EXHIBIT 1
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RIGHTS AGREEMENT
_____________________________
Arch Coal, Inc.
and
First Chicago Trust Company of New York
Rights Agent
_____________________________
Dated as of March 3, 2000
INDEX
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Page
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Section 1. Certain Definitions.............................................................................................. 1
Section 2. Appointment of Rights Agent...................................................................................... 5
Section 3. Issue of Right Certificates...................................................................................... 5
Section 4. Form of Right Certificates....................................................................................... 6
Section 5. Countersignature and Registration................................................................................ 7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates..................................................................................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.................................................... 8
Section 8. Cancellation and Destruction of Right Certificates............................................................... 10
Section 9. Reservation and Availability of Shares of Preferred Stock........................................................ 10
Section 10. Preferred Stock Record Date..................................................................,................... 11
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..........................,.................... 11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.................................,..................... 18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power......................,...................... 18
Section 14. Fractional Rights and Fractional Shares..................................................,....................... 20
Section 15. Rights of Action................................................................................................. 21
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Section 16. Agreement of Right Holders...................................................................................... 22
Section 17. Right Certificate Holder Not Deemed a Stockholder............................................................... 22
Section 18. Concerning the Rights Agent..................................................................................... 23
Section 19. Merger or Consolidation or Change of Name of Rights Agent....................................................... 23
Section 20. Duties of Rights Agent.......................................................................................... 24
Section 21. Change of Rights Agent.......................................................................................... 25
Section 22. Issuance for New Right Certificates............................................................................. 26
Section 23. Redemption and Termination...................................................................................... 27
Section 24. Exchange........................................................................................................ 27
Section 25. Notice of Proposed Actions...................................................................................... 28
Section 26. Notices......................................................................................................... 29
Section 27. Supplements and Amendments...................................................................................... 30
Section 28. Successors...................................................................................................... 30
Section 29. Benefits of This Agreement...................................................................................... 30
Section 30. Severability.................................................................................................... 31
Section 31. Governing Law................................................................................................... 31
Section 32. Counterparts.................................................................................................... 31
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Section 33. Descriptive Headings............................................................................................ 31
Exhibit A - Form of Certificate of Designations for
Series One Junior Participating
Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Preferred Stock Purchase Rights
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RIGHTS AGREEMENT
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This Rights Agreement, dated as of March 3, 2000, is entered into
between Arch Coal, Inc., a Delaware corporation (the "Company") and First
Chicago Trust Company of New York, a New York banking corporation (the "Rights
Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, by vote of not less than two-thirds of the entire Board of
Directors, on March 3, 2000, the Board of Directors of the Company authorized
and declared a dividend distribution of one right (hereinafter referred to as a
"Right") for each share of Common Stock, par value $0.01 per share, of the
Company outstanding at the close of business on March 20, 2000 (the "Record
Date"), other than shares of such Common Stock held in the Company's treasury on
such date, and has authorized the issuance of one Right, in respect of each
share of Common Stock of the Company issued between the Record Date (whether
originally issued or issued from the Company's treasury) and the Distribution
Date (as such term is defined in Section 3 hereof), each Right representing the
right to purchase one one-hundredth of a share of Series One Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designations attached hereto
as Exhibit A, upon the terms and subject to the conditions hereinafter set
forth; and
WHEREAS, the Company desires to appoint the Rights Agent to act as
provided herein, and the Rights Agent is willing to so act.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights
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Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined)
who or which, together with all Affiliates (as hereinafter defined) and
Associates (as hereinafter defined) of such Person, without the Prior Written
Approval of the Company (as hereinafter defined), shall be the Beneficial Owner
(as hereinafter defined) of securities of the Company constituting 20% or more
of the Voting Power (as hereinafter defined) of the Company or was such a
Beneficial Owner at any time after the date hereof, whether or not such Person
continues to be the Beneficial Owner of securities representing 20% or more of
the Voting Power of the Company but shall not include (i) the Company, any
Subsidiary of the Company, any employee benefit plan or compensation arrangement
of the Company or any Subsidiary of the Company, or any entity holding
securities of the Company to the extent organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such employee benefit plan or compensation arrangement, (ii) any Person who or
which, together with all Affiliates and Associates of such Person, inadvertently
may become the Beneficial Owner of securities of the Company representing 20% or
more of the Voting Power of the Company or otherwise becomes such a Beneficial
Owner without a plan or intention to acquire control of the Company, so long as
such Person, individually or together with the Affiliates and Associates of such
Person, promptly enters into, and delivers to the Company, an irrevocable
commitment promptly to divest, and thereafter promptly divests (without
exercising or retaining any power,
including voting, with respect to such securities), sufficient securities of the
Company so that such Person, together with all Affiliates and Associates of such
Person, ceases to be the Beneficial Owner of 20% or more of the Voting Power of
the Company, or (iii) an Excepted Person (as hereinafter defined).
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of securities of the Company by the Company which,
by reducing the amount of such securities outstanding, increases the
proportionate voting power of such securities beneficially owned by such Person
to 20% or more of the Voting Power of the Company; provided, however, that if a
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Person becomes the Beneficial Owner of securities constituting 20% or more of
the Voting Power of the Company by reason of purchases by the Company and shall,
after such purchases by the Company, become the Beneficial Owner of any
additional securities of the Company without the Prior Written Approval of the
Company, then such Person shall be deemed to be an Acquiring Person.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof; provided however that any employee benefit plan or
compensation arrangement of Ashland Inc., including, but not limited to, the
Ashland Inc. Employee Savings Plan and the Ashland Inc. Leveraged Employee Stock
Ownership Plan, shall not be deemed to be an Affiliate or Associate of Ashland
Inc.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act,
as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the
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"Beneficial Owner" of 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
payment or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding, provided, however, that a Person shall not be
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deemed the "Beneficial Owner" of any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and (2) is not also
then reportable by such person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other than
customary agreements with and
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between underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy or consent as described in
clause (B) of subparagraph (ii) of this paragraph (c)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, (i) the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder, and (ii) Ashland Inc. shall not
be deemed to beneficially own securities of the Company held by any employee
benefit plan or compensation arrangement of Ashland Inc., including, but not
limited to, the Ashland Inc. Employee Savings Plan and the Ashland Inc.
Leveraged Employee Stock Ownership Plan.
