner
of additional Common Shares representing 1% or more of the then-outstanding
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 (ii) any other Person who is the Beneficial
Owner of Common Shares representing 1% or more of the then-outstanding Common
Shares thereafter becomes an Affiliate or Associate of such Person.
Notwithstanding the foregoing, if the Directors of the Company determine in
good faith that a Person who would otherwise be an "Acquiring Person" as
defined pursuant to the foregoing provisions of this paragraph (a), has become
such inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
"Acquiring Person" as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
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(b) "Affiliate" and "Associate" will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.
(c) A Person will be deemed the "Beneficial Owner" of, and to
"Beneficially Own," any securities:
(i) the beneficial ownership of which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants, options or other rights
(in each case, other than upon exercise or exchange of the Rights);
provided, however, that a Person will not be deemed the Beneficial Owner
of, or to Beneficially Own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iii) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) with
such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of
any securities of the Company;
provided, however, that a Person will not be deemed the Beneficial Owner of,
or to Beneficially Own, any security (A) if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding (whether
or not in writing) which (1) 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 (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report), or (B) if such
beneficial ownership arises solely as a result of such Person's status as a
"clearing agency," as defined in Section 3(a)(23) of the Exchange Act;
provided further, however, that nothing in this paragraph (c) will cause a
Person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in an underwriting syndicate until
the expiration of 40 calendar days after the date of such acquisition, or such
later date as the Directors of the Company may determine in any specific case.
(d) "Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in the State of New York (or such other
state in which the principal office of the Rights Agent is located) are
authorized or obligated by law or executive order to close.
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(e) "Close of Business" on any given date means 5:00 P.M., Eastern
time, on such date; provided, however, that if such date is not a Business Day
it means 5:00 P.M., Eastern time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company means the
Common Shares, par value $5.00 per share, of the Company; provided, however,
that, if the Company is the continuing or surviving corporation in a
transaction described in Section 13(a)(ii), "Common Shares" when used with
reference to the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the Company.
"Common Shares" when used with reference to any corporation or other legal
entity other than the Company, including an Issuer, means shares of the
capital stock or units of the equity interests with the greatest aggregate
voting power of such corporation or other legal entity.
(g) "Company" means Aeroquip-Xxxxxxx, Inc., an Ohio corporation.
(h) "Distribution Date" means the earlier of: (i) the Close of
Business on the Share Acquisition Date, or (ii) the Close of Business on the
tenth Business Day (or, unless the Distribution Date shall have previously
occurred, such later date as may be specified by the Directors of the Company)
after the commencement of a tender or exchange offer by any Person (other than
the Company or any Related Person), if upon the consummation thereof such
Person would be the Beneficial Owner of 20% or more of the then-outstanding
Common Shares.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Expiration Date" means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed
as provided in Section 23, and (iii) the time at which all exercisable Rights
are exchanged as provided in Section 24.
(k) "Final Expiration Date" means the tenth anniversary of the Record
Date.
(l) "Flip-in Event" means any event described in clauses (A), (B) or
(C) of Section 11(a)(ii).
(m) "Flip-over Event" means any event described in clauses (i), (ii)
or (iii) of Section 13(a).
(n) "Issuer" has the meaning set forth in Section 13(b).
(o) "Nasdaq" means The NASDAQ Stock Market.
(p) "Person" means any individual, firm, corporation or other legal
entity, and includes any successor (by merger or otherwise) of such entity.
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(q) "Preferred Shares" means shares of Cumulative Redeemable Serial
Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the form of Certificate of Adoption of Amendment to
Articles of Incorporation attached as Exhibit A.
(r) "Purchase Price" means initially $150.00 per one one-hundredth of
a Preferred Share, subject to adjustment from time to time as provided in this
Agreement.
(s) "Record Date" has the meaning set forth in the Recitals to this
Agreement.
(t) "Redemption Price" means $.01 per Right, subject to adjustment by
resolution of the Directors of the Company to reflect any stock split, stock
dividend or similar transaction occurring after the Record Date.
(u) "Related Person" means (i) any Subsidiary of the Company or (ii)
any employee benefit or stock ownership plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant
to the terms of any such plan.
(v) "Right" has the meaning set forth in the Recitals to this
Agreement.
(w) "Right Certificates" means certificates evidencing the Rights, in
substantially the form attached as Exhibit B.
(x) "Rights Agent" means First Chicago Trust Company of New York,
unless and until a successor Rights Agent has become such pursuant to the
terms of this Agreement, and thereafter, "Rights Agent" means such successor
Rights Agent.
(y) "Securities Act" means the Securities Act of 1933, as amended.
(z) "Share Acquisition Date" means the first date of public
announcement by the Company (by press release, filing made with the Securities
and Exchange Commission or otherwise) that an Acquiring Person has become
such.
(aa) "Subsidiary" when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such Person; provided, however, that for purposes of Section
13(b), "Subsidiary" when used with reference to any Person means any
corporation or other legal entity of which at least 20% of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(bb) "Trading Day" means 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
Business Day.
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(cc) "Triggering Event" means any Flip-in Event or Flip-over Event.
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, will 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 act as Co-Rights Agent or 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. To the extent that any Co-Rights Agent takes any action pursuant to
this Agreement, such Co-Rights Agent will be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
3. Issue of Right Certificates. (a) Until the Distribution Date, (i)
the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates. On or as promptly as
practicable after the Record Date, the Company will send by first class,
postage prepaid mail, 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, a copy of a Summary of Rights to
Purchase Preferred Stock in substantially the form attached as Exhibit C.
(b) Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will 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 or transaction reporting system
on which the Common Shares may from time to time be listed or quoted, or to
conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Aeroquip-
Xxxxxxx, Inc. and First Chicago Trust Company of New York, dated
as of February 7, 1999 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a
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copy of which is on file at the principal executive offices of
Aeroquip-Xxxxxxx, Inc. The Rights are not exercisable prior to
the occurrence of certain events specified in the Rights
Agreement. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be redeemed, may be exchanged,
may expire, may be amended, or may be evidenced by separate
certificates and no longer be evidenced by this Certificate.
Aeroquip-Xxxxxxx, Inc. will mail to the holder of this Certificate
a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances as set forth in the
Rights Agreement, Rights that are or were beneficially owned by an
Acquiring Person or any Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement) may
become null and void.
(c) Any Right Certificate issued pursuant to this Section 3 that
represents Rights 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 Section 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 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 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 are or were
beneficially owned 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 Section 11(a)(ii) or Section 13 of the Rights Agreement.
(d) As promptly as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign and the
Company will send or cause to be sent (and the Rights Agent will, if
requested, send), by first class, insured, postage prepaid mail, to each
record holder of Common Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Right Certificate evidencing one Right for each Common Share so held, subject
to adjustment as provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(e) In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired
so that the Company will not be entitled to exercise any Rights associated
with the Common Shares so purchased or acquired.
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4. Form of Right Certificates. The Right Certificates (and the form
of election to purchase and the form of assignment to be printed on the
reverse thereof) will be substantially in the form attached as Exhibit B with
such changes and 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 or
transaction reporting system on which the Rights may from time to time be
listed or quoted, or to conform to usage. Subject to the provisions of
Section 22, the Right Certificates, whenever issued, on their face will
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as are set forth therein at the Purchase Price set forth
therein, but the Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding will be
subject to adjustment as provided herein.
