PRECISION CASTPARTS CORP.
and
THE BANK OF NEW YORK
Rights Agreement
Dated as of December 3, 1998
TABLE OF CONTENTS
Page
1. Certain Definitions........................................................1
2. Appointment of Rights Agent................................................5
3. Issue of Rights Certificates...............................................5
4. Form of Rights Certificates................................................7
5. Countersignature and Registration..........................................8
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates..........................8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights..............9
8. Cancellation and Destruction of Rights Certificates.......................11
9. Reservation and Availability of Capital Stock.............................11
10. Preferred Stock Record Date...............................................13
11. Adjustment of Purchase Price, Number of Shares or Number of Rights........13
12. Certificate of Adjusted Purchase Price or Number of Shares................21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......21
14. Fractional Rights and Fractional Shares...................................24
15. Rights of Action..........................................................26
16. Agreement of Rights Holders...............................................26
17. Rights Certificate Holder Not Deemed a Shareholder........................27
18. Concerning the Rights Agent...............................................27
19. Merger or Consolidation or Change of Name of Rights Agent.................27
20. Duties of Rights Agent....................................................28
i
Page
21. Change of Rights Agent....................................................30
22. Issuance of New Rights Certificates.......................................31
23. Redemption................................................................31
24. Exchange..................................................................33
25. Notices...................................................................34
26. Supplements and Amendments................................................35
27. Successors................................................................35
28. Benefits of this Agreement................................................35
29. Severability..............................................................35
30. Determinations and Actions by the Board of Directors, Etc.................36
31. Governing Law.............................................................36
32. Counterparts..............................................................36
33. Descriptive Headings......................................................36
ii
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of December 3, 1998 (the "Agreement"),
between Precision Castparts Corp., an Oregon corporation (the "Company"), and
The Bank of New York, a New York banking corporation (the "Rights Agent").
WITNESSETH
WHEREAS, effective as of December 3, 1998, the Board of Directors of the
Company authorized and declared a dividend of one Right for each share of Common
Stock (as such terms are hereinafter defined) of the Company outstanding on
December 16, 1998 (the "Record Date"), and has authorized the issuance of one
Right with respect to each share of Common Stock issued by the Company between
the Record Date and the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date (as such terms are hereinafter defined), with each
Right initially representing the right to purchase one one-hundredth of a share
of Preferred Stock (as hereinafter defined) having the rights, powers and
preferences set forth in the Company's Articles of Incorporation, upon the terms
and subject to the conditions herein set forth (the "Rights");
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following terms
have the meanings indicated:
(a) "Acquiring Person" shall mean (i) any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter, defined) of such Person, shall become the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding or (ii) any Person who is an Adverse
Person (as such term is hereinafter defined); provided, however, that an
Acquiring Person shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity holding shares of Common
Stock for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an "Acquiring Person" either (i) as
the result of an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 15% or more of the Common Stock of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Stock then outstanding by reason
of share purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional shares of Common Stock,
then such Person shall be deemed to be an "Acquiring Person," or (ii) if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an
1
"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 shares of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a).
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adverse Person" shall mean any Person declared to be an Adverse
Person by the Board of Directors of the Company upon a determination that such
Person, alone or together with its Affiliates and Associates, has, at any time
after the date of this Agreement, become the Beneficial Owner of an amount of
Common Stock which the Board of Directors determines to be substantial (which
amount shall be more than 10% of the shares of Common Stock then outstanding)
and a determination by at least a majority of the Board of Directors who are not
officers of the Company, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(1) such beneficial ownership by such Person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such Person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term financial gain
under circumstances where the Board of Directors determines that the best
long-term interests of the Company and its shareholders would not be served by
taking such action or entering into such transactions or series of transactions
at that time, or (2) such beneficial ownership is causing or reasonably likely
to cause a material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to maintain
its competitive position) on the business or prospects of the Company.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as such term is hereinafter defined), as in effect on the date
of this Agreement.
(e) "Agreement" shall mean this Rights Agreement.
(f) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to beneficially own any, securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the power to vote or dispose of,
including pursuant to any agreement, arrangement or understanding, whether
or not in writing;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire voting or
dispositive power over (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),
2
or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement
arrangement or understanding, whether or not in writing, for the purpose of
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that nothing in this paragraph (f) shall cause a person to be
the "Beneficial Owner" of, or to "beneficially own," (A) any securities that may
be issued on the exercise of Rights, (B) any security if the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy or consent 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, (C) 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 (D) any securities acquired by a Person engaged in
business as an underwriter of securities through such Person's participation in
good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act.
(g) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(h) "Close of business" on any given date shall mean 5:00 p.m., New
York time, on such date; provided, however, that if such date is not a Business
Day, it shall mean 5:00 p.m., New York time, on the next succeeding Business
Day.
(i) "Common Stock" shall mean the Common Stock of the Company. The
term "common stock" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person together with all rights and benefits (however
denominated or constituted) relating to such common stock (including, without
limitation any rights or warrants to acquire additional shares of such common
stock or other securities or assets, or to participate in any trust for the
benefit of holders of such shares, or to share in the benefits of any agreements
or other arrangements for the benefit of such holders), whether or not such
rights are yet exercisable, and together with any other securities which are
represented by the certificates for such common stock or are transferred in
connection with transfers of such common stock.
