PROLER INTERNATIONAL CORP.
and
KEYCORP SHAREHOLDER SERVICES, INC.
Rights Agent
Rights Agreement
Dated as of February 28, 1996
TABLE OF CONTENTS
SECTION PAGE
------- ----
1 Certain Definitions ................................................ 1
2 Appointment of Rights Agent ........................................ 4
3 Issue of Rights Certificates ....................................... 4
4 Form of Rights Certificates ........................................ 6
5 Countersignature and Registration .................................. 7
6 Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates ........... 7
7 Exercise of Rights; Purchase Price; Expiration Date of Rights ...... 8
8 Cancellation and Destruction of Rights Certificates ................ 10
9 Reservation and Availability of Capital Stock ...................... 10
10 Record Date ........................................................ 11
11 Adjustment of Purchase Price, Number and Kind of Shares or Number
of Rights .......................................................... 12
12 Certificate of Adjusted Purchase Price or Number of Shares ......... 20
13 Consolidation, Merger, or Sale or Transfer of Assets or Earning
Power .............................................................. 20
14 Fractional Rights and Fractional Shares ............................ 23
15 Rights of Action ................................................... 24
16 Agreement of Rights Holder ......................................... 24
17 Rights Certificate Holder Not Deemed a Stockholder ................. 25
18 Concerning the Rights Agent ........................................ 25
19 Merger, Consolidation or Change of Name of Rights Agent ............ 25
20 Duties of Rights Agent ............................................. 26
21 Change of Rights Agent ............................................. 28
22 Issuance of New Rights Certificates ................................ 29
23 Redemption ......................................................... 29
24 Notice of Certain Events ........................................... 31
25 Notices ............................................................ 32
26 Supplements and Amendments ......................................... 32
27 Successors ......................................................... 33
28 Determinations and Actions by the Board of Directors, etc .......... 33
29 Benefits of this Agreement ......................................... 33
30 Severability ....................................................... 34
31 Governing Law ...................................................... 34
32 Counterparts ....................................................... 34
33 Descriptive Headings ............................................... 34
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of February 28, 1996 (the "Agreement"),
between Proler International Corp., a Delaware corporation (the "Company"), and
KeyCorp Shareholder Services, Inc. as Rights Agent (the "Rights Agent");
WITNESSETH:
WHEREAS, the Company (formerly Proler Successor, Inc.) is a "holding
company" formed pursuant to a merger consummated on February 28, 1996 by and
among the former Proler International Corp. (the predecessor to the Company),
the Company, and Proler Merger, Inc., pursuant to which merger Common Stock of
the Company was issued in exchange for outstanding Common Stock of the former
Proler International Corp.; and
WHEREAS, pursuant to the Merger Agreement dated February 28, 1996
pursuant to which the merger was consummated, the Company agreed to enter into
this Agreement upon the effectiveness of the merger and agreed to declare a
distribution to its stockholders of certain rights issued pursuant to this
Agreement; and
WHEREAS, on February 28, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one-third of one Right for each share of common stock, $1.00 par
value per share, of the Company (the "Common Stock") outstanding at 5:02 p.m. on
February 28, 1996 (the Effective Time of the merger and, for purposes of this
Agreement, the "Record Date"), and authorized the issuance of one-third of one
Right (as such number may hereinafter be adjusted pursuant to the provisions of
SECTION 11(P) hereof) for each share of Common Stock of the Company issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date (as such term is defined in
SECTION 3 hereof), each whole Right initially representing the right to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
$1.00 par value per share, of the Company having the rights, powers and
preferences set forth in the Company's Certificate of Incorporation as in effect
on the date hereof upon the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan.