(d) "Action of the Board of Directors" shall mean the approval by
action of not less than two-thirds of the entire Board of Directors.
(e) "Board of Directors" shall mean the Board of Directors of the
Company as constituted from time to time.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Missouri are authorized
or obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00 P.M.,
eastern standard time, on such date; provided, however, that if such date is not
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a Business Day it shall mean 5:00 P.M., eastern standard time , on the next
succeeding Business Day.
(h) "Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock with the greatest
Voting Power of such Person or the equity securities or other equity interest
having power to control or direct the management of such Person or, if such
Person is a Subsidiary (as hereinafter defined) of another Person, of the Person
which ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Excepted Person" shall mean Ashland Inc., together with its
Affiliates and Associates; provided, however, that Ashland Inc. shall cease to
be an Excepted Person upon the earlier of either (x) Ashland Inc. beneficially
owning less than 20% of the Voting Power of the Company, including, without
limitation, following a spin-off transaction by Ashland Inc. of shares of Common
Stock of the Company to Ashland Inc. shareholders, or (y) Ashland Inc. becoming
the Beneficial Owner of any additional securities of the Company without the
Prior Written Approval of the Company, provided, however, that Ashland Inc.
shall not be deemed to beneficially own any such additional securities unless,
after receipt of notice from the Company of such increase in Beneficial
Ownership, Ashland Inc. fails promptly to enter into and deliver to the Company
an irrevocable commitment promptly to divest, and thereafter fails to promptly
divest
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(without exercising or retaining any power, including voting, with respect to
such securities) and in any event within 10 days of Ashland Inc.'s receipt of
such notice, sufficient securities of the Company so that Ashland Inc., together
with its Affiliates and Associates, ceases to be the Beneficial Owner of Voting
Power of the Company greater than the Voting Power beneficially owned by Ashland
Inc. on March 3, 2000.
(k) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of any
such entity.
(n) "Preferred Stock" shall mean the Series One Junior Participating
Preferred Stock, par value $0.01 per share, of the Company.
(o) "Prior Written Approval of the Company" shall mean prior express
written consent of the Company to the actions in question, executed on behalf of
the Company by a duly authorized officer of the Company following express Action
of the Board of Directors.
(p) "Purchase Price" shall have the meaning set forth in Section 4
hereof.
(q) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(r) "Section 11(b) Event" shall have the meaning set forth in Section
11(b) hereof.
(s) "Section 13 Event" shall mean an event described in clauses (x),
(y) or (z) of Section 13(a) hereof.
(t) "Stock Acquisition Date" shall mean the earlier of (i) the first
date of public announcement by the Company or a Person that an Acquiring Person
has become an Acquiring Person, or (ii) the date on which the Company first has
notice, direct or indirect, or otherwise determines that a Person has become an
Acquiring Person.
(u) "Subsidiary" shall mean, with respect to any Person, any other
Person of which securities or other ownership interests having ordinary Voting
Power, in the absence of contingencies, to elect a majority of the board of
directors (or other persons performing similar functions) of such other Person
are at the time directly or indirectly owned by such Person or one or more of
such Person's Subsidiaries, except that "Subsidiary" when used with reference to
the Company shall mean any Person of which either a majority of the Voting Power
of the voting equity securities or a majority of the equity interests is owned,
directly or indirectly, by the Company.
(v) "Voting Power" shall mean the voting power of all securities of a
Person then outstanding generally entitled to vote for the election of directors
of the Person (or, where appropriate, for the election of persons performing
similar functions).
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Section 2. Appointment of Rights Agent. The Company hereby appoints
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the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent. In the event
the Company appoints one or more Co-Rights Agents, the respective duties of the
Rights Agents and any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
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(a) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Stock Acquisition Date or (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by Action of the
Board of Directors but in no event later than the tenth Business Day after such
time as any Person becomes an Acquiring Person) 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 or compensation arrangement of the Company or
of any Subsidiary of the Company, or any entity holding securities of the
Company to the extent organized, appointed or established by the Company or any
Subsidiary of the Company for or pursuant to the terms of any such employee
benefit plan or compensation arrangement or any Excepted Person) 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, without the Prior Written Approval
of the Company, which tender or exchange offer would result in any Person
becoming the Beneficial Owner of Voting Power aggregating 20% or more of the
outstanding Voting Power (including any such date which is after the date of
this Rights Agreement and prior to the issuance of the Rights; the earlier of
such dates being herein referred to as the "Distribution Date"), (y) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this Section 3)
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also to
be Right Certificates) and not by separate Right Certificates, as more fully set
forth below, and (z) the Rights (and the right to receive certificates therefor)
will be transferable only in connection with the transfer of the underlying
shares of Common Stock, as more fully set forth below. As soon as practicable
after the Company has notified the Rights Agent of the occurrence of the
Distribution Date, the Company shall prepare and execute, and the Rights Agent
shall countersign and send, by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a right certificate, in substantially the form of Exhibit B hereto (the
"Right Certificate"), evidencing one Right for each share of Common Stock so
held subject to adjustment as provided herein. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit D hereto (the "Summary of Rights"), by first-
class, postage prepaid mail, to each record holder of the Common Stock as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Common Stock
outstanding as of the Record Date, until the Distribution Date (or the earlier
redemption,
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expiration or termination of the Rights), the Rights will be evidenced by such
certificates for the Common Stock registered in the names of the holders of the
Common Stock and the registered holders of the Common Stock shall also be
registered holders of the associated Rights. Until the Distribution Date (or the
earlier redemption, expiration or termination of the Rights), the surrender for
transfer of any of the certificates for the Common Stock outstanding in respect
of which Rights have been issued shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record Date
but prior to the earlier of the Distribution Date or the redemption, expiration
or termination of the Rights shall be deemed also to be certificates for Rights
and shall have impressed, printed or written on, or otherwise affixed to them a
legend substantially to the following effect:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of March 3,
2000 between Arch Coal, Inc. (the "Company") and First Chicago Trust
Company of New York (the "Rights Agreement"), as it may from time to
time be supplemented or amended, 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 may expire or may be
redeemed, exchanged or be evidenced by separate certificates and 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 promptly after receipt of a written request therefor. Under
certain circumstances, Rights issued to or held by Acquiring Persons
or their Affiliates or Associates (as defined in the Rights Agreement)
and any subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
In the event that the Company purchases or acquires any Common Stock
after the Record Date but prior to the Distribution Date, any Rights associated
with such 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 which are no longer outstanding.