3
(j) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii).
(k) "Current Per Share Market Price" shall have the meaning set forth
in Section 11(d).
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(m) "Distribution Date" shall have the meaning set forth in Section
3(a).
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(p) "Person" shall mean any individual, firm, corporation, partnership
or other entity and shall include any successor (by merger or otherwise) of such
entity.
(q) "Preferred Stock" means Series A No Par Serial Preferred Shares of
the Company and, to the extent that there is not a sufficient number of Series A
No Par Serial Preferred Shares authorized to permit the full exercise of the
Rights, any other series of Preferred Shares of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A No
Par Serial Preferred Shares.
(r) "Preferred Stock Equivalents" shall have the meaning set forth in
Section 11(b).
(s) "Principal Party" shall have the meaning set forth in Section
13(b).
(t) "Proposed Acquiror" shall mean any Person who has proposed or
publicly announced an intention to propose a transaction that, if consummated,
would cause a Stock Acquisition Date (other than a Stock Acquisition Date
occurring as the result of a declaration by the Company's Board of Directors of
the existence of an Adverse Person) or any Section 13 Event to occur.
(u) "Purchase Price" shall mean the dollar amount payable upon
exercise of one Right to acquire the number of one one-hundredths of a share of
Preferred Stock or other securities or assets for which the Right is then
exercisable and shall initially be the price set forth in Section 7(b).
(v) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
4
(w) "Redemption Date" shall have the meaning set forth in Section
7(a).
(x) "Redemption Price" shall have the meaning set forth in Section
23(a).
(y) "Rights" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(z) "Rights Certificate" shall have the meaning set forth in Section
3(a).
(aa) "Section 13 Event" shall mean any event described in Section
13(a).
(ab) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(ac) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the date a report is filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become an Acquiring Person.
(ad) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(ae) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(af) "Trading Day" shall have the meaning set forth in Section 11(d).
2. Appointment of Rights Agent. The Company hereby appoints the Rights
Agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable.
3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date is prior to the Record Date, the Record Date) or (ii) the close
of business on the tenth day after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
15 percent or more of the shares of Common Stock then outstanding (the earliest
of (i) and (ii) being herein
5
referred to as the "Distribution Date"), (w) the Rights will be evidenced by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates shall also be deemed to be certificates for
Rights) and not by separate Rights Certificates, (x) the Rights and the right to
receive Rights Certificates will be transferable only in connection with the
transfer of the underlying Common Stock and any transfer of Common Stock shall
also constitute the transfer of the associated Rights represented by the same
certificate, (y) in the event the Company purchases or acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such acquired Common Stock shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated with shares of
Common Stock that are no longer outstanding, and (z) in the event the Company
issues any Common Stock after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, the Company
shall issue one Right for each such newly issued share of Common stock (subject
to adjustment as provided in Section 11(h)) which Right shall be evidenced by
the certificate for the associated share of Common Stock. As soon 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, postage-prepaid mail, to
each record holder of shares of Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit A hereto (a
"Rights Certificate"), evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(h), at the time the Rights Certificates are distributed the Company
shall make the necessary and appropriate rounding adjustments pursuant to
Section 14(a) so that Rights Certificates are distributed representing only
whole numbers of Rights and cash is paid in lieu of fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially
the form of Exhibit B (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of shares of Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company.
(c) All Common Stock certificates which are issued, either upon an
original issuance by the Company or upon a transfer by a holder, after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date, shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights set forth in a Rights Agreement
between Precision Castparts Corp. (the "Company") and The
Bank of New York
6
dated as of December 3, 1998 (the "Rights Agreement"), the
terms of which are incorporated herein by reference and a
copy of which is on file at the principal executive offices
of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under
certain circumstances, Rights beneficially owned by
Acquiring Persons or their Affiliates or Associates (as such
terms are defined in the Rights Agreement), and Rights
previously owned by such Persons, may become null and void.
4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase and
form of assignment to be printed on the reverse thereof) shall be substantially
the same as Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22, the
Rights Certificates, whenever distributed, shall entitle the holders thereof to
purchase for the Purchase Price such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein, but the amount and type of
securities purchasable upon exercise and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) any other Person if such Rights
formerly were beneficially owned by an Acquiring Person (or by an Associate or
Affiliate of such Acquiring Person) at a time after the Acquiring Person became
an Acquiring Person, or (iii) a transferee of Rights from an Acquiring Person
(or from any Associate or Affiliate thereof) who became a transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring Person and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or its Affiliate or Associate) to holders of equity
interests in such Acquiring Person (or its Affiliate or Associate) or to any
Person with whom such Acquiring Person (or its Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e), and any Rights Certificate issued
7
pursuant to Section 6, 7(d) or 22 upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement;
provided, however, that the Rights Agent shall not have any responsibility to
ascertain the existence of facts that would require the imposition of such
legend but shall be required to impose such legend only if instructed to do so
by the Company or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
5. Countersignature and Registration. The Rights Certificates shall be
executed on behalf of the Company by its Chief Executive Officer, President or
any Vice President, either manually or by facsimile signature, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal offices, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any
time after the close of business on the Distribution Date, and at or prior to
the close of business on the
8
earlier of the Redemption Date or the Final Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Preferred Stock or other securities or
property as the Rights Certificate or Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to
Sections 4(b), 7(e) and 14, countersign and deliver to the person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) At any time after the Distribution Date and at or prior to the
earlier of (i) the close of business on December 16, 2008 (the "Final Expiration
Date") or (ii) the time at which the Rights are redeemed as provided in Section
23 (the "Redemption Date"), subject to Section 7(e), the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii)) and 23(a) in whole or in
part upon surrender of the Rights Certificate, with the form of election to
purchase and certificate on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each Right that is exercised.