5. Countersignature and Registration. (a) The Right Certificates
will be executed on behalf of the Company by its Chairman, its President or
any Vice President, either manually or by facsimile signature, and will have
affixed thereto the Company's seal or a facsimile thereof which will be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates will be manually
countersigned by the Rights Agent and will not be valid for any purpose unless
so countersigned. In case any officer of the Company who signed any of the
Right Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
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, is 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 officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or any transaction reporting
system on which the Rights may from time to time be listed or quoted, books
for registration and transfer of the Right Certificates issued hereunder.
Such books will 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.
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 7(d) and 14, at any time after the Close
of Business on the Distribution Date and prior to the Expiration Date, any
Right Certificate or Right Certificates representing exercisable Rights may be
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transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a Preferred Share (or other securities, as the case
may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
such Right Certificate or Rights Certificates must make such request in a
writing delivered to the Rights Agent and must surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at
the principal office of the Rights Agent designated for such purpose.
Thereupon or as promptly as practicable thereafter, subject to the provisions
of Sections 7(d) and 14, the Company will prepare, execute and deliver to the
Rights Agent, and the Rights Agent will countersign and deliver, a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, if requested by
the Company, 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
prepare, execute and deliver a new Right Certificate of like tenor to the
Rights Agent and the Rights Agent will countersign and deliver such new Right
Certificate to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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 prior to the 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 the office or
offices of the Rights Agent designated for such purpose, together with payment
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 sum of (i) the
exercise price for the total number of securities as to which such surrendered
Rights are exercised and (ii) an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
the provisions of Section 9(d).
(b) Upon receipt of a Right Certificate representing exercisable
Rights with the form of election to purchase duly executed, accompanied by
payment as described above, the Rights Agent will promptly (i) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent) certificates representing the number of
one one-hundredths of a Preferred Share to be purchased (and the Company
hereby irrevocably authorizes and directs its transfer agent to comply with
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all such requests), or, if the Company elects to deposit Preferred Shares
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased (and
the Company hereby irrevocably authorizes and directs such depositary agent to
comply with all such requests), (ii) after receipt of such certificates (or
depositary receipts, as the case may be), 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) when
appropriate, requisition from the Company or any transfer agent therefor (or
make available, if the Rights Agent is the transfer agent) certificates
representing the number of equivalent common shares to be issued in lieu of
the issuance of Common Shares in accordance with the provisions of Section
11(a)(iii), (iv) when appropriate, 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, (v) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of the issuance of fractional shares in accordance
with the provisions of Section 14 or in lieu of the issuance of Common Shares
in accordance with the provisions of Section 11(a)(iii), (vi) when
appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate, and (vii) when appropriate,
deliver any due xxxx or other instrument provided to the Rights Agent by the
Company for delivery to the registered holder of such Right Certificate as
provided by Section 11(l).
(c) In case the registered holder of any Right Certificate exercises
less than all the Rights evidenced thereby, the Company will prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such
new Right Certificate to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section 14.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will 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 or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of
such Right Certificate has (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 may
reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or 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, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
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permitted by the provisions of this Agreement. The Company will deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will
deliver all canceled Right Certificates to the Company, or will, at the
written request of the Company, destroy such canceled Right Certificates, and
in such case will deliver a certificate of destruction thereof to the Company.
9. Company Covenants Concerning Securities and Rights. The Company
covenants and agrees that:
(a) It will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in
its treasury, a number of Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with
Section 7.
(b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities)
issuable upon the exercise of the Rights may be listed on a national
securities exchange, or quoted on Nasdaq, it will endeavor to cause,
from and after such time as the Rights become exercisable, all
securities reserved for issuance upon the exercise of Rights to be
listed on such exchange, or quoted on Nasdaq, upon official notice of
issuance upon such exercise.
(c) It will take all such action as may be necessary to ensure
that all Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) delivered upon exercise of
Rights, at the time of delivery of the certificates for such securities,
will be (subject to payment of the Purchase Price) duly authorized,
validly issued, fully paid and nonassessable securities.
(d) It will pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates and of any certificates
representing securities issued upon the exercise of Rights; provided,
however, that the Company will not be required to pay any transfer tax
or charge which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts representing securities issued
upon the exercise of Rights 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 or depositary receipts
representing securities issued upon the exercise of any Rights until any
such tax or charge has been paid (any such tax or charge being payable
by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction
that no such tax is due.
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(e) It will use its best efforts (i) to file on an appropriate
form, as soon as practicable following the later of the Share
Acquisition Date and the Distribution Date, a registration statement
under the Securities Act with respect to the securities issuable upon
exercise of the Rights, (ii) to cause such registration statement to
become effective as soon as practicable after such filing, and (iii) to
cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company will also
take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time after the date set forth in
clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective. 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. In addition, if the Company determines that a
registration statement should be filed under the Securities Act or any
state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been
declared 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 will not be exercisable in
any jurisdiction if the requisite registration or qualification in such
jurisdiction has not been effected or the exercise of the Rights is not
permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the contrary,
after the later of the Share Acquisition Date and the Distribution Date
it will not take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action
will eliminate or otherwise diminish the benefits intended to be
afforded by the Rights.
(g) In the event that the Company is obligated to issue other
securities of the Company and/or pay cash pursuant to Sections 11, 13,
14 or 24 it will make all arrangements necessary so that such other
securities and/or cash are available for distribution by the Rights
Agent, if and when appropriate.
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10. Record Date. Each Person in whose name any certificate
representing Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights will for all purposes
be deemed to have become the holder of record of the Preferred Shares (or
Common Shares and/or other securities, as the case may be) represented thereby
on, and such certificate will be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the transfer books of the Company for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) are closed, such Person will be
deemed to have become the record holder of such securities on, and such
certificate will be dated, the next succeeding Business Day on which the
transfer books of the Company for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate will not be
entitled to any rights of a holder of any security for which the Rights are or
may become exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions, or to exercise any preemptive
rights, and will not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities
issuable upon exercise of 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 at any time after the Record
Date (A) declares a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivides the outstanding Preferred Shares, (C)
combines the outstanding Preferred Shares into a smaller number of
Preferred Shares, or (D) issues any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), 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 upon
exercise of a Right, will be proportionately adjusted so that the holder
of any Right exercised after such time is entitled to receive upon
payment of the Purchase Price then in effect the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the transfer books of
the Company for the Preferred Shares were open, the holder of such Right
would have owned upon such exercise (and, in the case of a
reclassification, would have retained after giving effect to such
reclassification) and would have been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the
-19-
exercise of one Right be less than the aggregate par value of the shares
of capital stock issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) or Section 13, the adjustment provided
for in this Section 11(a)(i) will be in addition to, and will be made
prior to, any adjustment required pursuant to Section 11(a)(ii) or
Section 13.
