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EXHIBIT 4(l)
______________________________________________________________________________
CLEVELAND-CLIFFS INC
and
AMERITRUST COMPANY NATIONAL ASSOCIATION
RIGHTS AGREEMENT
Dated as of September 8, 1987
Amended and Restated as of November 19, 1991
______________________________________________________________________________
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TABLE OF CONTENTS
PAGE
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8. Cancellation and Destruction of
Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 9. Reservation and Availability of
Common Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10. Common Shares Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11. Adjustment of Purchase Price, Number
and Type of Shares or Number of Rights . . . . . . . . . . . . . . . . . . . . 24
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 13. Notice of Adjusted Purchase Price
or Number or Type of Shares to
Holders of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . 46
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 49
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TABLE OF CONTENTS
(continued)
PAGE
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Section 17. Right Certificate Holder Not Deemed
a Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 19. Merger or Consolidation or Change
of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . 60
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 27. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 29 Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 30. Action by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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Rights Agreement, dated as of September 8, 1987, amended and restated
as of November 19, 1991 ("Agreement"), between Cleveland-Cliffs Inc, an Ohio
corporation (the "Company"), and Ameritrust Company National Association (the
"Rights Agent").
RECITALS
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The Directors of the Company have authorized and declared a dividend
consisting of one right ("Right") for each Common Share, $1.00 par value, of
the Company ("Common Share") outstanding as of the Close of business on
September 18, 1987 (the "Record Date"), each Right representing the right to
purchase one-hundredth of one Common Share, and have authorized the issuance of
one Right with respect to each Common Share issued after the Record Date but
prior to the earlier of the Distribution Date (in the case of Common Shares
issued upon conversion of the Company's convertible securities, prior to the
tenth day after the Distribution Date), and the Expiration Date (each as
hereinafter defined), including, without limitation, Common Shares issued upon
conversion of the Company's convertible securities and upon exercise of
employee stock options and Common Shares which are treasury shares as of the
Record Date and subsequently become outstanding.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than
the Company or any Subsidiary or any employee benefit or stock
ownership plan of the Company or of any Subsidiary or any entity
holding Common Shares for or pursuant to the terms of any such plan)
who or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 15% or more of the Common
Shares than outstanding; PROVIDED, HOWEVER, that a Person shall not be
deemed to have become an Acquiring Person solely as a result of a
reduction in the number of Common Shares outstanding unless and until
(i) such time as such Person or any Affiliate or Associate of such
Person shall thereafter become the Beneficial Owner of any additional
Common Shares, other than as a result of a stock dividend, stock split
or similar transaction effected by the Company in which all holders of
Common Shares are treated equally, or (ii) any other Person who is the
Beneficial Owner of any Common Shares shall thereafter become an
Affiliate or Associate of such 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.
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(c) A Person shall be deemed the "Beneficial Owner" of,
and to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise (in each
case, other than upon exercise or exchange of the Rights);
PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in
writing); or
(iii) of which any other Person is the Beneficial
Owner, if such Person or any of such Person's Affiliates or
Associates has any agreement,
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arrangement or understanding (whether or not in writing) with
such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting or
disposing of any securities of the Company;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security (A) if such Person has
the right to vote such security pursuant to an agreement, arrangement
or understanding (whether or not in writing) which (1) arises solely
from a revocable proxy given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance
with, the applicable rules and regulations of the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report), or (B) if such beneficial
ownership arises solely as a result of such Person's status as a
"clearing agency," as defined in Section 3(a)(23) of the Exchange Act;
and PROVIDED, FURTHER, that nothing in this paragraph (c) shall cause a
Person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired
through such Person's participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the date of
such acquisition, or such later date as the Board of Directors; of the
Company may determine in any specific case.
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(d) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the States
of Ohio and New York are authorized or obligated by law or executive
order to close.
(e) "Close of business" on any given date shall mean 5:00
P.M., Cleveland, Ohio time, on such date; PROVIDED, HOWEVER, that if
such date is not a Business Day it shall mean 5:00 P.M., Cleveland,
Ohio time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the Common Shares, par value, $1.00 per share, of
the Company; PROVIDED that, if the Company is the continuing or
surviving corporation in a transaction described in Section 11(d)(ii)
hereof, "Common Shares" when used with reference to the Company shall
mean the capital stock with the greatest aggregate voting power of the
Company, or, if the Company is a subsidiary of another corporation or
business trust, the corporation or business trust which ultimately
controls the Company. "Common Shares" when used with reference to any
corporation or business trust, other than the Company, shall mean the
capital stock with the greatest aggregate voting power of such
corporation or business trust, or, if such corporation or business
trust is a subsidiary of another corporation or
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business trust, the corporation or business trust which ultimately
controls such first-mentioned corporation or business trust.
(g) "Distribution Date" shall mean the earliest of: (i)
the close of business on the tenth Business Day (or, unless the
Distribution Date shall have previously occurred, such later date as
may be specified by the Board of Directors of the Company) after the
Share Acquisition Date, (ii) the close of business on the tenth
Business Day (or, unless the Distribution Date shall have previously
occurred, such later date as may be specified by the Board of
Directors of the Company) after the date of the commencement of a
tender or exchange offer by any Person (other than the Company or any
Subsidiary or any employee benefit or stock ownership plan of the
Company or of any Subsidiary or any entity holding Common Shares for
or pursuant to the terms of any such plan), if upon the consummation
thereof such Person would be the Beneficial Owner of 15% or more of
the outstanding Common Shares, and (iii) the close of business on the
tenth Business Day after the first date of public announcement by the
Company or an Acquiring Person (by press release, filing made with the
Securities and Exchange Commission or otherwise) of the first
occurrence of a Triggering Event.
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(h) "Expiration Date" shall mean the earliest of (i) the
close of business on the Final Expiration Date, (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof, and (iii)
the time at which all exercisable Rights are exchanged as provided in
Section 27 hereof.