(b) The Purchase Price to be paid on exercise of each Right shall
initially be $200.00 and shall be payable in lawful money of the United States
of America in
9
accordance with paragraph (c) below. Each Right shall initially entitle the
holder to acquire one one-hundredth of a share of Preferred Stock upon exercise
of the Right. The Purchase Price and the number of shares of Preferred Stock or
other securities or assets for which a Right is exercisable shall be subject to
adjustment as provided in Sections 11 and 13.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax in cash, or by certified check or cashier's check
payable to the order of the Company, the Rights Agent shall, subject to Section
20(k), thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby authorizes its transfer agent to comply with all such requests,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance with Section 14,
(iii) after receipt of the certificates for Preferred Stock cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities (including, but not limited
to, debt securities) of the Company, and/or distribute other property pursuant
to Section 11, the Company covenants that it will make all arrangements
necessary so that such other securities and/or property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or to
his duly authorized assigns, subject to the provisions of Section 14.
(e) Notwithstanding any other provision of this Agreement, from and
after the occurrence of a Stock Acquisition Date, any Rights beneficially owned
by (i) an Acquiring Person, or any Associate or Affiliate of an Acquiring
Person, (ii) any other Person if such Rights formerly were beneficially owned by
an Acquiring Person (or by an Associate or Affiliate of such Acquiring Person)
at a time after such Acquiring Person became an Acquiring Person, or (iii) a
transferee of Rights from an Acquiring Person (or from any Associate or
Affiliate thereof) who became a transferee prior to or concurrently with the
Acquiring Person becoming an Acquiring Person and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or its Affiliate or Associate) to holders of equity interests in such
Acquiring Person (or its Affiliate or Associate) or to any Person with whom the
Acquiring Person (or its Affiliate or Associate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
10
Section 7(e), shall become null and void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and of Section 4(b) are complied with, but shall
have no liability to any holder of Rights Certificates or any other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person, or any of its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the surrendered Right Certificate and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event, out
of its authorized and unissued shares of Common Stock and/or other securities),
the number of shares of Preferred Stock (and, following the occurrence of a
Stock Acquisition Date or a Section 13 Event, Common Stock and/or other
securities) that, as provided in this Agreement, will be sufficient to permit
the exercise in full of all outstanding Rights; provided, however, that shares
issuable pursuant to Section 11(a)(ii) shall be reserved only following the
occurrence of an event described in that section.
(b) If any shares of Preferred Stock are listed on a national
securities exchange, and so long as the shares of Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event,
Common Stock and/or other securities) issuable and deliverable upon the exercise
of the Rights may be listed on that exchange, the
11
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
the exchange upon official notice of issuance upon exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following a Stock Acquisition Date and the determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights, or as soon as is required
by law following the Distribution Date, as the case may be, a registration
statement under the Act with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) to cause such registration statement
to become effective as soon as practicable after such filing, and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed 90 days after the date the Company first becomes
obligated to use its best efforts to file a registration statement as set forth
in clause (i) of the first sentence of this Section 9(c), in order to prepare
and file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Stock Acquisition Date or Section 13 Event, Common Stock
and/or other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares of such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates or
of any shares of Preferred Stock or other securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer, split-up, combination or
exchange of Rights Certificates, or any issuance or delivery of certificates for
shares in a name other than that of the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise, and shall not be
required to issue or deliver any certificates for shares upon the exercise of
any Rights until any such tax shall have been paid (any such
12
tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
10. Preferred Stock Record Date. Each person in whose name any certificate
for a number of one one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such fractional shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares (fractional or otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred. Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a shareholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The
Purchase Price, the number and kind of securities covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the number and kind of shares of capital
stock issuable at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of
the Company were open, he or she would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. The adjustments provided for in this
Section 11(a)(i) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or reclassification is
effected. If an event occurs which would require an
13
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event that a Stock Acquisition Date occurs, proper
provision shall be made so that each holder of a Right, except as provided
below and in Section 7(e), shall thereafter have a right to receive, upon
exercise thereof and payment of the Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock as shall
equal the result obtained by dividing the then current Purchase Price by 50
percent of the Current Per Share Market Price of the Common Stock
(determined pursuant to Section 11(d)) on the Stock Acquisition Date (such
number of shares being the "Adjustment Shares").
(iii) In the event the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the then current Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the applicable Purchase Price, (3) shares of Common
Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock that the Board
of Directors of the Company has deemed to have the same value as shares of
Common Stock ("Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within 30 days following the Stock Acquisition Date, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of Directors
of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 90 days
after the Stock Acquisition Date, in order that the Company may seek
shareholders approval for the authorization of such additional shares (such
period, as it may be extended as so permitted, the "Substitution Period").