Section 4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof) shall be in
substantially the same form as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Rights Agreement, or as may be required to comply
with any applicable law, rule or regulation or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to customary usage. Subject to the provisions of Section 11 and Section
22 hereof, the Right Certificates, whenever issued, shall
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be dated as of the Record Date, and on their face shall entitle the holders
thereof to purchase such number of one one-hundredths of a share of Preferred
Stock as shall be set forth therein at the price per one one-hundredth of a
share as set forth therein (the "Purchase Price"), but the number and identity
of such shares and the Purchase Price shall be and remain subject to adjustment
as provided in Sections 11, 13 and 22 hereof.
(b) Any Right Certificate issued pursuant hereto that represents
Rights beneficially owned by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and which receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer that has been determined by Action of the Board of Directors to be part
of a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(e), and any Right Certificate issued pursuant to
Section 6 hereof, Section 11 hereof or Section 22 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or an Associate of an Acquiring Person. Accordingly,
this Right Certificate and the Rights represented hereby are void in
the circumstances specified in Section 7(e) of the Rights Agreement.
The failure to print the foregoing legend on any such Right Certificate or any
defect therein shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
shall be countersigned manually or by facsimile signature by the Rights Agent or
the registrar or co-registrar for the Common Stock (the "Registrar") and shall
not be valid for any purpose unless so countersigned. In case any officer of
the Company whose manual or facsimile signature is affixed to the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent or the Registrar and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be countersigned by
the Rights Agent or the Registrar, issued and delivered with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company. Any Right Certificate may be signed on behalf
of the
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Company by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its stockholder services office or such other office
designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right Certificates, the certificate number of each of
the Right Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date (as such term is defined in Section 7(a)
hereof), any Right Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
stockholder services office of the Rights Agent or such office designated for
such purpose. Thereupon, the Rights Agent shall countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
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Rights.
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(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the stockholder services office of the
Rights Agent or such office designated for such purpose, together with payment
of the Purchase Price for each one-one hundredth of a share of Preferred Stock
as to which the Rights are exercised, at or prior to the Close of Business on
the Expiration Date. The "Expiration Date", as used in this Rights Agreement,
shall be the earliest of (i) the Final Expiration Date (as defined
8
below), (ii) the time at which the Rights are redeemed as provided in Section 23
hereof, or (iii) the time at which the Rights are exchanged as provided in
Section 24 hereof. The "Final Expiration Date", as used in this Rights
Agreement, shall be March 20, 2010.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $42.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for each
one one-hundredth of a share of Preferred Stock to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of the
Rights pursuant hereto in accordance with Section 9 hereof by certified check,
bank draft or money order payable to the order of the Company or the Rights
Agent, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) either (A) requisition from any transfer agent of the shares of
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 irrevocably authorizes any such transfer agent to comply with all
such requests, or (B) if the Company, in its sole discretion, shall have elected
to deposit the shares of Preferred Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a share of Preferred
Stock as are to be purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company hereby directs such depositary
agent to comply with all such requests, (ii) promptly after receipt of such
certificates or depositary receipts cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (iii) 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 hereof, (iv) after receipt of
any such cash, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate, (v) when appropriate, requisition from the
Company the amount of cash or securities issuable upon exercise of a Right
pursuant to the adjustment provisions of Section 11 or the exchange provisions
of Section 24, and (vi) after receipt of any such cash or securities, promptly
deliver such cash or securities to or upon the order of the registered holder of
such Right Certificate, of any such cash or securities.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, upon the first occurrence of a Section 11(b) Event or a Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) which becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) which becomes a transferee prior to or
concurrently with the Acquiring
9
Person becoming such and which receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person (or any
such Associate or Affiliate) to holders of equity interests in such Acquiring
Person (or any such Associate or Affiliate) or to any Person with whom such
Acquiring Person (or such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, shares of Company
Common Stock or the Company or (B) a transfer that has been determined by Action
of the Board of Directors to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall be null and void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b) are
complied with, but shall have no liability to any holder of Rights or any other
Person as a result of its failure to make any determination under this Section
7(e) or Section 4(b) with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Rights 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 the certificate
contained in the appropriate form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise shall have
been properly completed and duly executed by the registered holder thereof and
the Company shall have been provided with such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Preferred Stock.
---------------------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights and, after the occurrence
of a Section 11(b) Event or a Section 13 Event, shall so reserve and keep
available a sufficient number of shares of Preferred Stock, Common Stock and/or
other securities which may be required to permit the exercise in full of the
Rights pursuant to this Rights Agreement.
(b) 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/or
other securities delivered upon
10
exercise of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares or
securities.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of an event which would establish the
Distribution Date, a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the
Expiration Date. The Company will also take such action as may be appropriate
under the "blue sky laws" of the various states.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any shares of Preferred Stock and/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 involved in the transfer or
delivery of Right Certificates or the issuance or delivery of certificates or
depositary receipts for Preferred Stock and/or other securities in a name other
than that of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, nor shall the Company be required to issue or deliver
any certificates or depositary receipts for shares of Preferred Stock and/or
other securities upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person (other than the
---------------------------
Company) in whose name any certificate for shares of Preferred Stock (or other
securities) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (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 other securities) transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock (or other securities)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a stockholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
--------------------------------------------------------
of Rights. The Purchase Price, the number and identity of shares covered by
---------
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
11
(a) In the event the Company shall at any time after the date of this
Rights Agreement (i) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (ii) subdivide the outstanding Preferred Stock, (iii)
combine the outstanding Preferred Stock into a smaller number of shares or (iv)
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, the Purchase Price in effect at the
time of the record date for such dividend or the time of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock, including Preferred Stock, issuable upon exercise of a
Right, shall be proportionately adjusted so that the holder of any Right
exercised after such time, upon payment of the aggregate consideration such
holder would have had to pay to exercise such Right prior to such time, shall be
entitled to receive the aggregate number and kind of shares of capital stock,
including Preferred 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, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
(b) In the event any Person becomes an Acquiring Person ("Section
11(b) Event"), then proper provision shall be made so that each holder of a
Right, subject to Section 7(e) and Section 24 hereof and except as provided
below, shall after the later of the occurrence of such event and the effective
date of an appropriate registration statement pursuant to Section 9 hereof, have
a right to receive, upon exercise thereof at the then current Purchase Price,
multiplied by the then number of one-one hundredths of a share of Preferred
Stock for which a Right is then exercisable, in accordance with the terms of
this Rights Agreement, in lieu of shares of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result obtained by (y)
multiplying the then current Purchase Price by the then number of one one-
hundredths of a share of Preferred Stock for which a Right is then exercisable
and dividing that product by (z) 50% of the current market price per one share
of Common Stock (determined pursuant to Section 11(f) hereof on the date of the
occurrence of the Section 11(b) Event) (such number of shares being referred to
as the "number of Adjustment Shares").