(i) "Final Expiration Date" shall mean the tenth
anniversary of the Record Date.
(j) "Flip-in Event" shall mean any event described in
clauses (A), (B) or (C) of Section 11(a)(ii) hereof.
(k) "Flip-over Event" shall mean any event described in
clauses (i), (ii) or (iii) of Section 11(d) hereof.
(l) "Person" shall mean any individual, firm, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person (by press
release, filing made with the Securities and Exchange Commission or
otherwise) that an Acquiring Person has become such.
(n) "Subsidiary" shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by
the Company.
(o) "Triggering Event" shall mean any Flip-in Event or
Flip-over Event.
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Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions here on, and the Rights Agent hereby accepts such
appointment and hereby certifies that it complies with the requirements of the
New York Stock Exchange governing transfer agents and registrars. The Company
may from time to time act as Co-Rights Agent or appoint such Co-Rights Agents
as it may deem necessary or desirable. Any actions which may be taken by the
Rights Agent pursuant to the terms of this Agreement may be taken by any such
Co-Rights Agent. To the extent that any Co-Rights Agent takes any action
pursuant to this Agreement, such Co-Rights Agent shall be entitled to all of
the rights and protections of, and subject to all of the applicable duties and
obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for Common Shares registered in the
names of the record holders thereof (which certificates for Common Shares shall
also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive
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Right Certificates will be transferable only in connection with the transfer of
Common Shares in the stock transfer books of the Company maintained by the
Company or its appointed transfer agent. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first class, insured, postage
prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto, evidencing one Right for each Common Share so held, subject
to adjustment, together with a notice setting forth the Purchase Price (as
defined in Section 4 hereof) as in effect on the Distribution Date. As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
Any Right Certificate issued pursuant to this Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the
transfer of any Rights to an Acquiring Person or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate, and
any Right Certificate issued pursuant to Sections 6 or 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall be subject to and contain the following legend or such
similar legend as the Company may deem appropriate and
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as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage:
The Rights represented by this Right Certificate were issued
to or acquired by a Person who was an acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement). This Right
Certificate and the Rights represented hereby may become null
and void in the circumstances specified in Section 11(a)(ii)
or Section 11(d) of the Rights Agreement.
(b) On the Record Date or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Common Shares, in substantially the form attached hereto as Exhibit B (the
"Summary of-Rights"), by first-class, postage prepaid mail, to each record
holder of Common Shares as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company as of such date.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares registered in the names of the holders thereof.
Until the earlier of the Distribution Date and the Expiration Date, the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
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(c) Certificates for Common Shares issued (including,
without limitation, any certificates for Common Shares issued upon conversion
of the Company's convertible securities or upon exercise of stock options) or
surrendered for transfer or exchange after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, shall have stamped on,
impressed on, printed on, written on or otherwise affixed to them the following
legend or such similar legend as the Company may deem appropriate and as is not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Common Shares or the Rights may from time to time be listed, or to conform to
usage:
This Certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement between
Cleveland-Cliffs Inc and AmeriTrust Company National
Association, dated as of September 8, 1987, amended and
restated as of November 19, 1991 and as may be further amended
from time to time (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of
Cleveland-Cliffs Inc. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this Certificate. Cleveland-Cliffs Inc will mail to the holder
of this Certificate a copy of the Rights Agreement without
charge within five business days after receipt of a written
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request there for. Under certain circumstances, Rights
beneficially owned by an Acquiring person or any Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and any subsequent holder of such Rights may become
null and void.
With respect to certificates containing the legend described above, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto with such
changes, marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Right Certificates, whenever
issued, shall be dated as of the Record Date, and on their face shall entitle
the holders thereof to purchase such number of Common
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Shares as shall be set forth therein at the price per whole share set forth
therein (the "Purchase Price"), but the number of such shares and the Purchase
Price shall be subject to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board,
President or any Vice President, either manually or by facsimile signature, and
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the company to sign such Right
Certificate, although at the
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date of the execution of this Rights Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at one of its offices in Cleveland, Ohio, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Sections 7(e) and 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, any Right Certificate or Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of Common Shares as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate, shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred,
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split up, combined or exchanged at the principal office of the Rights Agent in
Cleveland, Ohio. Thereupon the Rights Agent shall countersign and deliver to
the person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expense incidental thereto, and
upon surrender to the Rights Agent, and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and prior to the
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Expiration Date, upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent in Cleveland, Ohio, together
with payment in cash, in lawful money of the United States of America by
certified check or bank draft payable to the order of the Company, equal to the
sum of (i) the exercise price for the total number of securities as to which
such surrendered Rights are exercised and (ii) an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with the provisions of Section 9 hereof. In lieu of
the cash payment referred to in the immediately preceding sentence, following
the occurrence of a Triggering Event the registered holder of a Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part upon surrender of the Right Certificate as
described above together with an election to exercise such Rights without
payment of cash on the reverse side thereof duly completed. With respect to any
Rights as to which such an election made, the holder shall receive a number of
Common Shares or other securities having a value equal to the difference
between (i) the value of the Common Shares or other securities that would have
been issuable upon payment of the cash amount as described above, and (ii) the
amount of such cash payment. For purposes of this
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Section 7(a), the value of any security shall be the current per share market
price thereof determined pursuant to the applicable provisions of Section 11(e)
hereof, on the Trading Day (as defined in Section 11(e)) immediately preceding
the date of the first occurrence of a Triggering Event.