To the extent the Company determines that
14
some action must be taken pursuant to the first or second sentences of this
Section 11(a)(iii), the Company (x) shall provide that such action shall
apply uniformly to all outstanding Rights other than those that are void as
provided in Section 7(e), and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock shall be the Current Per Share
Market Price (as determined pursuant to Section 11(d) hereof) of the Common
Stock on the date of the Stock Acquisition Date and the value of any Common
Stock Equivalent shall be deemed to have the same value as the Common Stock
on such date.
(b) In case the Company shall at any time after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or Preferred Stock Equivalent (or having a conversion price per share, if
a security convertible into Preferred Stock or Preferred Stock Equivalents) less
than the then Current Per Share Market Price of the Preferred Stock (as defined
in Section 11(d)) on such record date, the number of shares of Preferred Stock
for which each Right shall be exercisable after such record date shall
determined by multiplying the number of shares of Preferred Stock for which each
Right was exercisable immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of additional shares of Preferred Stock
and/or Preferred Stock Equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible) and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Preferred Stock Equivalents so to be offered (and/or
the aggregate initial conversion price of convertible securities so to be
offered) would purchase at such Current Per Share Market Price. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent. Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the number of shares of Preferred Stock for which
each Right shall be exercisable shall be readjusted to be the number of shares
of Preferred Stock for which each Right would
15
then be exercisable if such record date had not been fixed; and to the extent
such rights, options or warrants are issued but not exercised prior to their
expiration, the number of shares for which each Right shall be exercisable shall
be readjusted to be the number which would have resulted from the adjustment
provided for in this Section 11(b) if only the rights or warrants that were
exercised had been issued.
(c) (i) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to all holders
of Preferred Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in shares of
Preferred Stock but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the number of shares of Preferred Stock for
which each Right shall be exercisable after such record date shall be
determined by multiplying the number of shares of Preferred Stock for which
each Right was exercisable immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Per Share Market
Price of the Preferred Stock (as defined in Section 11(d)) on such record
date, and the denominator of which shall be such Current Per Share Market
Price of the Preferred Stock, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the number
of shares of Preferred Stock for which each Right shall be exercisable
shall be readjusted to be the number of shares of Preferred Stock for which
each Right would then be exercisable if such record date had not been
fixed.
(ii) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to all holders
of Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section
11(h)(ii)), the number of shares of Preferred Stock for which each Right
shall be exercisable after such record date shall be determined by
multiplying the number of shares of Preferred Stock for which each Right
was exercisable immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Per Share Market Price of the
Common Stock (as defined in Section 11(d)) on such record date, and the
denominator of which shall be such Current Per Share Market Price of the
Common Stock, less the fair market value (as determined in good faith by
the Board of
16
Directors, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable
to one share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the number of shares of Preferred Stock for
which each Right shall be exercisable shall be readjusted to be the number
of shares of Preferred Stock for which each Right would then be exercisable
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 stock (including Common Stock) on any date
shall be deemed to be the average of the daily closing prices per share of
the common stock for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
that in the event the Current Per Share Market Price of common stock is
determined during a period following the announcement by the issuer of such
common stock of (A) a dividend or distribution on such common stock payable
in such common stock or securities convertible into such common stock, or
(B) any subdivision, combination or reclassification of such common stock,
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 shall be appropriately adjusted to take into account
such event. The closing price for each day shall be the last sale price as
reported by the New York Stock Exchange (the "NYSE") or such other system
then in use, or, if on any such date the common stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the common
stock selected by a majority of the Board of Directors. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the common stock is listed or admitted to trading is open for the
transaction of business or, if the common stock is not listed or admitted
to trading on any national securities exchange, a Business Day. If the
common stock is not publicly held or so listed or traded, "Current Per
Share Market Price" shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "Current Per
Share Market Price" of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Per
Share Market Price of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d), the
"Current Per Share Market Price" of Preferred Stock shall be conclusively
deemed to be an amount equal to the Current Per Share Market Price of
17
the Common Stock multiplied by the Adjustment Number as that term is
defined in Section 2 of the Amendment to the Company's Articles of
Incorporation, as amended, designating the Preferred Stock (initially 100).
If neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "Current Per Share Market Price" of Preferred Stock shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the current market price of
one one-hundredth of a share of Preferred Stock shall be equal to the
Current Per Share Market Price of one share of Preferred Stock divided by
100.
(e) No adjustment in the Purchase Price or the number of shares for
which a Right is exercisable shall be required unless such adjustment would
require an increase or decrease of at least one percent in the Purchase Price or
the number of shares for which a Right is exercisable; provided, however, that
any adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or
one-millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11 and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price or the number of shares of Preferred Stock
for which a Right is exercisable hereunder shall evidence the right to purchase,
at the adjusted Purchase Price, the number of one one-hundredths of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) (i) In the event the Company shall, after the date of this
Agreement and prior to the Distribution Date, (A) declare a dividend on the
Common Stock payable in Common Stock, (B) subdivide the outstanding Common
Stock, (C) combine the outstanding Common Stock into a smaller number of
shares of Common Stock, or (D) issue any shares of Common Stock in a
reclassification of the Common Stock (including any such reclassification
in connection with a consolidation
18
or merger in which the Company is the continuing or surviving corporation),
the number of Rights associated with each share of Common Stock then
outstanding, and the number of Rights to be associated with each share of
Common Stock which may thereafter become outstanding prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event
by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event.