(c) In the event that there shall not be sufficient Treasury shares
or authorized but unissued shares of Common Stock to permit the exercise in full
of the Rights in accordance with the foregoing Section 11(b), and the Rights
become so exercisable, notwithstanding any other provision of this Rights
Agreement, to the extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a party, each
Right shall thereafter represent the right to receive, upon exercise thereof at
the then current Purchase Price, multiplied by the then number of one-one
hundredths of a share of Preferred Stock for which a Right is then exercisable,
in accordance with the terms of this Rights Agreement, a number of shares, or
units of shares, of (y) Common Stock and (z) preferred stock (or other equity
securities) of the Company, including, but not limited to Preferred Stock, equal
in the aggregate to the number of Adjustment Shares where the Board of Directors
by Action of the Board of Directors shall have in good faith deemed such shares
or units, other than the shares of Common Stock, to have at least the same value
and voting rights as the Common Stock (a "common stock equivalent"); provided,
--------
however, if there are unavailable sufficient shares (or fractions of shares) of
-------
Common Stock and/or common stock equivalents, then the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
or common stock equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of
12
stockholders; and provided, further, that if the Company is unable to cause
------------ -------
sufficient shares of Common Stock and/or common stock equivalents to be
available for issuance upon exercise in full of the Rights, then the Company, to
the extent necessary and permitted by applicable law and any agreements or
instruments in effect on the date thereof to which it is a party, shall make
provision to pay an amount in cash equal to twice the Purchase Price (as
adjusted pursuant to this Section 11), in lieu of issuing shares of Common Stock
and/or common stock equivalents. To the extent that the Company determines that
some action needs to be taken pursuant to this Section 11(c), the Board of
Directors by Action of the Board of Directors may suspend the exercisability of
the Rights for a period of up to sixty (60) days following the date on which the
Section 11(b) Event shall have occurred, in order to decide the appropriate form
of distribution to be made pursuant to this Section 11(c) 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. The Board of Directors may, but shall not be required
to, establish, by Action of the Board of Directors, procedures to allocate the
right to receive Common Stock and common stock equivalents upon exercise of the
Rights among holders of Rights, which such allocation may be, but is not
required to be, pro-rata.
(d) If the Company shall fix a record date for the issuance of rights
or warrants to all holders of Preferred Stock entitling them (for a period
expiring within 90 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock, at a price per share of Preferred Stock or per share of equivalent
preferred stock or having a conversion or exercise price per share, as the case
may be, less than the current market price per share of Preferred Stock (as
defined in Section 11(f) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock or equivalent
preferred stock to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
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 Action of
the Board of Directors, which determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(e) If the Company shall 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, cash (other
than a regular periodic cash dividend out of earnings or retained earnings of
the Company), assets (other than a dividend payable in Preferred Stock, but
13
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11(d) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price for one share of Preferred Stock (as defined
in Section 11(f) hereof) on such record date less the fair market value (as
determined in good faith by Action of the Board of Directors, which
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 convertible securities, subscription rights or warrants applicable to
one share of Preferred Stock, and the denominator of which shall be such current
market price for 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 Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(f) (i) For the purpose of any computation hereunder, the "current
market price" of any security (a "Security" for purposes of this Section
11(f)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading
Days (as hereinafter defined) immediately prior to such date; provided,
--------
however, that in the event that the current market price per share of such
-------
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into shares of
such Security or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution or the record date for such
subdivision, combination or reclassification, then, and in each such case,
the "current market price" shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing
price for each day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the principal
national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any
national securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") National
Market System, or if the Security is not listed or admitted to trading on
any national securities exchange or included in the Nasdaq National Market
System, the average of the high bid and low asked prices in the over-the-
counter market, as reported by Nasdaq or such other system then in use, or,
if on any such date the Security 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 Security selected by
Action of the Board of Directors. If on any such date no market maker is
making a market in the Security, the fair value of such Security on such
date as determined in good faith by Action of the Board of Directors shall
be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is not
14
listed or admitted to trading on any national securities exchange a day on
which the Nasdaq National Market System is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange or included in the Nasdaq National Market
System, a Business Day. If the Security is not publicly held or not so
listed or traded, "current market price" shall mean the fair value as
determined in good faith by Action of the Board of Directors, which
determination shall be described in a statement filed with the Rights
Agent.
(ii) For the purpose of any computation hereunder, the "current
market price" per share (or one one-hundredth of a share) of Preferred
Stock shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(f) (other than the last
sentence thereof). If the current market price per share (or one one-
hundredth of a share) of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(f), the
"current market price" per share of Preferred Stock shall be conclusively
deemed to be an amount equal to 100 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date
of this Rights Agreement) multiplied by the current market price per share
of the Common Stock and the "current market price" per one one-hundredth of
a share of Preferred Stock shall be equal to the current market price per
share of the Common Stock (as appropriately adjusted). If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, "current market price" per share shall mean the fair value per
share as determined in good faith by Action of the Board of Directors,
which determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(g) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(g) 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,
as the case may be. Notwithstanding the first sentence of this Section 11(g),
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 mandates such
adjustment or (ii) the Expiration Date.
(h) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a) or (b) hereof, the holder of any Right shall be
entitled to receive upon exercise of such Right any shares of capital stock of
the Company other than shares of 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 shares contained in Section
11(a) through (e) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the shares of Preferred Stock shall apply on like
terms to any such other shares.
(i) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock or other capital
15
stock of the Company purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment of the Purchase Price.