(ii) Subject to the provisions of Section 24, if:
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, directly or indirectly, (1) merges into the Company or
otherwise combines with the Company and the Company is the continuing or
surviving corporation of such merger or combination (other than in a
transaction subject to Section 13), (2) merges or otherwise combines
with any Subsidiary of the Company, (3) in one or more transactions
(otherwise than in connection with the exercise, exchange or conversion
of securities exercisable or exchangeable for or convertible into shares
of any class of capital stock of the Company or any of its Subsidiaries)
transfers cash, securities or any other property to the Company or any
of its Subsidiaries in exchange (in whole or in part) for shares of any
class of capital stock of the Company or any of its Subsidiaries or for
securities exercisable or exchangeable for or convertible into shares of
any class of capital stock of the Company or any of its Subsidiaries, or
otherwise obtains from the Company or any of its Subsidiaries, with or
without consideration, any additional shares of any class of capital
stock of the Company or any of its Subsidiaries or securities
exercisable or exchangeable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries (otherwise
than as part of a pro rata distribution to all holders of shares of any
class of capital stock of the Company, or any of its Subsidiaries), (4)
sells, purchases, leases, exchanges, mortgages, pledges, transfers or
otherwise disposes (in one or more transactions) to, from, with or of,
as the case may be, the Company or any of its Subsidiaries (otherwise
than in a transaction subject to Section 13), any property, including
securities, on terms and conditions less favorable to the Company than
the Company would be able to obtain in an arm's-length transaction with
an unaffiliated third party, (5) receives any compensation from the
Company or any of its Subsidiaries other than compensation as a director
or a regular full-time employee, in either case at rates consistent with
the Company's (or its Subsidiaries') past practices, or (6) receives the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries; or
(C) during such time as there is an Acquiring Person, there is
any reclassification of securities of the Company (including any reverse
stock split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries, or any other
-20-
transaction or series of transactions involving the Company or any of
its Subsidiaries (whether or not with or into or otherwise involving an
Acquiring Person), other than a transaction subject to Section 13, which
has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or of securities
exercisable or exchangeable for or convertible into equity securities of
the Company or any of its Subsidiaries, of which an Acquiring Person, or
any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner;
then, and in each such case, proper provision will be made so that each
holder of a Right, except as provided below, will thereafter have the
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
the then-current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event
(or, if any other Flip-in Event shall have previously occurred, the
product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the first occurrence of a
Flip-in Event), in lieu of Preferred Shares, such number of Common
Shares as equals the result obtained by (x) multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-in Event shall
have previously occurred, multiplying the then-current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to the date of the first occurrence of
a Flip-in Event), and dividing that product by (y) 50% of the current
per share market price of the Common Shares (determined pursuant to
Section 11(d)) on the date of the occurrence of such Flip-in Event.
Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Flip-in Event, any Rights that are
Beneficially Owned by (A) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (B) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee
after the occurrence of a Flip-in Event, or (C) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the occurrence of a Flip-in
Event pursuant to either (1) a transfer from an Acquiring Person to
holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (2) a transfer which the Directors of the Company
have determined is part of a plan, arrangement or understanding which
has the purpose or effect of avoiding the provisions of this Section
11(a)(ii), and subsequent transferees of any of such Persons, will be
void without any further action and any holder of such Rights will
thereafter have no rights whatsoever with respect to such Rights under
any provision of this Agreement. The Company will use all reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) are
-21-
complied with, but will have no liability to any holder of Right
Certificates or any 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. Upon the occurrence of a Flip-in
Event, no Right Certificate that represents Rights that are or have
become void pursuant to the provisions of this Section 11(a)(ii) will
thereafter be issued pursuant to Section 3 or Section 6, and any Right
Certificate delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of this Section
11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event,
any Rights that shall not have been previously exercised pursuant to
this Section 11(a)(ii) shall thereafter be exercisable only pursuant to
Section 13 and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if there are not
sufficient Common Shares authorized but unissued or issued but not
outstanding to permit the issuance of all the Common Shares issuable in
accordance with Section 11(a)(ii) upon the exercise of a Right, the
Directors of the Company will use their best efforts promptly to
authorize and, subject to the provisions of Section 9(e), make available
for issuance additional Common Shares or other equity securities of the
Company having equivalent voting rights and an equivalent value (as
determined in good faith by the Directors of the Company) to the Common
Shares (for purposes of this Section 11(a)(iii), "equivalent common
shares"). In the event that equivalent common shares are so authorized,
upon the exercise of a Right in accordance with the provisions of
Section 7, the registered holder will be entitled to receive (A) Common
Shares, to the extent any are available, and (B) a number of equivalent
common shares, which the Directors of the Company have determined in
good faith to have a value equivalent to the excess of (x) the aggregate
current per share market value on the date of the occurrence of the most
recent Flip-in Event of all the Common Shares issuable in accordance
with Section 11(a)(ii) upon the exercise of a Right (the "Exercise
Value") over (y) the aggregate current per share market value on the
date of the occurrence of the most recent Flip-in Event of any Common
Shares available for issuance upon the exercise of such Right; provided,
however, that if at any time after 90 calendar days after the latest of
the Share Acquisition Date, the Distribution Date and the date of the
occurrence of the most recent Flip-in Event, there are not sufficient
Common Shares and/or equivalent common shares available for issuance
upon the exercise of a Right, then the Company will be obligated to
deliver, upon the surrender of such Right and without requiring payment
of the Purchase Price, Common Shares (to the extent available),
equivalent common shares (to the extent available) and then cash (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 Share
Acquisition Date), which securities and cash have an aggregate value
equal to the excess of (1) the Exercise Value over (2) the product of
the then-current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of the most recent Flip-
in Event (or, if any other Flip-in Event shall have previously occurred,
-22-
the product of the then-current Purchase Price multiplied by the number
of one one-hundredths of a Preferred Share for which a Right would have
been exercisable immediately prior to the date of the occurrence of such
Flip-in Event if no other Flip-in Event had previously occurred). 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 will 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 and will continue to make payments on a
pro rata basis as promptly as funds become available until the full
amount due to each such Rights holder has been paid.
(b) In the event that the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of
this Section 11(b), "equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a price per Preferred
Share or equivalent preferred share (or having a conversion price per share,
if a security convertible into Preferred Shares or equivalent preferred
shares) less than the current per share market price of the Preferred Shares
(determined pursuant to Section 11(d)) on such record date, the Purchase Price
to be in effect after such record date will be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which is the number of Preferred Shares outstanding on such
record date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current per
share market price and the denominator of which is the number of Preferred
Shares outstanding on such record date plus the number of additional Preferred
Shares and/or equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise of
one Right. In case such subscription price may be paid in a consideration
part or all of which is in a form other than cash, the value of such
consideration will be as determined in good faith by the Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent. Preferred Shares owned by or held for the account of the
Company will not be deemed outstanding for the purpose of any such
computation. Such adjustment will 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 will 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 fixes a record date for the making
of a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
-23-
indebtedness, cash (other than a regular periodic cash dividend), assets,
stock (other than a dividend payable in Preferred Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date will be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which is the current per share market
price of the Preferred Shares (as determined pursuant to Section 11(d)) on
such record date or, if earlier, the date on which Preferred Shares begin to
trade on an ex-dividend or when issued basis for such distribution, less the
fair market value (as determined in good faith by the Directors of the
Company, whose determination will be described in a statement filed with the
Rights Agent) of the portion of the evidences of indebtedness, cash, assets or
stock so to be distributed or of such subscription rights, options or warrants
applicable to one Preferred Share, and the denominator of which is such
current per share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock
issuable upon exercise of one Right. Such adjustments will be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price will again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of Common Shares on any date will be deemed to
be the average of the daily closing prices per share of such Common
Shares for the 30 consecutive Trading Days immediately prior to such
date; provided, however, that in the event that the current per share
market price of the Common Shares is determined during a period
following the announcement by the issuer of such Common Shares of (A) a
dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares (other than the
Rights) or (B) 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 per share market price will be appropriately
adjusted to take into account ex-dividend trading or to reflect the
current per share market price per Common Share equivalent. The closing
price for each day will 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 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
-24-
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. If the
Common Shares are not publicly held or not so listed or traded, or are
not the subject of available bid and asked quotes, "current per share
market price" will mean the fair value per share as determined in good
faith by the Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares will be determined in
the same manner as set forth above for Common Shares in Section
11(d)(i), other than the last sentence thereof. If the current per
share market price of the Preferred Shares cannot be determined in the
manner provided above, the "current per share market price" of the
Preferred Shares will be conclusively deemed to be an amount equal to
the current per share market price of the Common Shares multiplied by
one hundred (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the Common Shares occurring after the
date of this Agreement). If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, or the subject of
available bid and asked quotes, "current per share market price" of the
Preferred Shares will mean the fair value per share as determined in
good faith by the Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent. For all purposes
of this Agreement, the current per share market price of one one-
hundredth of a Preferred Share will be equal to the current per share
market price of one Preferred Share divided by one hundred.