(b) The Purchase Price shall initially be $85 (equivalent
to $.85 for each one-hundredth of a Common Share), and shall be subject to
adjustment from time to time as provided in Section 11 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 representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by (y) a duly completed election to exercise without payment of
cash or (z) payment of the Purchase Price for the shares to be purchased and an
amount equal to any applicable transfer tax in cash, or by certified check or
bank draft payable to the order of the Rights Agent, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Shares
(or make available, if the Rights Agent is the transfer agent) certificates for
the number of whole Common Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
(ii) when appropriate, requisition from the
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Company the amount of cash to be paid or depositary receipts to be issued in
lieu of the issuance of fractional shares in accordance with Section 14 hereof
or the amount of cash to be paid in lieu of the issuance of Common Shares in
accordance with Sections 11(a)(iii) or 11(d) hereof, (iii) promptly after
receipt of such certificates (or depositary receipts, when appropriate), cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver such cash
to or upon the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to any purported transfer, split up,
combination or exchange of any Right Certificate pursuant to Section 6 hereof
or the exercise
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of a Right Certificate as set forth in this Section 7 unless the registered
holder of such Right Certificate shall have (i) completed and signed the
certificate following the form of assignment or form of election to purchase,
as applicable, set forth on the reverse side of the Right Certificate
surrendered for such transfer, split up, combination, exchange or exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall have reasonably requested.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other right Certificate purchased
or acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company, or shall,
at the written request
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of the Company, destroy such cancelled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES. The Company
covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Common Shares or any authorized and issued
Common Shares held in its treasury the number of Common Shares that will be
sufficient to permit the exercise pursuant to Section 7 hereof of all
outstanding Rights; such number of Common Shares reserved and kept available
shall be adjusted from time to time, if and to the extent required, upon the
occurrence of any of the events described in Section 11 hereof.
So long as the Company's Common Shares are listed on a national
securities exchange, the Company shall endeavor to cause, from and after such
time as the Rights become exercisable, all Common Shares reserved for issuance
upon exercise of the Rights to be listed on such exchange upon official notice
of issuance.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Common Shares delivered upon exercise of
Rights shall be, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), duly and validly authorized and
issued, fully paid, non assessable and freely tradeable shares,
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free and clear of any liens, encumbrances and other adverse claims and not
subject to any rights of call or first refusal.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Common Shares in a name other than
that of, the registered holder of the Right Certificates evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
The Company also shall use its best efforts (i) to file on an
appropriate form, as soon as practicable following the later of the first
occurrence of a Triggering Event or the Distribution Date, a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective
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as soon as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company shall also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time after the date set forth in
clause (i) of the first sentence of this paragraph, the exercisability of the
Rights in order to prepare and file such registration statement and to permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement should be filed under the Securities Act or any
state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been declared
effective and, upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has
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been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding anything in this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite registration or qualification in such
jurisdiction shall not have been effected or the exercise of the Rights shall
not be permitted under applicable law.
Notwithstanding anything in this Agreement to contrary, after the
Distribution Date the Company shall not, except as permitted by Section 23 or
Section 26 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
eliminate or otherwise diminish the benefits intended to be afforded by the
Rights.
In the event that the Company is obligated to pay cash pursuant to
Sections 11 or 14 hereof, it shall make all arrangements necessary so that such
cash is available for distribution by the Rights Agent, if and when
appropriate.
Section 10. COMMON SHARES RECORD DATE. Each person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any
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applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Shares transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and type of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Common Shares payable
in Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of shares or
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(D) issue any shares of its capital stock in a reclassification of the Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) or in Section 11(d) hereof,
the Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or reclassification,
and/or the number and/or kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Common Shares transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii) hereof or Section 11(d)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) or Section 11(d) hereof.
(ii) In the event that
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the
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date of this Agreement, directly or indirectly, shall (1) merge into
the Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such merger or
combination, other than in a transaction subject to Section 11(d)(ii)
(2) merge or otherwise combine with any Subsidiary, (3) in one or more
transactions, transfer any assets to the Company or any Subsidiary in
exchange (in whole or in part) for shares of any class of capital
stock of the Company or any Subsidiary or for securities exercisable
for or convertible into shares of any class of capital stock of the
Company or any Subsidiary, or otherwise obtain from the Company or any
Subsidiary, with or without consideration, any additional shares of
any class of capital stock of the Company or any Subsidiary or
securities exercisable for or convertible into shares of any class of
capital stock of the Company or any Subsidiary (other than as part of
a pro rata distribution to all holders of such shares of any class of
capital stock of the Company or any Subsidiary), (4) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise dispose (in
one or more transactions), to, from or with, as the case may be, the
Company or any Subsidiary, other than in a transaction subject to
Section 11(d) hereof, assets on terms and conditions less favorable to
the Company than the Company
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would be able to obtain in arm's-length negotiation with an
unaffiliated third party, (5) receive any compensation from the
Company or any Subsidiary other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) receive the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage
provided by the Company or any Subsidiaries; or
(B) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any Subsidiary or any
other transaction or series of transactions (whether or not with or
into or otherwise involving an Acquiring Person), other than a
transaction subject to Section 11(d), hereof, which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities or of securities exercisable for or convertible into equity
securities of the Company or any Subsidiary which is directly or
indirectly beneficially owned by any Acquiring Person or any Associate
or Affiliate of any Acquiring Person; or
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(C) any Person (other than the Company or any Subsidiary
or any employee benefit or stock ownership plan of the Company or of
any Subsidiary or any entity holding Common Shares for or pursuant to
the terms of any such plan) who or which, together with all Affiliates
and Associates of such Person, shall at any time after the date of
this Agreement, become the Beneficial Owner of 20% or more of the
Common Shares then outstanding (other than pursuant to any transaction
set forth in Section 11(d) hereof); provided, however, that a Person
shall not be deemed to have become the Beneficial Owner of 20% or more
of the Common Shares then outstanding for the purposes of this Section
11(a)(ii)(C) solely as a result of a reduction in the number of Common
Shares outstanding unless and until such time as (1) such Person or
any Affiliate or Associate of such Person shall thereafter become the
Beneficial Owner of any additional Common Shares other than as a
result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Shares are
treated equally, or (2) any other Person who is the Beneficial Owner
of any common Shares shall thereafter become an Affiliate or Associate
of such Person,
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof in accordance with the terms of this Agreement at an
exercise
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price per Right equal to the product of one hundred (100) times the
then-current Purchase Price multiplied by the number of Common Shares for which
a Right was exercisable immediately prior to the first occurrence of a
Triggering Event, such number of Common Shares as shall equal the result
obtained by (x) multiplying the product of one hundred (100) times the
then-current Purchase Price by the number of Common Shares for which a Right
was exercisable immediately prior to the first occurrence of a Triggering
Event, and dividing that product by (y) 50% of the current per share market
price of the Common Shares (determined pursuant to Section 11(e) hereof) on the
date of the first occurrence of a Triggering Event. Notwithstanding anything in
this Agreement to the contrary, from and after the later of the Distribution
Date and the first occurrence of a Flip-in Event, (1) any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Affiliate
or Associate of such Acquiring Person) shall be void and any holder of such
Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement, (2) no Right Certificate shall be issued pursuant
to this Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (3) no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person
or Affiliate thereof, and (4) any Right Certificate delivered to the Rights
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Agent for transfer to an Acquiring Person or any Affiliate or Associate thereof
shall be cancelled.