(j) Unless the Company shall have exercised its election as provided
in Section 11(k) hereof, upon each adjustment of the Purchase Price as a result
of the calculations made in Section 11(d) and (e) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one one-
hundredths of a share of Preferred Stock (calculated to the nearest ten-
thousandth) obtained by (i) multiplying (A) the number of one one-hundredths of
a share of Preferred Stock covered by a Right immediately prior to the
adjustment by (B) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(k) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(k), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Preferred Stock issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(m) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the shares of Common
Stock or other securities and below one -hundredth of the then par value, if
any, of the Preferred Stock,
16
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Preferred Stock, Common Stock or other securities at such adjusted Purchase
Price. If upon any exercise of the Rights, a holder is to receive a combination
of Common Stock and common stock equivalents, a portion of the consideration
paid upon such exercise, equal to at least the then par value of a share of
Common Stock of the Company, shall be allocated as the payment for each share of
Common Stock of the Company so received.
(n) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(o) 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 its good faith judgment the Board of Directors shall
determine by Action of the Board of Directors to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly
for cash of any Preferred Stock at less than the then current market price,
(iii) issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to the holders of its
Preferred Stock, shall not be taxable to such stockholders.
(p) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in any
such case (y) the number of one one-hundredths of a share of Preferred Stock
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (z) each
share of Common Stock outstanding immediately after such event shall have issued
with respect to it that number of Rights which each share of Common Stock
outstanding immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(p) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation
17
is effected.
(q) The Company covenants and agrees that it shall not, at any time
after the Distribution Date and so long as the Rights have not been redeemed
pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (i)
consolidate with, (ii) merge with or into, or (iii) sell or transfer, in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, if at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
(r) The Company covenants and agrees that, after the Stock Acquisition
Date, it will not, except as permitted by Sections 23 and 24 hereof, take any
action the purpose or effect of which is to diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
---------------------------------------------------
Shares. Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
------
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) include
a brief summary thereof in a mailing to each holder of a Right Certificate in
accordance with Section 26 hereof, or prior to the Distribution Date, disclose a
brief summary in a filing under the Exchange Act. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustments
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
(a) In the event that, directly or indirectly, at any time after a
Person has become an Acquiring Person, (x) the Company shall consolidate with,
or merge with and into, any other Person, (y) any Person shall consolidate with
or merge with and into the Company, and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (z) the Company shall sell, or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person other
than to the Company or one or more of its wholly-owned Subsidiaries, then, and
in each such case, proper provision shall be made so that (i) each holder of a
Right, subject to Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price multiplied
by the then number of one-one hundredths of a share of Preferred Stock for which
a Right is then exercisable (or if a Section 11(b) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of such one
one-hundredths of a share for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(b) Event by the Purchase Price in effect
immediately prior to such first occurrence) in accordance with the terms of this
Rights Agreement, in lieu of Preferred Stock,
18
such number of shares of freely tradable Common Stock of the Principal Party (as
hereinafter defined), free and clear of liens, rights of call or first refusal,
encumbrances or other adverse claims, as shall be equal to the result obtained
by (A) multiplying the then current Purchase Price by the number of one one-
hundredths of a share of Preferred Stock for which a Right is then exercisable
(or if a Section 11(b) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one one-hundredths of a share
for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(b) Event by the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product by (B) 50% of the current market
price per share of the Common Stock of such Principal Party (determined in the
manner described in Section 11(f) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Rights Agreement; (iii) the term "Company" shall thereafter be deemed to
refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof, except for the provisions of 11(b), shall apply
to such Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization and reservation of a
sufficient number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this Section 13(a)) in connection with
such consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a) hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, and if no securities are so
issued, the Person, including the Company, that is the other party to the
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in
-------- -------
any case described in clause (i) or (ii) in this Section 13(b), (x) 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, and such Person is a direct or indirect Subsidiary or
Affiliate of another Person, "Principal Party" shall refer to such other
Person; (y) in case such Person is a Subsidiary, directly or indirectly, or
Affiliate of more than one Person, the Common Stocks of all of which are
and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest
aggregate market value, and (z) in case such Person is, or is owned
directly or indirectly by, a partnership or joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (x) and (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations set forth
in this Section 13 in the same ratio as their direct or indirect interests
in such Person bear to the total of such interests.
19
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
shares of its authorized 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 each Principal Party and
each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the "blue sky
laws" of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section 11(b)
Event, the Rights which have not theretofore been exercised shall thereafter
also become exercisable in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, as reported by the Nasdaq National Market System or, if
the Rights are not listed or admitted to
20
trading on any national securities exchange or included in the Nasdaq National
Market System, the last quoted price, or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by a Action of the Board of Directors. 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 Action of the Board of Directors 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). Fractions of shares of Preferred Stock in integral
multiples of one one-hundredth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Right Certificates at the time
such Right Certificates are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one one-hundredths 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(f)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 hereof giving rise to the right to receive common stock
equivalents (other than Preferred Stock) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional shares or
units of such common stock equivalents or other securities, the Company may pay
to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share or unit of such common stock equivalent or other
securities. For purposes of this Section 14(c), the current market value shall
be determined in the manner set forth in Section 11(f) hereof for the Trading
Day immediately prior to the date of such exercise and, if such common stock
equivalent is not traded, each such common stock equivalent shall have the value
of one one-hundredth of a share of Preferred Stock.
(d) Except as otherwise expressly provided in this Section 14, the
holder of a Right by the acceptance of the Right expressly waives such holder's
right to receive any fractional Rights or any fractional share upon exercise of
Rights.
Section 15. Rights of Action. All rights of action in respect of
----------------
this Rights Agreement, except for rights of action given to the Rights Agent
under Section 18 or Section 20
21
hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
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 Rights Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Rights Agreement. Holders of Rights shall be entitled
to recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this Rights
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
--------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the stockholder services office of the Rights Agent or such office designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common 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 Certificate 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 shall be affected by
any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Preferred Stock, Common
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 Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
22
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Rights 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 Rights Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock, Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
---------------------------------------------------
Agent.
-----
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
corporate trust powers or business or the stock transfer business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Rights 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 Person
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Rights Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
23
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, President, Chief Financial Officer or any Executive Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant 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 Rights
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice to the Rights Agent of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock or other securities to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities 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 Rights Agreement.