(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 and in effect on the date of
this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to 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; PROVIDED, HOWEVER,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to SECTION 3(a) or SECTION 22 hereof (the "Original
Rights") or pursuant to SECTION 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not
in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this SUBPARAGRAPH (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to SUBPARAGRAPH (ii) of
this PARAGRAPH (c)) or disposing of any voting securities of the
Company.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
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(e) "Close of business" on any given date shall mean 5:00 P.M., Houston
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it shall mean 5:00 P.M. Houston time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, $1.00 par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(g) An "Offer" shall mean a written proposal delivered to the Company
by any Person who both beneficially owns 1% or less of the outstanding Common
Stock as of the date such proposal is delivered and who has not within one year
prior to the delivery of such written proposal (x) beneficially owned in excess
of 1% of the outstanding Common Stock and (y) (at a time when such Person
beneficially owned a greater than 1% stake) disclosed, or caused the disclosure
of, any intention which relates to or would result in the acquisition, or
influence of control, of the Company (an "Offeror"), and which proposal:
(i) provides for the acquisition of all of the outstanding
shares of Voting Stock held by any Person other than the Offeror and
its Affiliates for cash at the same price;
(ii) is accompanied by a written opinion of a nationally
recognized investment banking firm which is addressed to the holders of
shares of Voting Stock other than the Offeror and its Affiliates and
states that the price to be paid to such holders pursuant to the Offer
is fair to such holders;
(iii) states that the Offeror has obtained written financing
commitments from recognized financing sources, and/or has on hand cash
or cash equivalents, for the full amount of all financing necessary to
consummate the Offer; and
(iv) requests the Company to call a special meeting of the
holders of Voting Stock for the purpose of voting on a resolution
requesting the Board of Directors to accept such Offer and contains a
written agreement of the Offeror to pay (or share with any other
Offeror) at least one-half of the Company's costs of such special
meeting (exclusive of the Company's costs of preparing and mailing
proxy material for its own solicitation).
Notwithstanding anything in the foregoing to the contrary, an "Offer"
shall include a proposal that meets the requirements of all of (i), (ii), (iii),
and (iv) above and that is delivered to the Company by a Person who beneficially
owns in excess of 1% of the outstanding Common Stock if (x) such Person owned in
excess of 1% of the outstanding Common Stock on February 28, 1996, (y) as of the
date such proposal is delivered such Person beneficially owns not more than the
percentage of the Common Stock that is the sum of (A) the percentage of the
outstanding Common Stock beneficially owned by such Person as of February 28,
1996 and (B) 1 (one) (this percentage, as calculated for each such Person, shall
be hereinafter referred to as the "Offeror Percentage"), and (z) such Person has
not within one year prior to the delivery of such written proposal (1)
beneficially owned a percentage of the outstanding Common Stock that exceeds the
Offeror Percentage applicable to such Person and (2) (at a time when such Person
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beneficially owned a percentage of the outstanding Common Stock that exceeds the
Offeror Percentage applicable to such Person) disclosed, or caused the
disclosure of, any intention which relates to or would result in the
acquisition, or influence of control, of the Company. Any Person who complies
with all the requirements of the preceding sentence shall be an Offeror for
purposes of this Agreement.
(h) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(i) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $1.00 par value per share, of the Company.
(j) "SECTION 11(a)(ii) Event" shall mean any event described in SECTION
11(a)(ii) (a), (b) or (c) hereof.
(k) "SECTION 13 Event" shall mean any event described in CLAUSES (x),
(y) or (z) of SECTION 13(a) hereof.
(l) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(m) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such Person.
(n) "Triggering Event" shall mean any SECTION 11(a)(ii) Event or any
SECTION 13 EVENT.
(o) "Voting Stock" shall mean (i) the Common Shares and (ii) any other
shares of capital stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with the Common Shares in
respect of any merger, consolidation, sale of all or substantially all of the
Company's assets, liquidation, dissolution or winding up.