(e) Except as set forth below, no adjustment in the Purchase Price
will be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made will be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 will be made to the nearest cent or to the nearest one
one-millionth of a Preferred Share or one ten-thousandth of a Common Share or
other security, as the case may be. Notwithstanding the first sentence of
this Section 11(e), any adjustment required by this Section 11 will be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of
-25-
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares (and the
Purchase Price in respect thereof) will apply on like terms to any such other
securities (and the Purchase Price in respect thereof).
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section
11(b) or Section 11(c), each Right outstanding immediately prior to the making
of such adjustment will thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share issuable upon exercise of a Right immediately prior to such
adjustment of the Purchase Price by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company will 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. Such 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, will 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(i), the Company will, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to the provisions of Section 14, the
additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, will cause to be distributed to
such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof if required by the Company, new Right Certificates
evidencing all the Rights to which such holders are entitled after such
adjustment. Right Certificates so to be distributed will be issued, executed,
and countersigned in the manner provided for herein (and may bear, at the
-26-
option of the Company, the adjusted Purchase Price) and will be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of
the Preferred Shares or below the then par value, if any, of any other
securities of the Company issuable upon exercise of the Rights, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares or such other securities, as the case may
be, at such adjusted Purchase Price.
(l) In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or
other 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 delivers to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional Preferred Shares or other securities upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Directors of the Company
determine to be advisable in order that any (i) consolidation or subdivision
of the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at
less than the current per share market price therefor, (iii) issuance wholly
for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock dividends,
or (v) issuance of rights, options or warrants referred to in this Section
11, hereafter made by the Company to holders of its Preferred Shares is not
taxable to such shareholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii)
combines the outstanding Common Shares into a smaller number of shares, or
(iv) issues any shares of its capital stock in a reclassification of the
outstanding Common Shares (including any such reclassification in connection
-27-
with a consolidation or merger in which the Company is the continuing or
surviving corporation), the number of Rights associated with each Common Share
then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, will be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
equals the result obtained by multiplying the number of Rights associated with
each Common Share immediately prior to such event by a fraction the numerator
of which is the total number of Common Shares outstanding immediately prior to
the occurrence of the event and the denominator of which is the total number
of Common Shares outstanding immediately following the occurrence of such
event. The adjustments provided for in this Section 11(n) will be made
successively whenever such a dividend is paid or such a subdivision,
combination or reclassification is effected.
12. Certificate of Adjusted Purchase Price or Number of Securities.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Preferred Shares
and the Common Shares a copy of such certificate, and (c) if such adjustment
is made after the Distribution Date, mail a brief summary of such adjustment
to each holder of a Right Certificate in accordance with Section 26.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. (a) In the event that:
(i) at any time after a Person has become an Acquiring Person,
the Company consolidates with, or merges with or into, any other Person
and the Company is not the continuing or surviving corporation of such
consolidation or merger; or
(ii) at any time after a Person has become an Acquiring Person,
any Person consolidates with the Company, or merges with or into the
Company, and the Company is 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 is changed into or
exchanged for stock or other securities of any other Person or cash or
any other property; or
(iii) at any time after a Person has become an Acquiring Person,
the Company, directly or indirectly, sells or otherwise transfers (or
one or more of its Subsidiaries sells or otherwise transfers), 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 other than the Company or one or more of
its wholly owned Subsidiaries;
then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
-28-
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable immediately
prior to the Share Acquisition Date, such number of duly authorized, validly
issued, fully paid, nonassessable and freely tradeable Common Shares of the
Issuer, free and clear of any liens, encumbrances and other adverse claims and
not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is exercisable
immediately prior to the Share Acquisition Date 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(d)), on the date of the occurrence
of such Flip-over Event; (B) the Issuer will thereafter be liable for, and
will assume, by virtue of the occurrence of such Flip-over Event, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" will thereafter be deemed to refer to the Issuer; and (D) the Issuer
will 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 are thereafter applicable, as nearly as
reasonably may be possible, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" means (i) in the case of
any Flip-over Event described in Sections 13(a)(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 13(a)(ii) above), and (ii) in the case of any Flip-over
Event described in Section 13(a)(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, (A) 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" means such other Person; and (B) 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" means
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, (x) 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 will 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 (y) if
there is no such corporation or other legal entity having outstanding equity
-29-
securities, (I) proper provision will be made so that the Issuer creates or
otherwise makes 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 (II) all other provisions of this Agreement
will apply to the issuer of such securities as if such securities were Common
Shares.
(c) The Company will not consummate any Flip-over Event if, (i) at the
time of or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the shareholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person
or any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event
unless the Issuer has a sufficient number of authorized Common Shares (or
other securities as contemplated in Section 13(b) above) which have not been
issued or reserved for issuance to permit the exercise in full of the Rights
in accordance with this Section 13 and unless prior to such consummation the
Company and the Issuer have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in subsections (a)
and (b) of this Section 13 and further providing that as promptly as
practicable after the consummation of any Flip-over Event, the Issuer will:
(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 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 Expiration Date;
(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 under the
Exchange Act.
(d) The provisions of this Section 13 will 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
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Flip-in Event, except for Rights that have become void pursuant to Section
11(a)(ii), Rights that shall not have been previously exercised will cease to
be exercisable in the manner provided in Section 11(a)(ii) and will thereafter
be exercisable in the manner provided in Section 13(a).
14. Fractional Rights and Fractional Securities. (a) The Company will
not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company will pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same fraction of
the current market value of one Right. For the purposes of this Section
14(a), the current market value of one Right is the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights otherwise would have been issuable. The closing price for
any day is the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, if on any
such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Directors of the Company. If
the Rights are not publicly held or are not so listed or traded, or are not
the subject of available bid and asked quotes, the current market value of one
Right will mean the fair value thereof as determined in good faith by the
Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent.
(b) The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of a
Preferred Share may, at the election of the Company, be evidenced by
depositary receipts pursuant to an appropriate agreement between the Company
and a depositary selected by it, provided that such agreement provides that
the holders of such depositary receipts have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a
Preferred Share, the Company may pay to any Person to whom or which such
fractional Preferred Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of one Preferred Share.