24
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, President, Chief Financial
Officer, any Executive Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer, employee,
agent or representative of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent 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 that reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Rights 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, clause 2
and/or, in the case of the certificate attached to the form of election to
purchase, clause 3 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise of transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties under this
Rights 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 Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed 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 Right
Certificates by first-class mail or, prior to the Distribution Date, through any
filing made by the Company pursuant to the Exchange Act. 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 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
25
of a Right Certificate (which holder shall, with such notice, submit such
holder's Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation or other
entity organized and doing business under the laws of the United States or of
any state, in good standing, having an office in the States of New York or
Missouri, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority or (b) an affiliate of a corporation or other entity 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 Right Certificates or, prior to the Distribution
Date, through any filing made by the Company pursuant to the Securities Exchange
Act of 1934, as amended. Failure to give any notice provided for this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
(a) Notwithstanding any of the provisions of this Rights Agreement or
of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by Action of the
Board of Directors to reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Rights Agreement.
(b) In addition, in connection with the issuance or sale of Common
Stock following the Distribution Date and prior to the redemption, exchange or
expiration of the Rights, the Company (a) shall with respect to shares of Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee benefit plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by Action of the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
-------- -------
such Right Certificates 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
Right Certificates would be issued, and (ii) no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
26
Section 23. Redemption and Termination.
--------------------------
(a) The Board of Directors may, at its option, at any time prior to
the earlier of (i) the Close of Business on the Stock Acquisition Date or (ii)
the Close of Business on the Final Expiration Date, by Action of the Board of
Directors, elect to redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right, as 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"). The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish by Action of the Board
of Directors.
(b) Immediately upon the Action of the Board of Directors electing to
redeem the Rights, evidence of which shall be promptly filed with the Rights
Agent, or, when appropriate, immediately upon the time or satisfaction of such
conditions as the Board of Directors may have established, 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. The Company shall promptly give public disclosure
of any such redemption; provided, however, that the failure to give, or any
-------- -------
defect in, any such disclosure shall not affect the validity of such redemption.
Within 10 days 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 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 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.
(c) Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23, Section 24 hereof and other
than in connection with the purchase of Common Stock prior to the Distribution
Date.
Section 24. Exchange.
--------
(a) By Action of the Board of Directors, the Board of Directors may,
at its option, at any time after any Person becomes an Acquiring Person,
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) hereof) for Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect adjustments in the number of Rights
pursuant to Section 11 of this Rights Agreement (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan or compensation arrangement of the Company or
any such Subsidiary, or any entity holding securities of the Company to the
extent organized, appointed or established by the Company or any such Subsidiary
for or pursuant to the terms of any such employee benefit plan or compensation
27
arrangement or any Excepted Person), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the Voting Power
of the Company.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (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 equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company
promptly shall 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 Common Stock 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) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as such
term is defined in Section 11(d) hereof) for Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a share of Preferred Stock
(or equivalent preferred stock) for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of Preferred
Stock delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock (or equivalent preferred stock) issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock or
Preferred Stock (or equivalent preferred stock) for issuance upon exchange of
the Rights.
(e) The Company shall not be required to issue fractions 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 the Right Certificates 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 current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(f)(i)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Proposed Actions.
--------------------------
(a) In case the Company shall propose at any time after the
Distribution Date (a) to pay any dividend payable in stock of any class to the
holders of the Preferred Stock or to
28
make any other distribution to the holders of the Preferred Stock (other than a
regular periodic cash dividend out of earnings or retained earnings of the
Company), (b) to offer to the holders of the Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any other class or any other securities, rights or options,
(c) to effect any reclassification of the Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (d) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sales or other transfer), in one or more transactions, of 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person, (e) to effect the liquidation, dissolution or
winding up of the Company, or (f) to declare or pay any dividend on the Common
Stock payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Stock and/or Preferred Stock,
if any such date is to be fixed. Such notice shall be so given in the case of
any action covered by clauses (a) or (b) above at least ten days prior to the
record date for determining holders of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least ten days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of Preferred Stock, whichever shall be the earlier. The failure
to give notice required by this Section 25 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
(b) In case a Section 11(b) Event shall occur, then the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(b) hereof.
Section 26. Notices. Notices or demands authorized by this Rights
-------
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Arch Coal, Inc.
Xxxxx 000, XxxxXxxxx Xxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Rights Agreement to be given or made by the Company or by the holder of
any Right Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
29
First Chicago Trust Company of New York
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Tenders & Exchange Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
--------------------------
time, by Action of the Board of Directors, supplement or amend this Rights
Agreement without the approval of any holders of Right Certificates in order (a)
to cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(c) to shorten or lengthen any time period hereunder (including without
limitation to extend the Final Expiration Date), (d) increase or decrease the
Purchase Price, or (e) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable; provided, however,
-------- -------
that from and after such time as any Person becomes an Acquiring Person, this
Rights Agreement shall not be amended in any manner which would adversely affect
the interests of the holders of Rights; provided further that this Rights
Agreement may not be supplemented or amended to lengthen pursuant to clause (c)
of this sentence, (A) the time period relating to the when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of the Rights;
provided further that the Company shall have the right to make unilaterally any
changes necessary to facilitate the appointment of a successor Rights Agent,
which such changes shall be set forth in a writing by the Company or by the
Company and such successor Rights Agent. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes an Acquiring
Person, by Action of the Board of Directors, amend this Rights Agreement to
lower the thresholds set forth in Sections 1(a) and 3(a) hereof from 20% to not
less than the greater of (i) any percentage greater than the largest percentage
of the Voting Power of the Company then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, or
any employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company, and any entity holding securities of the Company to
the extent organized, appointed or established by the Company or any such
Subsidiary for or pursuant to the terms of any such employee benefit plan or
compensation arrangement or any Excepted Person) together with all Affiliates
and Associates of such Person and (ii) 10%. 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 27, the
Rights Agent shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
----------
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. Benefits of This Agreement. Nothing in this Rights
--------------------------
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered
30
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; but this Rights Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Section 30. Severability. If any term, provision, covenant or
------------
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. It is the intent of the parties hereto to enforce the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement to the maximum extent permitted by law.
Section 31. Governing Law. This Rights Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in
------------
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
31
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed, all as of the day and year first above written.
Attest: Arch Coal, Inc.