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 prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the tenth
calendar day after the Stock Acquisition Date (or, if the tenth calendar day
after the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business
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on the tenth business day after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14e-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would be the Beneficial Owner of
30% or more of the shares of Common Stock then outstanding (the earlier of (i)
and (ii) being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of PARAGRAPH (b) of this SECTION 3)
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Rights Agent has been notified that the Distribution Date
has occurred, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more right certificates, in substantially the
form of EXHIBIT A hereto (the "Rights Certificates"), evidencing one-third of
one Right for each share of Common Stock so held, subject to adjustment as
provided herein. In the event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to SECTION 11(P) hereof, at the
time of distribution of the Right Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with SECTION 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form attached
hereto as EXHIBIT B (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as such term is defined in
SECTION 7 hereof), the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and shall
bear the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between
Proler International Corp. (the "Company") and KeyCorp Shareholder
Services, Inc. dated as of February 28, 1996 (the "Rights Agreement"),
the terms of which are hereby incorporated
5
herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes, an Acquiring Person or any
Affiliate, or Associates thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void."
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by such certificates shall
be evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in EXHIBIT A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of SECTION 11 and SECTION 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one-hundredths of a
share of Preferred Stock as shall be set forth therein at the price set forth
therein the "Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to SECTION 3(a) or SECTION
22 hereof that the Company knows represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of SECTION 7(e) hereof, and any Rights
Certificate issued pursuant to SECTION 6 or
6
SECTION 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in SECTION 7(e) of such Agreement."
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, and President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the Company's
seal or a facsimile thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature.
The Rights Certificates shall be countersigned by the Rights Agent (either
manually or by facsimile signature as determined by the Company) 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 Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by and person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 4(b), SECTION 7(e) and SECTION
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of shares of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Rights Certificate or Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
7
exchange any Rights Certificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder has completed and signed the certificate
contained in the form of assignment on the reverse side of such Rights
Certificate and has provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to SECTION 4(b), SECTION 7(e) and SECTION 14 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to SECTION 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in SECTION 9(c), SECTION 11(a)(iii) and SECTION 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the close of business on October
10, 1998 (the "Final Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in SECTION 23 hereof (the earlier of (i) and (ii) being
herein referred to as the "Expiration Date").
(b) The Purchase Price for one one-hundredth of a share of Preferred
Stock pursuant to the exercise of a Right shall initially be $200, and shall be
subject to adjustment from time to time as provided in SECTIONS 11 and 13(a)
hereof and shall be payable in accordance with PARAGRAPH (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the shares of Preferred Stock (or other
8
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to SECTION 20(k) hereof, thereupon promptly (i) (A) requisition
from any transfer agent of the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
total number of shares of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company has elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a depositary
agent, requisition from the depositary agent depositary receipts representing
such number of shares of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with SECTION 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced pursuant to SECTION 11(a)(iii) hereof) may be
made by money order, certified bank check or bank draft payable to the order of
the Company. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
SECTION 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all of the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of SECTION 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a triggering Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this SECTION 7(e),
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this SECTION 7(e) and
SECTION 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other Person
9
as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this SECTION 7 unless such registered holder has (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such 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 reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange, if surrendered to the Company or any of its agents,
shall be delivered to the Rights Agent for cancellation or in canceled form, or,
if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) and/or out of any authorized and issued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) held in its treasury, the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement including SECTION 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a SECTION
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with SECTION 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933 (the
"Act"), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and
10
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in CLAUSE (i) of the first
sentence of this SECTION 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction has been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax that may be payable in respect
of any transfer or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of a number of shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for shares of