(iii) In the event that there shall not be sufficient authorized but
unissued Common Shares or authorized and issued Common Shares held in Treasury
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be necessary
to authorize additional Common Shares for issuance upon exercise of the Rights;
PROVIDED, HOWEVER, that if at any time after 90 calendar days after the first
occurrence of a Flip-In Event, there shall not be sufficient Common Shares
available for issuance upon the exercise of a Right, then the Company shall
deliver, upon the surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available), and then cash (to the
extent permitted by applicable law and any agreements or instruments to which
the Company is a party in effect immediately prior to the first occurrence of
any Flip-In Event), which Common Shares and cash shall have an aggregate value
equal to the excess of (1) the aggregate current per share market price of all
the Common Shares (determined pursuant to Section 11(e) hereof) issuable in
accordance with subsection (ii) of this Section 11(a) upon the exercise of a
Right over (2) the product of one hundred (100) times the then-current Purchase
Price multiplied by the number of Common Shares for which a Right was
exercisable immediately the first occurrence of a Triggering Event. To the
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extent that any legal or contractual restrictions prevent the Company from
paying the full amount of cash payable in accordance with the foregoing
sentence, the Company shall pay to holders of the Rights as to which such
payments are being made all amounts which are not then restricted on a pro rata
basis. The Company shall continue to make payments on a pro rata basis as funds
become available until such payments have been paid in full.
(b) In the event that the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or shares having the same
rights, privileges and preferences as the Common Shares ("equivalent common
shares")) or securities convertible into Common Shares or equivalent common
shares at a price per Common Share or equivalent common share (or having a
conversion price per share, if a security convertible into Common Shares or
equivalent common shares) less than the current per share market price of the
Common Shares (as determined pursuant to Section 11(e) hereof) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the number of
Common Shares outstanding on such record date plus the number of Common Shares
which the aggregate offering price of the total number of Common Shares and/or
equivalent
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common shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional Common Shares
and/or equivalent common shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. Common Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In the event that the Company shall fix a record date
for the making of a distribution to all holders of the Common Shares (including
any such distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of evidences of
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indebtedness, cash (other than a regular periodic cash dividend at a rate not
in excess of 125% of the rate of the last cash dividend theretofore paid),
assets, stock (other than a dividend payable in Common shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Common Shares (as determined pursuant to Section
11(e) hereof) on such record date, less the fair market value (as determined in
good faith by the Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the cash, assets, stock or evidences of
indebtedness so to be distributed (in the case of regular periodic cash
dividends at a rate in excess of 125% of the rate of the last cash dividend
theretofore paid, only that portion in excess of 125% of such rate) or of such
subscription rights, options or warrants applicable to one Common Share, and
the denominator of which shall be such current per share market price of the
Common Shares. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
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(d) In the event that, following the Share Acquisition
Date, directly or indirectly:
(i) the Company shall consolidate with, or merge with or
into, any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or
merge with or into the Company and the Company shall be the continuing
or surviving corporation of such merger or consolidation and, in
connection with such merger or consolidation, all or part of the
Common Shares shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer (or one
or more Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or
any Subsidiaries) representing in the aggregate more than 50% of the
assets or earning power of the Company and the Subsidiaries (taken as
a whole) to any Person or Persons,
then, and in each such case, proper provision shall be made so that (A) except
as provided below, each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof
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in accordance with the terms of this Agreement at an exercise price per Right
equal to the product of one hundred (100) times the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, such number of
validly authorized and issued, fully paid, non assessable and freely tradeable
Common Shares of such surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described
in clause (ii) above), as the case may clear of any liens, encumbrances and
other adverse claims and not subject to any rights of call or first refusal, as
shall be equal to the result obtained by (x) multiplying the product of one
hundred (100) times the then-current Purchase Price by the number of Common
Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event and dividing that product by (y) 50% of the
current per share market price of the Common Shares of such Person (determined
pursuant to Section 11(e) hereof) on the date of consummation of such Flip-over
Event; (B) the issuer of such Common Shares shall thereafter be liable for, and
shall assume, by virtue of the consummation of such Flip-over Event, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such issuer; and (D) such
issuer shall take such steps (including,
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but not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights. Notwithstanding
the foregoing, if the surviving, resulting or acquiring Person in any Flip-over
Event, is not a corporation or business trust, then, and in each such case, if
such surviving, resulting or acquiring Person is directly or indirectly wholly
owned by a corporation or business trust, then all references to Common Shares
of such surviving, resulting or acquiring Person in this Section 11(d) shall be
deemed to be references to the Common Shares of the corporation or business
trust which ultimately controls such Person, and if there is no such
corporation or business trust, (Y) proper provision shall be made so that such
surviving, resulting or acquiring Person shall create or otherwise make
available for purposes of the exercise of the Rights in accordance with the
terms of this Agreement, a type or types of security or securities having a
fair market value at least equal to the economic value of the Common Shares
which each holder of a Right would have been entitled to receive if such
surviving, resulting or acquiring Person had been a corporation or a business
trust; and (Z) all other provisions of this Section
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11(d) shall apply to the issuer of such securities as if such securities were
Common Shares. The Company shall not consummate any Flip-over Event, unless the
issuer of the Common Shares or other securities, as the case may be, shall have
a sufficient number of authorized Common Shares or other securities which have
not been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 11(d) and unless prior to such
consummation the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
this Section 11 and further providing that as promptly as practicable after the
consummation of any Flip-over Event, the issuer shall:
(I) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities issuable
upon exercise of the Rights on an appropriate form, and shall use its
best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(II) take all such action as may be appropriate under, or
to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the excercisibility of the Rights;
and
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(III) deliver to holders of the Rights historical financial
statements for such issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under
the Exchange Act.