-31-
For purposes of this Section 14(b), the current market value of one Preferred
Share is the closing price of the Preferred Shares (as determined in the same
manner as set forth for Common Shares in the second sentence of Section
11(d)(i)) for the Trading Day immediately prior to the date of such exercise;
provided, however, that if the closing price of the Preferred Shares cannot be
so determined, the closing price of the Preferred Shares for such Trading Day
will be conclusively deemed to be an amount equal to the closing price of the
Common Shares (determined pursuant to the second sentence of Section 11(d)(i))
for such Trading Day multiplied by one hundred (as such number may be
appropriately adjusted to reflect events such as stock splits, stock
dividends, recapitalizations or similar transactions relating to the Common
Shares occurring after the date of this Agreement); provided further, however,
that if neither the Common Shares nor the Preferred Shares are publicly held
or listed or admitted to trading on any national securities exchange, or the
subject of available bid and asked quotes, the current market value of one
Preferred Share will mean the fair value thereof as determined in good faith
by the Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the Company will
not be required to issue fractions of Common Shares or other securities
issuable upon exercise or exchange of the Rights or to distribute certificates
which evidence any such fractional securities. In lieu of issuing any such
fractional securities, the Company may pay to any Person to whom or which such
fractional securities would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of one such security. For
purposes of this Section 14(c), the current market value of one Common Share
or other security issuable upon the exercise or exchange of Rights is the
closing price thereof (as determined in the same manner as set forth for
Common Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise or exchange; provided, however,
that if neither the Common Shares nor any such other securities are publicly
held or listed or admitted to trading on any national securities exchange, or
the subject of available bid and asked quotes, the current market value of one
Common Share or such other security will mean the fair value thereof as
determined in good faith by the Directors of the Company, whose determination
will mean the fair value thereof as will be described in a statement filed
with the Rights Agent.
15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the holder of any 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
-32-
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.
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 are transferable
only in connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent designated for
such purpose, 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 (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 will be
affected by any notice to the contrary;
(d) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or
exchange of a Right, except as otherwise provided in Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any
holder of a Right or other Person as 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 will use its best
efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Right Certificate will be entitled to vote, receive dividends, or
be deemed for any purpose the holder of Preferred Shares or any other
securities of the Company which may at any time be issuable upon the exercise
of the Rights represented thereby, nor will anything contained herein or in
any Right Certificate be construed to confer upon the holder of any Right
-33-
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of Directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
of this Agreement or exchanged pursuant to the provisions of Section 24.
18. Concerning the Rights Agent. (a) The Company will pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and 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 to be done by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent will be protected and will incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate evidencing Preferred Shares or Common Shares or
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed, and, where necessary, verified or acknowledged, by
the proper Person or Persons.
19. Merger or Consolidation or Change of Name of Rights Agent. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent is a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. If at the time
such successor Rights Agent succeeds to the agency created by this Agreement
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and if at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
will have the full force provided in the Right Certificates and in this
Agreement.
-34-
(b) If at any time the name of the Rights Agent changes and at such
time any of the Right Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.
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, will 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 will be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems 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, the President, any Vice President, the
Secretary or the Treasurer of the Company and delivered to the Rights
Agent, and such certificate will 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 will be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent will 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 will be deemed to have been made by the Company only.
(e) The Rights Agent will 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 will it be
responsible for any breach by the Company of any covenant contained in
this Agreement or in any Right Certificate; nor will it be responsible
for any adjustment required under the provisions of Sections 11 or 13
(including any adjustment which results in Rights becoming void) or
responsible for the manner, method or amount of any such adjustment or
-35-
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor will
it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any shares of stock or other
securities to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of stock or other securities
will, when issued, be duly authorized, validly issued, fully paid and
nonassessable.
(f) The Company will perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the
Rights Agent of 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, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it will
not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
will preclude the Rights Agent from acting in any other capacity for the
Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
will 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 will not be under any duty or
responsibility to ensure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of
Right Certificates.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange,
either (i) the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed
or indicates an affirmative response to clause 1 or 2 thereof, or
(ii) any other actual or suspected irregularity exists, the Rights Agent
will not take any further action with respect to such requested
-36-
exercise, transfer, split up, combination or exchange without first
consulting with the Company, and will thereafter take further action
with respect thereto only in accordance with the Company's written
instructions.
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 calendar days' notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or 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
calendar days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Shares and the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails to make
such appointment within a period of 30 calendar 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 will, 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, will be a corporation or other
legal entity organized and doing business under the laws of the United States
or of the State of New York (or of any other state of the United States so
long as such corporation is authorized to do business as a banking institution
in the State of New York), in good standing, having a principal office in the
State of New York, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million. After
appointment, the successor Rights Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
will deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company will file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Preferred Shares or the Common Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, will not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
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 per share and the number or kind of securities issuable
-37-
upon exercise of the Rights made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the
Company of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company (a) will, with respect to Common Shares so issued
or sold pursuant to the exercise, exchange or conversion of securities (other
than Rights) issued prior to the Distribution Date which are exercisable or
exchangeable for, or convertible into Common Shares, and (b) may, in any other
case, if deemed necessary, appropriate or desirable by the Directors of the
Company, issue Right Certificates representing an equivalent number of Rights
as would have been issued in respect of such Common Shares if they had been
issued or sold prior to the Distribution Date, as appropriately adjusted as
provided herein as if they had been so issued or sold; provided, however, that
(i) no such Right Certificate will be issued if, and to the extent that, in
its good faith judgment the Directors of the Company determine that the
issuance of such Right Certificate could have a material adverse tax
consequence to the Company or to the Person to whom or which such Right
Certificate otherwise would be issued and (ii) no such Right Certificate will
be issued if, and to the extent that, appropriate adjustment otherwise has
been made in lieu of the issuance thereof.
23. Redemption. (a) Prior to the 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 Share Acquisition Date. Any such redemption will be
effective immediately upon the action of the Directors of the Company ordering
the same, unless such action of the Directors of the Company expressly
provides that such redemption will be effective at a subsequent time or upon
the occurrence or nonoccurrence of one or more specified events (in which case
such redemption will be effective in accordance with the provisions of such
action of the Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights
as provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption
of the Rights as provided in Section 23(a), the Company will publicly announce
such redemption and, within 10 calendar days thereafter, 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 upon the
registry books of the Company; provided, however, that the failure to give, or
any defect in, any such notice will not affect the validity of the redemption
of the Rights. Any notice that is mailed in the manner herein provided will
be deemed given, whether or not the holder receives the notice. The notice of
redemption mailed to the holders of Rights will 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(d))
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. The Company may, at its option,
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combine the payment of the Redemption Price with any other payment being made
concurrently to holders of Common Shares and, to the extent that any such
other payment is discretionary, may reduce the amount thereof on account of
the concurrent payment of the Redemption Price. If legal or contractual
restrictions prevent the Company from paying the Redemption Price (in the form
of consideration deemed appropriate by the Directors) at the time of
redemption, the Company will pay the Redemption Price, without interest,
promptly after such time as the Company ceases to be so prevented from paying
the Redemption Price.
24. Exchange. (a) The Directors of the Company may, at their option,
at any time after the later of the Share Acquisition Date and the Distribution
Date, exchange all or part of the then-outstanding and exercisable Rights
(which will not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii)) 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 Record Date (such
exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any
such exchange will be effective immediately upon the action of the Directors
of the Company ordering the same, unless such action of the Directors of the
Company expressly provides that such exchange will be effective at a
subsequent time or upon the occurrence or nonoccurrence of one or more
specified events (in which case such exchange will be effective in accordance
with the provisions of such action of the Directors of the Company).
Notwithstanding the foregoing, the Directors of the Company will not be
empowered to effect such exchange at any time after any Person (other than the
Company or any Related Person), who or which, together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
then-outstanding Common Shares.