By__________________________ By_________________________
Name:_______________________ Name:______________________
Title:______________________ Title:_____________________
Attest: First Chicago Trust Company of New York
By__________________________ By_________________________
Name:_______________________ Name:______________________
Title:______________________ Title:_____________________
32
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES ONE JUNIOR PARTICIPATING PREFERRED STOCK
OF
Arch Coal, Inc.
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
We, _________, [NAME OF OFFICE], and __________, [NAME OF OFFICE], of
Arch Coal, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 151(g) thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation, as amended, of the Company, the said Board
of Directors on March 3, 2000, adopted the following resolution creating a
series of One Million (1,000,000) shares of Preferred Stock designated as Series
One Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Restated
Certificate of Incorporation, as amended, a series of Preferred Stock of the
company be and it hereby is created, and that the designation and amount thereof
and the powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount.
----------------------
There shall be a series of the Preferred Stock which shall be
designated as the "Series One Junior Participating Preferred Stock," par value
$0.01 per share, and the number of shares constituting such series shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series One Junior Participating Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any series
of preferred stock of the Company ranking prior and superior to the Series One
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series One Junior Participating Preferred Stock, in preference to the
holders of shares of Common Stock, par value $0.01 per share of the Company (the
"Common Stock"), and of any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on any regular
quarterly dividend payment date as shall be established by the Board of
Directors (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series One Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series One Junior Participating Preferred Stock.
In the event the Company shall at any time after March 20, 2000 (the "Rights
Declaration Date") declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series One Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series
One Junior Participating Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series One Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series One Junior Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series One Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series One Junior Participating Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may, in accordance with
applicable law, fix a record date for the determination of holders of shares of
Series One Junior Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared
2
thereon, which record date shall be not more than such number of days prior to
the date fixed for the payment thereof as may be allowed by applicable law.
Section 3. Voting Rights.
-------------
The holders of shares of Series One Junior Participating Preferred
Stock shall have the following voting rights:
(A) Each share of Series One Junior Participating Preferred Stock
shall entitle the holder thereof to one vote on all matters submitted to a vote
of the stockholders of the Company.
(B) Except as otherwise provided herein, in the Company's Restated
Certificate of Incorporation or by law, the holders of shares of Series One
Junior Participating Preferred Stock, the holders of shares of Common Stock, and
the holders of shares of any other capital stock of the Company having general
voting rights, shall vote together as one class on all matters submitted to a
vote of stockholders of the Company.
(C) Except as otherwise set forth herein or in the Company's Restated
Certificate of Incorporation, and except as otherwise provided by law, holders
of Series One Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever dividends or distributions payable on the Series One
Junior Participating Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series One Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series One Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series One Junior
Participating Preferred Stock, except dividends paid ratably on the Series
One Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) except as permitted in Section 4(A)(iv) below, redeem or
purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series One Junior Participating Preferred Stock,
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of
3
any stock of the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series One Junior
Participating Preferred Stock; and
(iv) purchase or otherwise acquire for consideration any shares
of Series One Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series One Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
-----------------
Any shares of Series One Junior Participating Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. The Company shall
cause all such shares upon their cancellation to be authorized but unissued
shares of Preferred Stock which may be reissued as part of a new series of
Preferred Stock, subject to the conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock of the Company ranking prior and superior to the Series One
Junior Participating Preferred Stock with respect to liquidation, upon any
liquidation (voluntary or otherwise), dissolution or winding up of the Company,
no distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series One Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Series One Junior Participating Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series One Liquidation Preference"). Following the payment of the full
amount of the Series One Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series One Junior Participating
Preferred Stock, unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series One Liquidation Preference by (ii)
100 (as appropriately adjusted as set forth in subparagraph C below to reflect
such events as stock dividends, and subdivisions, combinations and
consolidations with respect to the Common Stock) (such number in clause (ii)
being referred to as the "Adjustment Number"). Following the payment of the
full amount of the Series One Liquidation Preference and the Common Adjustment
in respect of all outstanding shares of Series One Junior Participating
Preferred Stock and Common Stock, respectively, holders of Series One Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and
4
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Series One Junior Participating
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available to permit
payment in full of the Series One Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series One Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after the Rights
Declaration Date declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Consolidation, Merger, etc.
--------------------------
In case the Company shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series One Junior Participating
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Company
shall at any time after the Rights Declaration Date declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series One Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event.
5
Section 8. Redemption.
----------
The shares of Series One Junior Participating Preferred Stock shall
not be redeemable.
Section 9. Ranking.
-------
The Series One Junior Participating Preferred Stock shall rank junior
to all other series of the Company's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Fractional Shares.
-----------------
Series One Junior Participating Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series One Junior Participating Preferred Stock."
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this ____th
day of _____, 2000.
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
Attest
By:_________________________
Name: [NAME OF OFFICER]
Title: [OFFICE]
6
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R-___________ ____ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE. AT THE OPTION OF THE COMPANY, THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT OR EXCHANGE FOR COMMON
STOCK, UNDER THE CIRCUMSTANCES AND ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON. THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.][*]
Right Certificate
Arch Coal, Inc.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of March 3, 2000 (the "Rights Agreement") between Arch Coal,
Inc., a Delaware corporation (the "Company"), and First Chicago Trust Company of
New York, a New York banking corporation (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 p.m., eastern standard time, on the
Expiration Date, as that term is defined in the Rights Agreement, at the
stockholder services office (or such office designated for such purpose) of the
Rights Agent, or its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable share of the Series One Junior Participating Preferred
Stock, par value $0.01 per share ("Preferred Stock"), of the Company, at a
purchase price of $42.00 per one one-hundredth of a share (the "Purchase Price")
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon exercise
of each Right) and the Purchase Price set forth above, are the number and
Purchase Price as of ____________________ based on the shares of Preferred Stock
of the Company as constituted at such date.
______________
[* The portion of the legend in brackets shall be inserted only if
applicable.]
The Purchase Price and the number of shares of Preferred Stock which
may be purchased upon the exercise of each of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events as provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the Company and the above-mentioned office
of the Rights Agent and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stockholder services office (or such office designated for such
purpose) of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive, upon surrender hereof, another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price of $0.01 per Right on or prior to the Stock Acquisition
Date (as defined in the Rights Agreement). In addition, subject to the
provisions of the Rights Agreement, each Right evidenced by this Right
Certificate may be exchanged by the Company at its option for one share of
Common Stock following the Stock Acquisition Date and prior to the time an
Acquiring Person, as that term is defined in the Rights Agreement, owns 50% or
more of the Voting Power, as that term is defined in the Rights Agreement, of
the Company.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts). In lieu of
fractions of a share, a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of 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 stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
2
This Right 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 ________________.