(ii) In the event the Company shall, after the date of this Agreement
and prior to the Distribution Date, fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock or securities convertible into
Common Stock at a price per share of Common Stock (or having a conversion
price per share, if a security convertible into Common Stock) less than the
then Current Per Share Market Price of the Common Stock (as defined in
Section 11(d)) on such record date, the number of Rights associated with
each share of Common Stock then outstanding, and the number of Rights to be
associated with each share of Common Stock which may thereafter become
outstanding prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights associated with each share of Common
Stock after such record date shall be determined by multiplying the number
of Rights associated with each share of Common Stock immediately prior to
such record date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase at such Current Per Share Market Price and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent. Common Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed.
In the event that such rights, options or warrants are not so issued, the
number of Rights associated with each share of Common Stock shall be
readjusted to be the number of Rights that would have been associated with
each share of Common Stock if such record date had not been fixed; and to
the extent such rights, options or warrants are issued but not exercised
prior to their expiration, the number of Rights associated
19
with each share shall be readjusted to be the number which would have
resulted from the adjustment provided for in this Section 11(h)(ii) if only
the rights, options or warrants that were exercised had been issued.
(iii) Notwithstanding the foregoing, the adjustments provided for in
this Section 11(h) shall not be made if the Company exercises its election
provided for in Section 11(i).
(i) The Company may elect on or after the date of any event described
in clauses (A) through (D) of Section 11(h)(i) or described in Section
11(h)(ii), if such event occurs before the Distribution Date (a "Section 11(h)
Event"), to adjust the Purchase Price and the number of shares of Preferred
Stock purchasable upon the exercise of a Right in substitution for any
adjustment under Section 11(h) in the number of Rights associated with each
share of Common Stock. If such election is made, (i) the number of Rights
associated with each share of Common Stock prior to the Section 11(h) Event
shall be maintained after the Section 11(h) Event, (ii) any new shares of Common
Stock issued in the Section 11(h) Event shall, as provided in Section 3(a), have
issued with it the number of Rights associated with each share of Common Stock
outstanding, and (iii) any combination of shares of Common Stock into a smaller
number of shares in the Section 11(h) Event shall result in a similar
combination of the associated Rights. The Purchase Price and the number of
Shares of Preferred Stock purchasable upon exercise of a Right after such
adjustment shall be determined by multiplying the Purchase Price and the number
of Shares of Preferred Stock purchasable upon exercise of a Right, respectively,
in effect immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Rights that would have been associated with each
share of Common Stock after the Section 11(h) Event if the Company had not
exercised its election provided for in this Section 11(i) and the denominator of
which shall be the number of Rights associated with each share of Common Stock
immediately prior to the Section 11(h) Event. To the extent the number of Rights
that would have been associated with each share of Common Stock if the Company
had not exercised its election provided for in this Section 11(i) may be
readjusted as provided in the last sentence of Section 11(h)(ii), the Purchase
Price and number of shares of Preferred Stock purchasable upon exercise of a
Right shall be similarly readjusted.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share of Preferred Stock which
were expressed in the initial Rights Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price or the number of one one-hundredths of a share
of Preferred Stock for which a Right is exercisable 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
20
any Right exercised after such record date the number of one one-hundredths of a
share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one
one-hundredths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price and the number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to in Section 11(b), hereafter
made by the Company to holders of its Preferred Stock shall not be taxable to
such shareholders or shall reduce the taxes payable by such shareholders.
(m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26, take (or
permit any Subsidiary to take) any action, including any merger, consolidation
or sale of assets if at the time such action is taken or immediately thereafter
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 and 13, the Company shall 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 Stock and the Common Stock a copy of
such certificate and (c) mail a brief summary thereof to each holder of Rights
in accordance with Section 25.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(a) In the event that, following the Distribution Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(m)) and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
21
(ii) any Person shall acquire shares of Common Stock of the
Company in a share exchange,
(iii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m)) shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or
(iv) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50 percent or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person other than the Company or one or more of its wholly
owned Subsidiaries in a transaction that complies with Section 11(m),
then, and in each such case, proper provision shall be made so that (A) each
holder of a Right (except as otherwise provided in Section 7(e)) shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Purchase Price in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of common stock of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the then current
Purchase Price by 50 percent of the Current Per Share Market Price of the common
stock of the Principal Party (determined pursuant to Section 11(d)) on the date
of consummation of the Section 13 Event, (B) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement, (C)
the term "Company" shall thereafter be deemed to refer to the Principal Party,
it being specifically intended that the provisions of Section 11 shall apply to
the Principal Party only following the first occurrence of a Section 13 Event,
and (D) the Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its common stock in
accordance with Section 9) in connection with such consummation as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the common stock
thereafter deliverable upon the exercise of the Rights. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of an
event described in Section 13.