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder upon the exercise of any Rights
until such tax has been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. RECORD DATE. Each person in whose name any certificate for
shares of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise
11
of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind 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 its Preferred Stock payable
in shares of Preferred Stock (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a smaller
number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this SECTION 11(a) and SECTION 7(e) 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 the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, he
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, 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) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall 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 and the Common Stock of the Company
shall remain outstanding and unchanged, (2) shall, in one
transaction or a series of transactions, transfer any assets
to the Company or to any of its Subsidiaries in exchange (in
whole or in part) for shares of Common Stock, for shares of
other equity securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise) or
otherwise obtain from the Company, with or without
consideration, any additional shares of such equity securities
or securities exercisable for or convertible into shares of
such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Stock), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or
12
otherwise acquire or dispose of, in one transaction or a
series of transactions, to, from or with (as the case may be)
the Company or any of its Subsidiaries, assets on terms and
conditions less favorable to the Company than the Company
would be able to obtain in arm's length negotiation with an
unaffiliated third party, other than pursuant to a transaction
set forth in SECTION 13(a) hereof, (4) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of in one transaction or a series of
transactions, to, from or with (as the case may be) the
Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as of
the date hereof between the Company in as of the date hereof
between the Company and such Acquiring Person or Associate or
Affiliate) assets having an aggregate fair market value of
more than $6,578,300, other than pursuant to a transaction set
forth in SECTION 13(a) hereof, (5) shall receive any
compensation from the Company or any of the Company's
Subsidiaries 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) shall
receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from
a requirement of law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided
by the Company or any of its Subsidiaries; or
(B) any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary organized, appointed or established by the Company
for or pursuant to the terms of any such plan), along or
together with its Affiliates and Associates, shall, at any
time after the Rights Dividend Declaration Date, become the
Beneficial Owner of 30% or more of the shares of Common Stock
then outstanding, unless the event causing the 30% threshold
to be crossed is a transaction set forth in SECTION 13(a)
hereof, or is an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer, made in the
manner prescribed by Section 14(d) of the Exchange Act, for
all outstanding shares of Common Stock (other than shares held
by such Person and its Affiliates) that is, by its terms, held
open for not less than 60 days and either (1) is at a price
and on terms determined by at least a majority of the members
of the Board of Directors who are not officers of the Company,
or who are not nominees, representatives, Affiliates or
Associates of the Person making such offer, after receiving
advice from one or more investment banking firms, to be (a) at
a price that is fair to stockholders (taking into account all
factors which the Directors of the Company deem relevant
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders, or (2) is for cash and (i) causes such Person,
together with all Affiliates and Associates of such Person, to
be the Beneficial Owner of 80% or more of the Common Stock
then outstanding and (ii) is followed, within 90 days, by the
completion of a merger or other business combination in which
all remaining stockholders of the Company (other than the
Person making such offer) receive cash consideration in a per
share amount at least equal to the highest per share amount
paid in connection with such offer; or
13
(C) 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 of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of SECTION 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
which is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person
then, promptly following five (5) days after the date of the occurrence
of an event described in SECTION 11(a)(ii)(b) hereof and promptly
following the occurrence of any event described in SECTION 11(a)(ii)(a)
or hereof, proper provision shall be made so that each holder of a
Right (except as provided below and in SECTION 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement
and subject to the terms of the Company's certificate of incorporation,
in lieu of shares of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a SECTION
11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the current market price (determined pursuant to SECTION 11(d)(i)
hereof) per share of Common Stock on the date of such first occurrence
(such number of shares being referred to herein as the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's certificate of incorporation but
not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing SUBPARAGRAPH (ii)
of this SECTION 11(a), the Company shall: (A) determine the excess of
(1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such excess
being hereinafter referred to as the "Spread"), and (B) with respect to
each Right, make adequate provision to substitute for the Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of Directors of the
Company has deemed to have the same value as shares of Common Stock
(such shares of preferred stock being referred to as "common stock
equivalents")), (4) debt securities of the Company, (5) other assets,
or (6) any combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by
the Board of Directors of the Company; PROVIDED, HOWEVER, if the
Company
14
shall not have made adequate provision to deliver value pursuant to
CLAUSE (b) above within thirty (30) days following the later of (x) the
first occurrence of a SECTION 11(a) (ii) Event and (y) the date on
which the Company's right of redemption pursuant to SECTION 23(a)
expires (the later of (x) and (y) being referred to herein as the
"SECTION 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company determines in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the SECTION 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
extended being hereinafter referred to as, the "Substitution Period").