Notwithstanding the foregoing, upon the occurrence of any Flip-over Event, any
Rights that are or were at any time beneficially owned by any Acquiring Person
or any Associate or Affiliate of such Acquiring Person (which Acquiring Person,
Associate or Affiliate is, directly or indirectly, causing such Flip-over Event
to occur) after the date upon which such Acquiring Person became such shall
become void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. The provisions of
this Section 11(d) shall similarly apply to successive mergers or
consolidations or sales or other transfers.
(e) For the purpose of any computation hereunder, the
"current per share market price" of Common Shares on any date shall be deemed
to be the average of the daily closing prices per share of such Common Shares
for the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Common Shares is determined during a
period following the announcement by the issuer of such Common Shares (i) of a
dividend or distribution on such Common Shares payable in such Common
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Shares or securities convertible into such Common Shares or (ii) any
subdivision, combination or reclassification of such Common Shares, and prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current market price"
shall be appropriately adjusted to take into account ex-dividend trading or to
reflect the current market price per Common Share equivalent. The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Shares are not listed
or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then
in use, or, if on any such date the Common Shares are not
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43
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Shares selected by the Directors of the Company. The term "Trading Day"
shall mean any day on which the principal national securities exchange on which
the Common Shares are listed or admitted to trading is open for the transaction
of business or, if the Common Shares are not listed or admitted to trading on
any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not
authorized or obligated by law or executive order to close. If the Common
Shares are not publicly held or not so listed or traded, or not the subject of
available bid and asked quotes, "current per share market price" shall mean the
fair value per share as determined in good faith by the Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(f) Except as set forth below, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; PROVIDED, HOWEVER, that any
adjustments which by reason of this Section 11(f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest thousandth of a share as the case may be. Notwithstanding the first
sentence
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of this Section 11(f), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the transaction
which requires such adjustment and (ii) the Expiration Date.
(g) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Common Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares contained in this Section 11 and the provisions of
Sections 7, 9, 10 and 14 hereof with respect to the Common Shares shall apply
on like terms to any such other shares.
(h) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
Common Shares purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(i) Unless the Company shall have exercised its election
as provided in Section 11(j) hereof, upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such adjustment
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45
shall thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of shares (calculated to the nearest thousandth) obtained by
(i) multiplying (x) the number of shares covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(j) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights in
substitution for any adjustment in the number of Common Shares purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest thousandth) obtained by
dividing the Purchase Price in effect immediately prior to 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
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have been issued, shall be at least 10 calendar days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(j), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(k) Irrespective of any adjustment or change in the
Purchase Price or the number or type of shares issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares which
were expressed in the initial Right Certificate issued hereunder.
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(l) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if any, of the
Common Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and non
assessable Common Shares at such adjusted Purchase Price.
(m) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence of
such event the issuing to the holder of any Right exercised after such record
date the Common Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due xxxx or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(n) Anything in Sections 11 (a) through (m), inclusive,
hereof to the contrary notwithstanding, the Company shall be entitled to make
such reductions in the Purchase
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Price, in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Common Shares,
issuance wholly for cash of any of the Common Shares at less than the current
market price, issuance wholly for cash of Common Shares or securities which by
their terms are convertible into or exchangeable for Common Shares, stock
dividends or issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Common Shares
shall not be taxable to such shareholders.
(o) Notwithstanding any other provision of this
Agreement, no adjustment to the Purchase Price, the number of shares of Common
Stock (or fractions of a share) for which a Right is exercisable or the number
or Rights outstanding shall be made or be effective if such adjustment would
have the effect of reducing or limiting the benefits the holders of the Rights
would have had absent: such adjustment, including, without limitation, the
benefits under Sections 11(a)(ii) and 11(d) hereof, unless the terms of this
Agreement are amended so as to preserve such benefits.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 hereof, the Company
shall promptly prepare a certificate setting forth such adjustment, (including
a
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description of any Rights which have become void as a result thereof), and a
brief statement of the facts accounting for such adjustment and promptly file
with the Rights Agent and with each transfer agent for the Common Shares a copy
of such certificate.
Section 13. NOTICE OF ADJUSTED PURCHASE PRICE OR NUMBER OR TYPE OF
SHARES TO HOLDERS OF RIGHTS. Whenever an adjustment is made as provided in
Section 11 hereof after the Distribution Date, the Company shall mail a brief
summary of such adjustment to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
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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 securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Right, are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Directors of the Company. If on
any such date no such market maker is making a market in the Rights the fair
value of the Rights on such date as determined in good faith by the Directors
of the Company shall be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions
of shares upon exercise of the Rights or to distribute certificates which
evidence fractional shares.