(b) Immediately upon the effectiveness of the exchange of any Rights
as provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right
with respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. Promptly after the
effectiveness of the exchange of any Rights as provided in Section 24(a), the
Company will publicly announce such exchange and, within 10 calendar days
thereafter, will give notice of 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 will not affect the validity of such exchange. Any notice that is
mailed in the manner herein provided will be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange will 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.
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(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Directors of the Company (whose determination
will be described in a statement filed with the Rights Agent), equal to the
current market value of one Common Share (determined pursuant to Section
11(d)) on the Trading Day immediately preceding the date of the effectiveness
of the exchange pursuant to this Section 24.
25. Notice of Certain Events. (a) If, after the Distribution Date,
the Company proposes (i) to pay any dividend payable in stock of any class to
the holders of Preferred Shares or to make any other distribution to the
holders of Preferred Shares (other than a regular periodic cash dividend),
(ii) to offer to the holders of Preferred Shares rights, options or warrants
to subscribe for or to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights or options, (iii) to effect
any reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv) to
effect any consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of assets or earning
power (including, without limitation, securities creating any obligation on
the part of the Company and/or any of its Subsidiaries) representing more than
50% of the assets and earning power of the Company and its Subsidiaries, taken
as a whole, to any other Person or Persons other than the Company or one or
more of its wholly owned Subsidiaries, (v) to effect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or reclassification of the Common Shares then, in
each such case, the Company will give to each holder of a Right Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies 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 and/or Preferred
Shares, if any such date is to be fixed, and such notice will be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10
calendar days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and, in the case of any such
other action, at least 10 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 and/or Preferred Shares, whichever is the earlier.
(b) In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 26, a notice of
the occurrence of such event, which specifies the event and the consequences
of the event to holders of Rights.
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26. Notices. (a) Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company will be sufficiently given or made if sent by first class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Aeroquip-Xxxxxxx, Inc.
3000 Xxxxxxx
Xxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx
(b) 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 will 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:
First Chicago Trust Company of New York
P. O. Xxx 0000, Xxxxx 0000
Xxxxxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxx
(c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
(or, if prior the Distribution Date, to the holder of any certificate
evidencing Common Shares) will be sufficiently given or made if sent by first
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
27. Supplements and Amendments. Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last
sentence of this Section 27, the Company may in its sole and absolute
discretion, and the Rights Agent will if the Company so directs, supplement or
amend any provision of this Agreement in any respect without the approval of
any holders of Rights or Common Shares. From and after the time at which the
Rights cease to be redeemable pursuant to Section 23, and subject to the last
sentence of this Section 27, the Company may, and the Rights Agent will if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights or Common Shares in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder, or (iv) to supplement or amend the
provisions hereunder in any manner which the Company may deem desirable;
provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person), and no such supplement or
amendment shall cause the Rights again to become redeemable or cause this
Agreement again to become supplementable or amendable otherwise than in
accordance with the provisions of this sentence. Without limiting the
generality or effect of the foregoing, this Agreement may be supplemented or
-41-
amended to provide for such voting powers for the Rights and such procedures
for the exercise thereof, if any, as the Directors of the Company may
determine to be appropriate. Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent will
execute such supplement or amendment; provided, however, that the failure or
refusal of the Rights Agent to execute such supplement or amendment will not
affect the validity of any supplement or amendment adopted by the Directors of
the Company, any of which will be effective in accordance with the terms
thereof. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment may be made which decreases the stated Redemption
Price to an amount less than $.01 per Right.
28. Successors; Certain Covenants. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent
will be binding on and inure to the benefit of their respective successors and
assigns hereunder.
29. Benefits of This Agreement. Nothing in this Agreement will 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. This Agreement will be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered holders of the
Right Certificates (or prior to the Distribution Date, the Common Shares).
30. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder will be deemed to be a contract made under the
internal substantive laws of the State of Ohio and for all purposes will be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within
such State.
31. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
however, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
32. Descriptive Headings, Etc. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
Unless otherwise expressly provided, references herein to Articles, Sections
and Exhibits are to Articles, Sections and Exhibits of or to this Agreement.
-42-
33. Determinations and Actions by the Directors. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, will be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Directors of the Company will have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including any determination as to
whether particular Rights shall have become void). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, any omission with respect to any of the foregoing) which are
done or made by the Directors of the Company in good faith will (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and (y) not subject the Directors of the Company
to any liability to any Person, including without limitation the Rights Agent
and the holders of the Rights.
34. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
Attest: AEROQUIP-XXXXXXX, INC.
/S/ XXXXX X. XXXXXXX /S/ XXXXXX X. XXXXX
Name: Xxxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Title: Corporate Secretary Chairman, President &
Chief Executive Officer
[SEAL]
Attest: FIRST CHICAGO TRUST COMPANY OF
NEW YORK
By: ______________________________ _________________________________
Name: Name:
Title: Title:
-43-
EXHIBIT A
CERTIFICATE OF
ADOPTION OF AMENDMENT
TO AMENDED ARTICLES OF INCORPORATION
of
AEROQUIP-XXXXXXX, INC.
We, Xxxxxx X. Xxxxx, President, and Xxxxx X. Xxxxxxx, Secretary,
of Aeroquip-Xxxxxxx, Inc., an Ohio corporation (the "Corporation"), do hereby
certify that pursuant to the authority conferred upon the Directors by the
Amended Articles of Incorporation of the Corporation, the said Directors at a
meeting duly called and held on December 10, 1998, at which a quorum was
present and acting throughout, adopted the following resolution to amend the
Amended Articles of Incorporation of the Corporation pursuant to Section
1701.70(B)(l) of the Ohio Revised Code to amend the series of Serial Preferred
Stock designated as Cumulative Redeemable Serial Preferred Stock:
RESOLVED, that Article FOURTH of the Amended Articles of
Incorporation of this Corporation be, and it hereby is, amended by deleting
Paragraph 1(b) of Article FOURTH of the Amended Articles of Incorporation and
replacing it with a new Paragraph 1(b) as set forth below:
Paragraph 1(b). Express Terms of the Cumulative Redeemable Preferred Stock.
There is hereby established a series of Serial Preferred Stock to
which the following provisions shall be applicable:
Section l. Designation of Series. The series shall be designated
"Cumulative Redeemable Serial Preferred Stock" (hereinafter sometimes called
this "Series" or the "Cumulative Redeemable Preferred Shares").
Section 2. Number of Shares. The number of shares of this Series
shall be 1,000,000.
Section 3. Dividends. (a) The holders of record of Cumulative
Redeemable Preferred Shares shall be entitled to receive, when and as declared
by the Board of Directors in accordance with the terms hereof, out of funds
legally available for the purpose, cumulative quarterly dividends payable in
cash on the first day of January, April, July and October in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
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issuance of a Cumulative Redeemable Preferred Share in an amount per share
(rounded to the nearest cent) equal to the lesser of (i) $500 per share or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in cash) of all non-cash dividends or
other distributions (other than a dividend payable in Common Shares, or a
subdivision of the outstanding Common Shares (by reclassification or
otherwise)), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any Cumulative Redeemable
Preferred Share or fraction of a Cumulative Redeemable Preferred Share. In
the event the Corporation shall at any time declare or pay any dividend on the
Common Shares payable in Common Shares, or effect a subdivision or combination
or consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount to which
holders of Cumulative Redeemable Preferred Shares were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
(b) Dividends shall begin to accrue and be cumulative on
outstanding Cumulative Redeemable Preferred Shares from the Quarterly Dividend
Payment Date next preceding the date of issue of such Cumulative Redeemable
Preferred Shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Cumulative Redeemable Preferred Shares entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. No dividends shall be paid upon or declared and set apart for any
Cumulative Redeemable Preferred Shares for any dividend period unless at the
same time a dividend for the same dividend period, ratably in proportion to
the respective annual dividend rates fixed therefor, shall be paid upon or
declared and set apart for all Serial Preferred Stock of all series then
outstanding and entitled to receive such dividend. The Board of Directors may
fix a record date for the determination of holders of Cumulative Redeemable
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 40 days prior to the
date fixed for the payment thereof.