Attest: Arch Coal, Inc.
By_______________________ By______________________
Name:____________________ Name:___________________
Title:___________________ Title:__________________
Countersigned:
First Chicago Trust Company of New York
By:________________________
Authorized signature
3
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________ Attorney to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:__________________
__________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
4
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_________________ __________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate)
5
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To Arch Coal, Inc.:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:
Name:_____________________
Address:__________________
__________________
Social security
or taxpayer identification
number:___________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Name:_____________________
Address:__________________
_________________
Social security
or taxpayer identification
number:__________________
Dated:__________________
__________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
Signatures must be guaranteed by a member or a participant in the
Securities Transfer Agent Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program.
6
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:_______________
__________________________________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Right
Certificate)
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the form of
Assignment or the form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored as described in Section
7(e) of the Rights Agreement.
7
Exhibit C
---------
Arch Coal, Inc.
Summary of Preferred Stock
Purchase Rights
On March 3, 2000, the Board of Directors of Arch Coal, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each outstanding share of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"). The dividend distribution is payable on March 20,
2000 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series One Junior Participating Preferred Stock, par value $0.01 per
share (the "Preferred Stock") of the Company at a price of $42.00 per one one-
hundredth of a share of Preferred Stock (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement dated as of March 3, 2000, as the same may be amended from time to
time (the "Rights Agreement"), between the Company and First Chicago Trust
Company of New York, as Rights Agent (the "Rights Agent").
Until the earlier (the "Stock Acquisition Date") to occur of (i) the
close of business on the tenth business day following the date of public
announcement or the date on which the Company first has notice or determines
that a person or group of affiliated or associated persons (other than the
Company, any subsidiary of the Company or any employee benefit plan of the
Company, or Ashland Inc., except in certain circumstances) (an "Acquiring
Person") has acquired, or obtained the right to acquire, 20% or more of the
outstanding shares of voting stock of the Company without the prior express
written consent of the Company executed on behalf of the Company by a duly
authorized officer of the Company following express approval by action of not
less than two-thirds of the members of the entire Board of Directors ("Action of
the Board of Directors") or (ii) the close of business on the tenth business day
(or such later date as may be determined by Action of the Board of Directors but
not later than the Stock Acquisition Date) following the commencement of a
tender offer or exchange offer, without the prior written consent of the Company
executed on behalf of the Company by a duly authorized officer of the Company
following Action of the Board of Directors, by a person (other than the Company,
any subsidiary of the Company or an employee benefit plan of the Company, or
Ashland Inc., except in certain circumstances) which, upon consummation, would
result in such party's control of 20% or more of the outstanding shares of
voting stock of the Company (the earlier of the dates in clause (i) or (ii)
above being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the Record
Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Company's Common Stock. Until the Distribution Date (or
earlier redemption, exchange or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new issuances of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates for
shares of Common
Stock outstanding as of the Record Date, even without such notation or a copy of
this Summary of Rights, will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and such
separate certificates alone will then evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire, if not previously exercised, on March 20, 2010 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for or purchase Preferred Stock at a
price, or securities convertible into Preferred Stock with a conversion price,
less than the then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a share of Preferred Stock issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Common Stock or a
stock dividend on the Common Stock payable in shares of Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will
not be redeemable and will be junior to any other series of preferred stock the
Company may issue (unless otherwise provided in the terms of such stock). Each
share of Preferred Stock will have a preferential dividend in an amount equal to
100 times any dividend declared on each share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will receive a preferred
liquidation payment of equal to the greater of $100 and 100 times the payment
made per share of Common Stock. Each share of Preferred Stock will have one
vote, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount and type of consideration received per share of Common Stock.
The rights of the Preferred Stock as to dividends, liquidation and voting, and
in the event of mergers and consolidations, are protected by customary
antidilution provisions.
Because of the nature of the Preferred Stock's dividend and
liquidation rights, the value of the one one-hundredth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company, or Ashland Inc., except in
certain circumstances,
2
subject to the conditions set forth above) acquires 20% or more of the Company's
outstanding voting stock without the prior Action of the Board of Directors,
each Right, except those held by such persons, would entitle each holder of a
Right to acquire such number of shares of the Common Stock as shall equal the
result obtained by multiplying the then current Purchase Price by the number of
one one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by 50% of the then current per-share
market price of Common Stock.
If any person or group (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company, or Ashland Inc., except in
certain circumstances, subject to the conditions set forth above) acquires more
than 20% but less than 50% of the outstanding shares of Common Stock without
prior written consent of the Board of Directors, each Right, except those held
by such persons, may be exchanged by the Board of Directors for one share of
Common Stock.
If the Company were acquired in a merger or other business combination
transaction where the Company is not the surviving corporation or where Company
Common Stock is exchanged or changed or 50% or more of the Company's assets or
earnings power is sold in one or several transactions without the prior written
consent of the Board of Directors, each Right would entitle the holders thereof
(except for the Acquiring Person) to receive such number of shares of the
acquiring company's common stock as shall be equal to the result obtained by
multiplying the then current Purchase Price by the number one one-hundredths of
a share of Preferred Stock for which a Right is then exercisable and dividing
that product by 50% of the then current market price per share of the common
stock of the acquiring company on the date of such merger or other business
combination transaction.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in cash
will be made based on the market price of the Preferred Stock on the last
trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes such, the
Board of Directors of the Company, by Action of the Board of Directors, may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its
sole discretion may establish. Immediately upon any redemption of the Rights,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by Action of the Board of
Directors without the consent of the holders of the Rights, including, but not
limited to, an amendment to lower certain thresholds described above to not less
than the greater of (i) any percentage greater than the largest percentage of
the voting power of all securities of the Company then known to the Company to
be beneficially owned by any person or group of affiliated or associated persons
3
(other than an excepted person) and (ii) 10%, except that from and after such
time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, as the same may
be amended from time to time, which is hereby incorporated herein by reference.
iv