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Fractions of Common Shares may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it, provided that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
Common Shares. In lieu of fractional shares, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. For purposes of this Section 14(b), the
current market value of a Common Share shall be the closing price of a Common
Share (as determined pursuant to the second sentence of Section 11(e) hereof)
for the Trading Day immediately prior to the date of such exercise
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect
of this Agreement are vested in the respective registered holder, of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the
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holder of any other Rights certificate (or, prior Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under this Agreement, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to this
Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent in Cleveland, Ohio, duly endorsed
or accompanied by a proper instrument of transfer;
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(c) the Company and the Rights Agent may deem and treat
the person in whose name the Right Certificate (or, prior to the Distribution
Date, the associated Common Share certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the associated
Common Share certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
agent shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; PROVIDED, HOWEVER, that the Company
shall use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
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Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof or exchanged pursuant to the provisions of Section 27 hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to
pay to the Rights agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also
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agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, suit, action, proceeding or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent
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or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
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Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
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certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any adjustment
required under the provisions of Section 11 hereof (including any adjustment
which results in Rights becoming void) or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by
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Right Certificates after actual notice of any such adjustment or voidance); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any Common
Shares will, when issued, be validly authorized and issued, fully paid and non
assessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the President, the
Secretary, the Treasurer, the Chief Financial Officer or any Assistant General
Counsel of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company
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or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof. The Rights Agent shall not be under any duty or responsibility to
insure compliance with any applicable federal or state securities laws in
connection with the issuance, transfer or exchange of Right Certificates.
(j) The Rights Agent shall promptly remit to the
Company any funds paid to it upon exercise of the Rights pursuant to Section 7
hereof.
(k) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise, transfer, split up, combination
or exchange, the certificate attached to the form of assignment or form of
election to purchase, as the case
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may be, has either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further action with
respect requested exercise, transfer, split up, combination or exchange,
without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then the
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registered holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of Ohio or New York (or of any other state of the United States
so long as such corporation is authorized to do business as a banking
institution in the States of Ohio or New York), in good standing, having a
principal office in the states of Ohio or New York, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million and which shall otherwise meet any requirements imposed by the New York
Stock Exchange on transfer agents and registrars. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time hell 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
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in writing with the predecessor Rights Agent and each transfer agent of the
Common Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant to
the exercise or conversion of securities issued prior to the Distribution Date
which are exercisable for, or convertible into, Common Shares, and (b) may, in
any other case, if deemed necessary, appropriate or desirable by the Board of
Directors of the Company, issue Right Certificates
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representing an equivalent number of Rights as would have been issued in
respect of such Common Shares if they had been issued or sold prior to the
Distribution Date, as appropriately adjusted as provided herein as if they had
been so issued or sold; PROVIDED, HOWEVER, that (i) no such Right Certificate
shall be issued if, and to the extent that, in its good faith judgment the
Board of Directors of the Company shall have determined that the issuance of
such Right Certificate could have a material adverse tax consequence to the
Company or to the Person to whom or which such Right Certificate otherwise
would be issued, and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment otherwise shall have been made in lieu
of the issuance thereof.
Section 23. REDEMPTION. (a) Prior to the Expiration Date, the
Board of Directors of the Company may, at its option, redeem all but not less
than all of the then-outstanding Rights at a redemption price of $.05 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (the "Redemption Price"),
at any time prior to the close of business on the later of (i) the Distribution
Date and (ii) the first occurrence of a Triggering Event.
(b) Immediately upon the action of the Directors
of the Company ordering the redemption of the Rights, and without any further
action and without any notice, the right to
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exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Promptly after the action
of the Directors ordering the redemption of the Rights, the Company shall
publicly announce such action. Within 10 calendar days after ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the holders of the then-outstanding Rights by mailing 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 Shares. 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) At any time, the Directors of the Company may
relinquish their rights to redeem the Rights under paragraphs (a) or (b) above,
or both, by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Directors under the portions of
this Section 23 specified in such resolution shall terminate without further
action and without any notice.
Section 24. NOTICE OF CERTAIN EVENTS. In case, after the
Distribution Date, the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of Common
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Shares or to make any other distribution to the holders of Common Shares (other
than a regular periodic cash dividend at a rate not in excess of 125% of the
rate of the last cash dividend theretofore paid) or (b) to offer to the holders
of Common Shares rights, options or warrants to subscribe for or to purchase
any additional Common Shares or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common Shares), or (d) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company
and its Subsidiaries, taken as a whole, to any other Person or Persons, or (e)
to effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right Certificate,
in accordance with Section 25 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution or offering of rights, options or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation
therein by the holders of the Common Shares, if any such date
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is to be fixed, and such notice shall be so given, in the case of any action
covered by clause (a) or (b) above, at least 20 calendar days prior to the
record date for determining holders of the Common Shares for purposes of such
action, and, in the case of any such other action, at least 20 calendar days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares, whichever shall be
the earlier.
In case any Triggering Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to the Rights
Agent and each holder of a Right Certificate, in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights.