Section 4. Redemptions. Subject to the provisions of Section
6(b)(iii) of Paragraph l and in accordance with Section 4 of Paragraph l, the
Cumulative Redeemable Preferred Shares shall be redeemable from time to time
at the option of the Board of Directors of the Corporation, as a whole or in
part, at any time at a redemption price per share equal to one hundred times
the then applicable Purchase Price as defined in that certain Rights
-45-
Agreement, dated as of February 7, 1999, between the Corporation and First
Chicago Trust Company of New York (the "Rights Agreement"), as the same may be
from time to time amended in accordance with its terms, which Purchase Price
is $150.00 as of February 7, 1999, subject to adjustment from time to time as
provided in the Rights Agreement. Copies of the Rights Agreement are
available from the Corporation upon request. In case less than all of the
outstanding Cumulative Redeemable Preferred Shares are to be redeemed, the
Corporation shall select by lot the shares so to be redeemed in such manner as
shall be prescribed by its Board of Directors.
Section 5. Liquidations. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (hereinafter referred to as a "Liquidation"), no distribution
shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon Liquidation) to the Cumulative Redeemable Preferred Shares,
unless, prior thereto, the holders of Cumulative Redeemable Preferred Shares
shall have received at least an amount per share equal to one hundred times
the then applicable Purchase Price as defined in the Rights Agreement, as the
same may be from time to time amended in accordance with its terms (which
Purchase Price is $150.00 as of February 7, 1999), subject to adjustment from
time to time as provided in the Rights Agreement, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned
or declared, to the date of such payment, provided that the holders of shares
Cumulative Redeemable Preferred Shares shall be entitled to receive at least
an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Shares (the "Cumulative Redeemable
Preferred Shares Liquidation Preference").
(b) In the event, however, that the net assets of the
Corporation are not sufficient to pay in full the amount of the Cumulative
Redeemable Preferred Shares Liquidation Preference and the liquidation
preferences of all other series of Serial Preferred Stock, if any, which rank
on a parity with the Cumulative Redeemable Preferred Shares as to distribution
of assets in Liquidation, all shares of this Series and of such other series
of Serial Preferred Stock shall share ratably in the distribution of assets
(or proceeds thereof) in Liquidation in proportion to the full amounts to
which they are respectively entitled.
(c) In the event the Corporation shall at any time declare or
pay any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common Shares
(by reclassification or otherwise than by payment of a dividend in Common
Shares) into a greater or lesser number of Common Shares, then in each such
case the amount to which holders of Cumulative Redeemable Preferred Shares
were entitled immediately prior to such event pursuant to the proviso set
forth in paragraph (a) above, shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
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(d) The merger or consolidation of the Corporation into or with
any other corporation, or the merger of any other corporation into it, or the
sale, lease or conveyance of all or substantially all the property or business
of the Corporation, shall not be deemed to be a Liquidation for the purposes
of this Section 5.
Section 6. Conversions. The Cumulative Redeemable Preferred
Shares shall not be convertible into Common Shares.
IN WITNESS WHEREOF, Xxxxxx X. Xxxxx, President, and Xxxxx X.
Xxxxxxx, Secretary, of Aeroquip-Xxxxxxx, Inc., acting for and on behalf of the
Corporation, have hereunto subscribed their names this ___ day of __________,
199__.
/S/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Chairman, President & Chief Executive Officer
/S/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
Secretary
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EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER FEBRUARY 7, 2009 (SUBJECT TO POSSIBLE
EXTENSION AT THE OPTION OF THE COMPANY) OR EARLIER IF REDEEMED,
EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO REDEMPTION,
EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR WERE
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND
VOID.
Right Certificate
AEROQUIP-XXXXXXX, INC.
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and conditions
of the Rights Agreement, dated as of February 7, 1999 (the "Rights
Agreement"), between Aeroquip-Xxxxxxx, Inc., an Ohio corporation (the
"Company"), and First Chicago Trust Company of New York (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. (Eastern time)
on the Expiration Date (as such term is defined in the Rights Agreement) at
the principal office or offices of the Rights Agent designated for such
purpose, one one-hundredth of a fully paid nonassessable share of Cumulative
Redeemable Preferred Stock, without par value (the "Preferred Shares"), of the
Company, at a purchase price of $150.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related Certificate duly
executed. If this Right Certificate is exercised in part, the holder will be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. The number of
Rights evidenced by this Right Certificate (and the number of one one-
hundredths of a Preferred Share 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 the date of the Rights Agreement, based on the Preferred
Shares as constituted at such date.
-48-
As provided in the Rights Agreement, the Purchase Price and/or the
number and/or kind of securities issuable upon the exercise of the Rights
evidenced by this Right Certificate are subject to adjustment upon the
occurrence 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 of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability
of the Rights under the circumstances specified in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of
the Rights Agent and can be obtained from the Company without charge upon
written request therefor. Terms used herein with initial capital letters and
not defined herein are used herein with the meanings ascribed thereto in the
Rights Agreement.
Pursuant to the Rights Agreement, from and after the occurrence of a
Flip-in Event, any Rights that are Beneficially Owned by (i) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (ii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
becomes a transferee after the occurrence of a Flip-in Event, or (iii) a
transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-in Event pursuant
to either (a) a transfer from an Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (b) a
transfer which the Directors of the Company have determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding
certain provisions of the Rights Agreement, and subsequent transferees of any
of such Persons, will be void without any further action and any holder of
such Rights will thereafter have no rights whatsoever with respect to such
Rights under any provision of the Rights Agreement. From and after the
occurrence of a Flip-in Event, no Right Certificate will be issued that
represents Rights that are or have become void pursuant to the provisions of
the Rights Agreement, and any Right Certificate delivered to the Rights Agent
that represents Rights that are or have become void pursuant to the provisions
of the Rights Agreement will be canceled.
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one one-
hundredths of a Preferred Share (or other securities, as the case may be) as
the Right Certificate or Right Certificates surrendered entitled such holder
(or former holder in the case of a transfer) to purchase, upon presentation
and surrender hereof at the principal office of the Rights Agent designated
for such purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
-49-
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right or may be exchanged in whole or in part.
The Rights Agreement may be supplemented and amended by the Company, as
provided therein.
The Company is not required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or other securities issuable upon the exercise of any
Right or Rights evidenced hereby. In lieu of issuing such fractional
Preferred Shares or other securities, the Company may make a cash payment, as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, will be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement be construed to confer
upon the holder hereof, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement),
or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Right Certificate have been exercised in
accordance with the provisions of the Rights Agreement.
This Right Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______________, ______.
[SEAL]
ATTEST: AEROQUIP-XXXXXXX, INC.