(b) The term "Principal Party" shall mean
(i) in the case of any transaction described in clause (i), (ii) or
(iii) of Section 13(a), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such
merger or consolidation, or for
22
which shares of Common Stock are exchanged in such share exchange, and if
no securities are so issued, the Person that is the other party to such
merger, consolidation or share exchange or, if there is more than one such
Person, the Person the common stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d)); and
(ii) in the case of any transaction described in clause (iv) of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions; or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the common stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d));
provided, however, that, if the common stock of such Person is not at such time
and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act or such Person is not a corporation, then
(A) if such Person is a direct or indirect Subsidiary of one other Person which
has common stock so registered, "Principal Party" shall refer to such other
Person, (B) if such Person is a direct or indirect Subsidiary of another Person
but is not a direct or indirect Subsidiary of another Person which has common
stock so registered, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person, (C) if such Person is directly or indirectly
controlled by more than one Person, and one or more of such other persons has
common stock so registered, "Principal Party" shall refer to whichever of such
Persons that is the issuer of common stock so registered having the highest
aggregate current market price (determined pursuant to Section 11(d)), and (D)
if such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have common stock so registered, "Principal Party"
shall refer to whichever ultimate parent entity is the corporation having the
greatest shareholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
(c) The Company shall not enter into any transaction described in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. In
addition, the Company shall not consummate any such transaction unless the
Principal Party shall have a sufficient number of authorized shares of common
stock which have not been issued or reserved for issuance to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in this Section 13 and further providing that, as soon as practicable after
execution of such agreement, the Principal Party will
23
(i) prepare and file a registration statement under the Act with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing,
(B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date and, as soon as
practicable following the execution of such agreement, take such action as
may be required to ensure that any acquisition of such shares of common
stock upon the exercise of the Rights complies with any applicable state
security or "blue sky" laws; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Articles or Certificate of Incorporation or
Bylaws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of common stock of such Principal Party
at less than the then Current Per Share Market Price (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, shares of
common stock of such Principal Party at less than the then Current Per Share
Market Price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the shares of common stock of such Principal Party pursuant
to the provisions of Section 13; then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the Stock Acquisition
Date, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of a
Section 13 Event.
14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to
24
which such fractional Right would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, or, in case no such sale
takes place on such day, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NYSE or such other system then in
use or, if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredths of a share of Preferred Stock
the Company shall pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Stock Acquisition Date or Section 13
Event, the Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of current market value of one share of Common Stock. For purposes of
this Section 14(c), the current market value of one share of Common Stock shall
be the closing price of one share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
25
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 Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Right Certificate (or, prior to the Distribution
Date, of Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder 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 will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Sections 6 and 7(f), the Company and the Rights Agent
may deem and treat the Person in whose name the Rights Certificate (or, prior to
the Distribution Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent, subject to the last sentence of Section 7(e), shall be affected by
any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such
26
obligation; provided, however, the Company must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as such,
of any Rights Certificate shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the number of one one-hundredths of a share
of Preferred Stock or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company 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 23(c)), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for shares of Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20.
19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business or stock transfer business of the Rights Agent or
any successor rights agent, shall be the successor to
27
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. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter 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 provided and
established by a certificate signed by any one of the Chief Executive Officer,
the President, any Vice President, the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
28
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment in the
terms of the Rights (including the manner, method or amount thereof) provided
for in this Agreement or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock or Common Stock to be issued pursuant to this Agreement or
any Right Certificate or as to whether any shares of Preferred Stock or Common
Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, 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 shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any such officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
29
(h) The Rights Agent and any shareholder, director, officer, or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent
may resign and be discharged from its duties under this Agreement upon 30 days
notice in writing mailed to the Company and to each transfer agent of the Common
Stock and Preferred Stock by registered or certified mail, and to the holders of
the Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the
30
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any State of the United
States, in good standing, which is authorized under such laws to exercise
corporate trust powers 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 or (b) an affiliate or subsidiary of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Stock of the Company following the Distribution Date and prior
to the Final Expiration Date, the Company (a) shall, with respect to Common
Stock of the Company so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities issued by the Company prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
23. Redemption.
(a) The Board of Directors of the Company may at its option, at any
time prior to the earliest of (i) the close of business on the tenth day
following a Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), (ii) a determination by the
31
Board of Directors that any Person is an Adverse Person, or (iii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable as provided in Section 11(a)(ii) until such
time as the Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as shall be
specified in the resolution taking such action), and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights and the Rights Agent by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the shares of Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Per Share Market Price, as defined in Section 11(d),
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(c) In case the Company shall propose (a) to pay any dividend payable
in stock of any class to the holders of its Preferred Stock or Common Stock or
to make any other distribution to the holders of its Preferred Stock or Common
Stock (other than a regular cash dividend), (b) to offer to the holders of its
Preferred Stock or Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or Common Stock or shares of
stock of any class or any other securities, (c) to effect any reclassification
of its Preferred Stock or Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock or Common Stock),
(d) to effect any consolidation, merger or share exchange into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(m)), (e) 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
related transactions, of 50 percent or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person (other
than the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(m)), or (f) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend or distribution
of rights or warrants, or the date on which
32
such reclassification, consolidation, merger, exchange, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Preferred Stock or Common Stock if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (a) or (b) above at least 20 days prior to the
record date for determining holders of the Preferred Stock or Common Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock or Common Stock
whichever shall be the earlier.
In case a Stock Acquisition Date shall occur, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 25, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii).
24. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time and from time to time after a Stock Acquisition Date, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e)) for shares of
Common Stock or Common Stock Equivalents, or any combination thereof, at an
exchange ratio of one share of Common Stock, or such number of Common Stock
Equivalents or units representing fractions thereof as would be deemed to have
the same value as one share of Common Stock, per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock and/or
Common Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 7(e))
held by each holder of Rights.