Section 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Cleveland-Cliffs Inc
18th Floor, Diamond Building
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate
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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:
Ameritrust Company National Association
Corporate Trust Division
X.X. Xxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: B. Xxxxxxx Xxxx
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Rights Agent.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the
Distribution Date and subject to the last sentence of this Section 26, if the
Company so directs, the Company and the Rights Agent shall supplement or amend
any provision of this Agreement without the approval of any holders of
certificates representing Common Shares. From and after the Distribution Date
and subject to the last sentence of this Section 26, if the Company so directs,
the Company and the Rights Agent shall supplement or amend this Agreement
without the approval of any holders of Right Certificate; in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with
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any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to supplement or amend the provisions hereunder in any
manner which the Company may deem desirable, including, without limitation, the
addition of other events requiring adjustment to the Rights under Sections
11(a)(ii) or 11(d) hereof or procedures relating to the redemption of the
Rights, which supplement or amendment shall not, in the good faith
determination of the Board of Directors of the Company, adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment; PROVIDED, HOWEVER,
that the failure or refusal of the Rights Agent to execute such supplement or
amendment shall not affect the validity of any supplement or amendment adopted
by the Company, any of which shall be effective in accordance with the terms
thereof. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment shall be made which (x) changes the stated Redemption
Price or the period of time remaining until the Final Expiration Date, (y)
reduces the number of Common Shares for which a Right is then exercisable, or
(z) modifies a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable.
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Section 27. EXCHANGE. (a) The Board of Directors of the Company may, at
its option, at any time after the later of the Distribution Date and the first
occurrence of a Triggering Event, exchange all or part of the then-outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). 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, any employee benefit plan of the Company or any
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), who or which, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
Section 27(a) hereof, and without any further action and without any notice,
the right to exercise such Rights shall terminate and the only right with
respect to such Rights thereafter of the holder of such Rights shall be to
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receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to Section 27(a) hereof, the Company shall publicly announce such action, and
within 10 calendar days thereafter shall give notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent; PROVIDED, HOWEVER, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange shall state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Right; (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 27,
the Company, at its option, may substitute for any Common Share exchangeable
for a Right, (i) cash, (ii) debt securities of the Company, (iii) other assets,
or (iv) any combination of the foregoing, in any event having an aggregate
value which the
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Board of Directors of the Company shall have determined in good faith to be
equal to the current market value of one Common Share (determined pursuant to
Section 11(e) hereof) on the Trading Day immediately preceding the date of
exchange pursuant to this Section 27.
Section 28. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (or prior to the Distribution Date, the
Common Shares).
Section 30. ACTION BY DIRECTORS. Whenever any action hereunder
or in connection with the Rights is required or permitted to be taken by the
Directors of the Company, such action may be taken by the Executive Committee
of the Directors or by any other duly authorized committee thereof.
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Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Ohio and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective
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corporate seals to be hereunto affixed and attested, this 19th day of November,
1991.
CLEVELAND-CLIFFS INC
By /s/ M. Xxxxxx Xxxxx
------------------------
Chairman and Chief
Executive Officer
AMERITRUST COMPANY NATIONAL
ASSOCIATION
By /s/ Xxxxxxxx Xxxxx-Xxxxx
---------------------------
Trust Officer II/Assistant
Secretary
0980C
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Exhibit A
---------
[Form of Right Certificate]
Certificate No. R- _____________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 18, 1997 OR EARLIER IF
REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.05 PER RIGHT ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE WERE ISSUED TO OR ACQUIRED BY A PERSON WHO WAS AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION
11(a)(ii) OR SECTION 11(d) OF THE RIGHTS AGREEMENT.*]
Right Certificate
CLEVELAND-CLIFFS 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 September 8,
1987, amended and restated as of November 19, 1991 (the "Rights Agreement"),
between Cleveland-Cliffs Inc, an Ohio corporation (the "Company"), and
Ameritrust Company National Association (the "Rights Agent"), to purchase from
the Company at any time after
____________________
* The portion of the legend in brackets shall be inserted only if
applicable.
A-1
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the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (Cleveland, Ohio time) on September 18, 1997 at the
principal office of the Rights Agent, or its successors as Rights Agent, in
Cleveland, Ohio, one-hundredth of one fully paid non assessable Common Share,
par value $1.00 per share (a "Common Share") of the Company, at a purchase
price of $85 per whole Common Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
and related Certificate duly executed. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of November 12, 1991, based on the Common as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and
the number of Common Shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of
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the Right Certificates. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent.
Pursuant to the Rights Agreement, from and after the later of
the Distribution Date and the first occurrence of a Flip-in Event (as such
terms are defined in the Right Agreement), (i) any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any Affiliate or
Associate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
the Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof, and (iv) any Right Certificate delivered to
the Rights Agent for transfer to an Acquiring Person or any Affiliate or
Associate thereof shall be cancelled.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the Rights Agent in
Cleveland, Ohio, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be
A-3
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entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.05 per Right.
Subject to the provisions of the Rights Agreement, the Board
of Directors of the Company may exchange the Rights (other than any Rights
which have become void), in whole or in part, at an exchange ratio of one
Common Share per Right (subject to adjustment). Under certain circumstances set
forth in the Rights Agreement, Rights may be exercised, at the option of the
holder thereof, without the payment of the Purchase Price in cash that would
otherwise be required. In any such case, the number of securities which such
person would otherwise be entitled to receive upon the exercise of such Rights
will be reduced as provided in the Rights Agreement.
No fractional Common Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company which may at any time be
issuable on the exercise
A-4
79
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or, to receive notice of meetings
or other action; affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of_______________, 19__ .
ATTEST: CLEVELAND-CLIFFS INC
______________________________
By______________________________
Secretary Title:
Countersigned:
By____________________________
Authorized Signature
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80
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: ___________________________, 19___
______________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ____________________________, 19___
______________________________
Signature
A-6
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FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To Cleveland-Cliffs Inc:
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to purchase
the one one-hundredth of a Common Share or other securities issuable upon the
exercise of such Rights and requests that certificates for such securities be
issued in the name of:
Please insert social security
or other identifying number:_________________________________________________
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
If such number of Rights Shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________________________
______________________________________________________________________________
(Please print name and address
______________________________________________________________________________
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of ____________________ of the
Rights specified above, the Undersigned hereby elects to exercise such Rights
without payment of cash and to receive a number of Common Shares or other
securities having a value (as determined pursuant to the Rights Agreement)
equal to the difference between (i) the value of the Common Shares or other
securities that would have been issuable upon the exercise thereof upon payment
of the cash amount as provided in the Rights Agreement, and (ii) the amount of
such cash payment.