By:
Name:
Title:
Countersigned:
___________________________
By:
Authorized Signature
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Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers
unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _______________, _______
Signature
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned, transferred, split up, combined or exchanged by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _______________, _______
Signature
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To Aeroquip-Xxxxxxx, Inc.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of
and delivered to:
Please insert social security
or other identifying number:
(Please print name and address)
If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will 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:
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was, or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________, ____
Signature
NOTICE
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates 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.
Signatures must be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved medallion signature program) pursuant to Rule 17Ad-
15 under the Securities Exchange Act of 1934, as amended.
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
The Directors (the "Directors") of Aeroquip-Xxxxxxx, Inc. (the
"Company") have declared a dividend distribution of one right (a "Right") for
each outstanding Common Share, par value $5.00 per share (the "Common
Shares"), of the Company. The distribution is payable on February 7, 1999
(the "Record Date") to the stockholders of record as of the close of business
on the Record Date. Each Right entitles the registered holder thereof to
purchase from the Company one one-hundredth of a share of Cumulative
Redeemable Preferred Stock, without par value (the "Preferred Shares"), of the
Company at a price (the "Purchase Price") of $150.00 per one one-hundredth of
a Preferred Share, subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement, dated as of February 7, 1999 (the
"Rights Agreement"), between the Company and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agent").
Under the Rights Agreement, the Rights will be evidenced by the
certificates evidencing Common Shares until the earlier (the "Distribution
Date") of: (i) the close of business on the first date (the "Share
Acquisition Date") of public announcement that a person or group (other than
the Company, a subsidiary or employee benefit or stock ownership plan of the
Company or any of its affiliates or associates), together with its affiliates
and associates, has acquired beneficial ownership of 20% or more of the
outstanding Common Shares (any such person or group being hereinafter called
an "Acquiring Person") or (ii) the close of business on the tenth business day
(or such later date as may be specified by the Directors) following the
commencement of a tender offer or exchange offer by a person (other than the
Company, a subsidiary or employee benefit or stock ownership plan of the
Company or any of its affiliates or associates), the consummation of which
would result in beneficial ownership by such person of 20% or more of the
outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date, the
Rights may be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption, exchange or expiration of the
Rights), any certificate evidencing Common Shares of the Company issued upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates evidencing Common Shares will also constitute
the transfer of the Rights associated with such certificates. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights. No Right is
exercisable at any time prior to the Distribution Date. The Rights will
expire on the tenth anniversary of the Record Date (the "Final Expiration
Date") unless earlier redeemed, exchanged or amended by the Company as
described below. Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including the right to
vote or to receive dividends.
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The Purchase Price payable, and the number of the Preferred Shares or
other securities issuable, upon exercise of the Rights will be subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of Preferred Shares of
certain rights or warrants to subscribe for or purchase the Preferred Shares
at a price, or securities convertible into the Preferred Shares with a
conversion price, less than the then-current market price of the Preferred
Shares, or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness, cash (excluding regular periodic cash dividends),
assets, stock (excluding dividends payable in the Preferred Shares) or
subscription rights or warrants (other than those referred to above). The
number of outstanding Rights and the number of one one-hundredths of the
Preferred Shares issuable upon exercise of each Right will be subject to
adjustment in the event of a stock dividend on the Common Shares payable in
Common Shares or a subdivision, combination or reclassification of Common
Shares occurring, in any such case, prior to the Distribution Date.
Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below. A Distribution Date resulting from the commencement of a
tender offer or exchange offer described in clause (ii) of the second
paragraph of this summary could precede the occurrence of a Flip-in Event and
thus result in the Rights being exercisable to purchase Preferred Shares. A
Distribution Date resulting from any occurrence described in clause (i) of the
second paragraph of this summary would necessarily follow the occurrence of a
Flip-in Event and thus result in the Rights being exercisable to purchase
Common Shares or other securities as described below.
Under the Rights Agreement, in the event (a "Flip-in Event") that
(i) any person or group, together with its affiliates and associates, becomes
an Acquiring Person (ii) any Acquiring Person or any affiliate or associate
thereof merges into or combines with the Company and the Company is the
surviving corporation, (iii) any Acquiring Person or any affiliate or
associate thereof effects certain other transactions with the Company, or
(iv) during such time as there is an Acquiring Person the Company effects
certain transactions, in each case as described in the Rights Agreement, then,
in each such case, proper provision will be made so that from and after the
latest of the Share Acquisition Date, the Distribution Date and the date of
the occurrence of such Flip-in Event each holder of a Right, other than Rights
that are or were owned beneficially by an Acquiring Person (which, from and
after the date of a Flip-in Event, will be void), will have the right to
receive, upon exercise thereof at the then-current exercise price of the
Right, that number of Common Shares (or, under certain circumstances, an
economically equivalent security or securities of the Company) that at the
time of such Flip-in Event have a market value of two times the exercise price
of the Right.
In the event (a "Flip-over Event") that, at any time after a person has
become an Acquiring Person, (i) the Company merges with or into any person and
the Company is not the surviving corporation, (ii) any person merges with or
into the Company and the Company is the surviving corporation, but all or part
of the Common Shares are changed or exchanged for stock or other securities of
-56-
any other person or cash or any other property, or (iii) 50% or more of the
Company's assets or earning power, including securities creating obligations
of the Company, are sold, in each case as described in the Rights Agreement,
then, and in each such case, proper provision will be made so that each holder
of a Right, other than Rights which have become void, will thereafter have the
right to receive, upon the exercise thereof at the then-current exercise price
of the Right, that number of shares of common stock (or, under certain
circumstances, an economically equivalent security or securities) of such
other person that at the time of such Flip-over Event have a market value of
two times the exercise price of the Right.
From and after the Distribution Date, Rights (other than any Rights that
have become void) will be exercisable as described above, upon payment of the
aggregate exercise price in cash. In addition, at any time after the later of
the Share Acquisition Date and the Distribution Date and prior to the
acquisition by any person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Company may exchange the Rights
(other than any rights that have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company will not be required to issue fractional
Preferred Shares (other than fractions that are integral multiples of one one-
hundredth of a Preferred Share, which may, at the option of the Company, be
evidenced by depositary receipts) or fractional Common Shares or other
securities issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
The Company may, at its option, redeem the Rights in whole, but not in
part, at a price of $.01 per Right, subject to adjustment (the "Redemption
Price"), at any time prior to the close of business on the Share Acquisition
Date. Immediately upon any 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 Rights Agreement may be amended by the Company without the approval
of any holders of Rights Certificates, including amendments that increase or
decrease the Purchase Price, that add other events requiring adjustment to the
Purchase Price payable and the number of the Preferred Shares or other
securities issuable upon the exercise of the Rights or that modify procedures
relating to the redemption of the Rights, except that no amendment may be made
that decreases the stated Redemption Price to an amount less than $.01 per
Right.
The Directors will have the exclusive power and authority to administer
the Rights Agreement and to exercise all rights and powers specifically
granted to the Directors or to the Company therein, or as may be necessary or
advisable in the administration of the Rights Agreement, including without
-57-
limitation the right and power to interpret the provisions of the Rights
Agreement and to make all determinations deemed necessary or advisable for the
administration of the Rights Agreement (including any determination to redeem
or not redeem the Rights or to amend or not amend the Rights Agreement). All
such actions, calculations, interpretations and determinations (including any
omission with respect to any of the foregoing) which are done or made by the
Directors in good faith will be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties and will not
subject the Directors to any liability to any person, including without
limitation the Rights Agent and the holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights is as of the Record Date, does
not purport to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by this reference.
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