33
(c) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation as amended but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option, take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the company
shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 24, the value of a whole share of Common Stock shall be
the closing price (as determined pursuant to the second sentence of Section
11(d)(i) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.
25. Notices. Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Rights Certificate to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Precision Castparts Corp.
Executive Office, Suite 440
000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Financial Officer
Copy to: Xxxx X. Xxxxx
Stoel Rives LLP
000 XX Xxxxx Xxx., Xxxxx 0000
Xxxxxxxx, XX 00000
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx XX
Xxx Xxxx XX 00000
34
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
26. Supplements and Amendments. Prior to the Distribution Date, the Company
and the Rights Agent shall, if the Board of Directors of the Company so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Board of
Directors of the Company so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interest of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of any such Person); provided, however, this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable, or (b) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, the Rights Agent
shall execute such supplement or amendment. Prior to Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of shares of Common Stock.
27. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns.
28. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common Stock).
29. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the
35
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23(a)
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors of
the Company.
30. Determinations and Actions by the Board of Directors, Etc. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or 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. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (b) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (a) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (b) not subject the Board of Directors of the Company to any
liability to the holders of the Rights.
31. Governing Law. This Agreement and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Oregon and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State, provided, however, that the provisions concerning
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York.
32. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
36
33. Descriptive Headings. Descriptive headings of the several Sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
PRECISION CASTPARTS CORP.
By /S/ XXXXXXX X. XXXXXXXXX
-----------------------------------------
Its Chairman and Chief Executive Offier
------------------------------------
THE BANK OF NEW YORK
By /S/ XXXX XXXXXXXXX
-----------------------------------------
Its Vice President
------------------------------------
37
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER DECEMBER 16, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR RESPECTIVE AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]1
Rights Certificate
---------------
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of December 3, 1998 (the "Rights Agreement") between
Precision Castparts Corp. an Oregon corporation (the "Company"), and The Bank of
New York (the "Rights Agent"), to purchase from the Company at any time prior to
5 p.m., New York time, on December 16, 2008 (the "Final Expiration Date") at the
office or offices of the Rights Agent designated for such purpose, one
one-hundredth of a fully paid and nonassessable share of Series A Preferred
Shares (the "Preferred Stock") of the Company, at a purchase price of $200 (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election
--------
/1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
to Purchase and related Certificate duly executed. The Purchase Price may be
paid in cash or by certified check or cashier's check payable to the order of
the Company. The number of Rights evidenced by this Rights Certificate, the
number of one one-hundredths of a share of Preferred Stock which may be
purchased upon exercise hereof, and the Purchase Price per Right set forth above
are the number of Rights, the number of one one-hundredths of a share and the
Purchase Price as of December 3, 1998, based on the Preferred Stock and Common
Stock as constituted at such date.
Upon the occurrence of a Stock Acquisition Date (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or any Affiliate or Associate of
such Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
any other person if such Rights formerly were beneficially owned by such
Acquiring Person (or by an Associate or Affiliate thereof) at a time after such
Acquiring Person, became an Acquiring Person, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of Rights from
such Acquiring Person (or from any Associate or Affiliate thereof) who became a
transferee prior to or concurrently with such Acquiring Person becoming an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such an event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities or property which may be
obtained upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including a Stock Acquisition Date or a Section 13 Event (as such terms are
defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
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
and the limitations on the rights, obligations, duties, and immunities hereunder
of the Rights Agent, the Company, and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
A-2
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right at any time prior to the earlier of (i) the close of
business on the tenth day following the Stock Acquisition Date (as such period,
may be extended pursuant to the Rights Agreement) and (ii) the Final Expiration
Date.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredths of a share of Preferred Stock, which may, at the
election of the Company be evidenced by depository receipts), but in lieu
thereof a cash payment will be made as provided in the Rights Agreement.
No holder of this Rights certificate, as such, shall be entitled to vote,
receive dividends, or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________, 19__.
ATTEST: PRECISION CASTPARTS CORP.
-------------------------------- -----------------------------------------
Secretary Title:
A-3
Countersigned:
By ------------------------------
Authorized Signature
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights certificate.)
FOR VALUE RECEIVED --------------------------------------------------------
hereby sells, assigns, and transfers unto --------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint --------------------------,
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated ----------, 19--.
-----------------------------------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate --- is --- is not being sold, assigned, and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
A-5
(2) after due inquiry and to the best knowledge of the undersigned, it ___
did ___ did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was, or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: ----------, 19--. -----------------------------------------
Signature
Signature Guaranteed:
A-6
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
TO: ---------------------
The undersigned hereby irrevocably elects to exercise ---------- Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
Please insert social security
or other identifying number: ---------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
A-7
Please insert social security
or other identifying number: --------------------------------------------------
Dated ----------, 19--.