Dated: ____________________________, 19___
______________________________
Signature
Signature Guaranteed:
A-7
82
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ____________________________, 19___
______________________________
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of
Election to Purchase and in the related Certificates must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
A-8
83
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 8, 1987, the Board of Directors of
Cleveland-Cliffs Inc (the "Company") declared a dividend distribution of one
right (a "Right") for each outstanding Common Share, $1.00 par value (the
"Common Shares"), of the Company. The distribution was payable on September 18,
1987 (the "Record Date") to the shareholders of record as of the close of
business on the Record Date. Each Right entitles the registered holder to
purchase from the Company one-hundredth of one Common Share at a price of $85
per whole share, subject to adjustment (the "Purchase Price"). The description
and terms of the Rights are set forth in a Rights Agreement dated as of
September 8, 1987, amended and restated as of November 19, 1991 (the "Rights
Agreement"), between the Company and Ameritrust Company National Association,
as Rights Agent (the "Rights Agent").
Until the earliest to occur of (i) the close of business on
the tenth business day (or such later date as may be specified by the Board of
Directors) following a public announcement that a person or group of affiliated
or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 15%-or more of the outstanding Common Shares (an
"Acquiring Person"), (ii) the close of business on the tenth business day (or
such later date as may be specified by the Board of Directors) following the
commencement of a tender offer or exchange offer by a person or group of
affiliated or associated persons, the consummation of which would result in
beneficial ownership by such person or group of 15% or more of the outstanding
Common Shares, or (iii) the close of business on the tenth business day
following the first date of public announcement of the first occurrence of a
Flip-in Event or a Flip-over Event (as such terms are hereinafter defined) (the
earliest of such dates being hereinafter called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), or, in the case of Common Shares issued upon conversion of the
Company's convertible securities, until the tenth day after the Distribution
Date, new Common Share certificates issued after the Record Date upon transfer
or new issuance of Common Shares will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption
84
or expiration of the Rights), the surrender for transfer of any certificates
for Common Shares in respect of which Rights have been issued will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on September 18, 1997 (the "Final Expiration Date"),
unless earlier redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Common Shares or
other property issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Common Shares; (ii)
upon the grant to holders of the Common Shares of certain rights, options or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares; or (iii) upon the distribution
to holders of the Common Shares of evidences of indebtedness, cash (excluding
regular periodic cash dividends at a rate not in excess of 125% of the rate of
the last cash dividend theretofore paid), assets, stock (other than dividends
payable in Common Shares) or of subscription rights, options or warrants (other
than those referred to above).
In the event (a "Flip-in Event"), that (i) any person or group
or affiliated or associated persons becomes the beneficial owner of 20% or more
of the outstanding Common Shares, (ii) any Acquiring Person merges into or
combines with the Company and the Company is the surviving corporation or any
Acquiring Person effects certain other transactions with the Company, as
described in the Rights Agreement, or (iii) during such time as there is an
Acquiring Person, there shall be any reclassification of securities or
recapitalization or reorganization of the Company which has the effect of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its Subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at the
then current Purchase
85
Price, that number of Common Shares having a market value of two times the
Purchase Price.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. No fractional shares will be issued (other than
fractions which may, at the election of the Company, be evidenced by depositary
receipts), and in lieu thereof, a payment in cash will be made based on the
market price of the Common Shares on the last trading day prior to the date of
exercise.
In the event (a "Flip-Over Event") that, following the first
date of public announcement that a person has become an Acquiring Person, (i)
the Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is
the surviving corporation, but its Common Shares are changed or exchanged, or
(iii) 50% or more of the Company's assets or earning power, including without
limitation securities creating obligations of the Company, are sold, proper
provision shall be made so that each holder of a Right, other than Rights that
are or were beneficially owned by the Acquiring Person after the date upon
which the Acquiring Person became such (which will thereafter be void), shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock (or,
under certain circumstances, an economically equivalent security or securities)
of such other person which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
At any time after the later of the Distribution Date and the
first occurrence of a Flip-in Event or a Flip-over Event and prior to the
acquisition by any person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Board of Directors of the Company
may exchange the Rights (other than any Rights which have become void), in
whole or in part, at an exchange ratio of one Common Share per Right (subject
to adjustment).
The Company may redeem the Rights in whole, but not in part,
at a price of $.05 per Right (the "Redemption Price"), at any time prior to the
close of business on the later of (i) the Distribution Date and (ii) the first
occurrence of a Flip-in Event or a Flip-over Event. Immediately upon the action
of the Board of Directors electing to redeem the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price. The Company will give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear on the registry
books of the Rights Agent.
86
Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
Following the later of the Distribution Date and the first
occurrence of a Flip-in Event or a Flip-over Event, Rights may be exercised, at
the option of the holder thereof, without the payment of the Purchase Price in
cash that would otherwise be required. In any such case, the number of
securities which such person would otherwise be entitled to receive upon the
exercise of such Rights will be reduced as provided in the Rights Agreement.
The Rights Agreement may be amended by the Company without the
approval of any holders of Rights, including amendments which add other events
requiring adjustment to the Purchase Price payable and the number of Common
Shares or other securities issuable upon the exercise of the Rights or which
modify procedures relating to the redemption of the Rights, provided that no
amendment may be made which (i) changes the stated Redemption Price or the
period of time remaining until the Final Expiration Date, (ii) reduces the
number of Common Shares for which a Right is then exercisable, or (iii)
modifies a time period relating to when the Rights may be redeemed at such time
as the Rights are not then redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Form 8 dated November 19,
1991. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