-----------------------------------------
Signature
Signature Guaranteed:
A-8
Certificate
The undersigned hereby certifies by checking the, appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate ___ are ___ are not
being exercised by or on behalf of a Person is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it ___
did ___ did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was, or became Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ----------, 19--. -----------------------------------------
Signature
Signature Guaranteed:
A-9
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Effective as of December 3, 1998, the Board of Directors of Precision
Castparts Corp. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock of the Company to shareholders of record at
the close of business on December 16, 1998. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A No
Par Serial Preferred Shares (the "Preferred Shares") at a Purchase Price of
$200, subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the Company and The
Bank of New York, as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) ten days following a public announcement
that (A) a person or group of affiliated or associated persons has acquired, or
obtained the right to acquire from shareholders, beneficial ownership of 15
percent or more of the outstanding Common Stock or (B) the Board of Directors of
the Company shall declare any person to be an Adverse Person (as described
below) (each, an "Acquiring Person"), or (ii) ten business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 15 percent or more of such outstanding Common
Stock, as such periods may be extended pursuant to the Rights Agreement.
An Adverse Person is any person declared to be an Adverse Person by the
Board of Directors upon a determination that such person, alone or together with
its affiliates and associates, has become the beneficial owner of an amount of
Common Stock which the Board of Directors determines to be substantial (which
amount shall be more than 10% of the Common Stock then outstanding) and a
determination by at least a majority of the Board of Directors who are not
officers of the Company, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem appropriate, that
(i) such beneficial ownership by such person is intended to cause the Company to
repurchase the Common Stock beneficially owned by such person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such person with short-term financial gain
under circumstances where the Board of Directors determines that the best
long-term interests of the Company and its shareholders would not be served by
taking such action or entering into such transactions or series of transactions
at that time or (ii) such beneficial ownership is causing or reasonably likely
to cause a material adverse impact (including, but not limited to, impairment of
relationships with customers or
B-1
impairment of the Company's ability to maintain its competitive position) on the
business or prospects of the Company.
Until the Distribution Date, (i) the Rights will be evidenced by and will
be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after December 16, 1998, will contain a legend
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificate for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 16, 2008, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date, and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only Common Stock issued prior to the time the Rights
become exercisable or issued upon exercise or conversion of rights, warrants,
options or convertible securities issued prior to the time the Rights become
exercisable will be issued with Rights.
In the event that any person becomes an Acquiring Person, each holder of a
Right shall thereafter have the right to receive, upon exercise, in lieu of
Preferred Shares, Common Stock of the Company (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. However, Rights are not exercisable as
described in this paragraph until such time as the Rights are no longer
redeemable by the Company as set forth below. Notwithstanding any of the
foregoing, if any person becomes an Acquiring Person all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person will become null and void.
For example, at an exercise price of $200 per Right, each Right not owned
by the Acquiring Person (or by certain related parties or transferees) following
the event set forth in the preceding paragraph would entitle its holder to
purchase $400 worth of Common Stock (or other consideration, as noted above) for
$200. Assuming that the Common Stock had a per share value of $50 at such time,
the holder of each valid Right would be entitled to purchase eight shares of
Common Stock for $200.
In the event that, at any time following the Distribution Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the Common Stock
are exchanged for stock or other securities or property, or (ii) 50 percent or
more of the Company's assets or earning power
B-2
is sold or transferred, each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right.
The Purchase Price payable, and the number of one one-hundredths of a share
of Preferred Shares or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares or the Common Stock, (ii) if holders
of the Preferred Shares are granted certain rights or warrants to subscribe for
Preferred Shares or convertible securities at less than the current market price
of the Preferred Shares, (iii) if holders of Common Stock are granted certain
rights or warrants to subscribe for Common Stock or convertible securities at
less than the current market price of the Common Stock, or (iv) upon the
distribution to holders of Preferred Shares or Common Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price or the number
of Preferred Shares issuable upon exercise of a Right will be required until
cumulative adjustments would require an increase or decrease of at least 1
percent. No fractional Preferred Shares will be issued (other than fractions
which are integral multiples of one one-hundredth of a share of Preferred
Shares) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
At any time until a determination that any person is an Adverse Person or
ten days (or longer if extended pursuant to the terms of the Rights Agreement)
after a person otherwise becomes an Acquiring Person, the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per Right (payable in
cash, Common Stock or other consideration), appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 redemption price.
At any time after a person becomes an Acquiring Person, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which become void), in whole or in part, at an exchange
ratio of one Common Stock, or one one-hundredth of a share of Preferred Shares
(or of a share of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive
B-3
dividends. While the distribution of the Rights will not be taxable to
shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The Preferred Shares will be non-redeemable. The Preferred Shares may rank
on a lower priority in respect of the preference as to dividends and the
distribution of assets with other classes or series of the Company's preferred
shares. Each Preferred Share will be entitled to an aggregate of 100 times the
cash and non-cash (payable in kind) dividends and distributions (other than
dividends and distributions payable in Common Shares) declared on the Company's
Common Stock. In the event of liquidation, the holders of Preferred Shares will
be entitled to receive a liquidation payment in an amount equal to 100 times the
payment made per Common Share, plus an amount equal to declared and unpaid
dividends and distributions thereon. In the event of any merger, consolidation
or other transaction in which Common Stock is exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per share of Common
Stock. The dividend and liquidation rights of the Preferred Stock are protected
by antidilution provisions. Each Preferred Share will be entitled to 100 votes
(subject to certain adjustments) on all matters submitted to the shareholders.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K dated December
3, 1998. A copy of the Rights Agreement is available free of charge from the
Rights Agent. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
B-4