To the extent that the Company determines that some action need be
taken pursuant to the first and/or second sentences of this SECTION
11(a)(iii), the Company (x) shall provide, subject to SECTION 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. For purposes of this SECTION 11(a)(iii), the value of the
Common Stock shall be the current market price (as determined pursuant
to SECTION 11(d)(i) hereof) per share of the Common Stock on the
SECTION 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock
on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options, or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("equivalent
preferred stock")) or securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to SECTION 11(d)(ii)
hereof) per share of Preferred Stock 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 shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date, plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock
to be offered for subscription or purchase (or into which the convertible
15
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in SECTION 11(b), hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current market price (as determined pursuant to
SECTION 11(d)(ii) hereof) per share of Preferred Stock on such record date, less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such current market price (as determined pursuant to SECTION 11(d)(ii) hereof
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to SECTION 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to SECTION
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
Common Stock for the ten (10) consecutive Trading Days immediately following
such date; PROVIDED, HOWEVER, that in the event that the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, 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 properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or in case no
16
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 shares of Common Stock 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 shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
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 shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares of such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of the
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current market
price" per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in CLAUSE (i) of this SECTION 11(d) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in CLAUSE (i) of this SECTION 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock occurring after
the date of this Agreement) multiplied by the current market price per share of
the Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this SECTION 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common Stock
or other share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this SECTION 11(e), any adjustment
required by this SECTION 11 shall be made no later
17
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to SECTION 11(a)(ii)
or SECTION 13(a) hereof, the holder of any Right thereafter exercised becomes
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to provisions
with respect to the Preferred Stock contained in SECTIONS 11(a), (b), (c), (e),
(g), (h), (i), (j), (k) and (m), and the provisions of SECTIONS 7, 9, 10, 13,
and 14 hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) All rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in
SECTION 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in SECTIONS 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase at the adjusted Purchase Price, that number of one one-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share of Preferred
Stock 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.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of shares of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of shares or fractions of a share of
Preferred Stock 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
one-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 Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this SECTION 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights 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
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender
18
thereof, if required by the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Rights
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 Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares or fractions of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share of Preferred Stock
and the number of shares which were expressed in the initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the par value, if any, of the shares of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Preferred Stock at such adjusted Purchase Price.
(l) 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 issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any share
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
SECTION 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with SECTION 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with SECTION 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to
19
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with SECTION
11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of SECTION 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will 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 diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 and SECTION 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with SECTION 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and the Rights Agent shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merger with and into,
any other Person (other than a Subsidiary of the Company in a transaction which
complies with SECTION 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with
20
SECTION 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with SECTION 11(o) hereof), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in SECTION 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a SECTION 13 Event (or,
if a SECTION 11(a)(ii) Event has occurred prior to the first occurrence of a
SECTION 13 Event, multiplying the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a SECTION 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a SECTION 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the current market price (determined pursuant to SECTION 11(d)(i)
hereof) per share of the common stock of such Principal Party on the date of
consummation of such SECTION 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such SECTION 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of SECTION 11 hereof shall
apply only to such Principal Party following the first occurrence of a SECTION
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its common
stock) in connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of common stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of SECTION 11(a)(ii) hereof shall be of no effect following the first occurrence
of any SECTION 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in CLAUSE (x) or (y) of
the first sentence of SECTION 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
21
(ii) in the case of any transaction described in CLAUSE (z) of the
first sentence of SECTION 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; PROVIDED, HOWEVER, that
in any such case, (1) if the common stock of such Person is not at such
time and has not been continuously over the preceding twelve (12) month
period registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the common stock
of which is and has been so registered, "Principal Party" shall refer
to such other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person, the common stocks of
two or more of which are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer of the common
stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its common stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
SECTION 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
Providing for the terms set forth in PARAGRAPHS (a) and (b) of this SECTION 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
SECTION 13, the Principal Party will:
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of it Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this SECTION 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a SECTION 13 Event
shall occur at any time after the occurrence of a SECTION 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in SECTION 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, SECTION
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of SECTION 13(a) if:
(i) such transaction is consummated with a person or Persons who
acquired shares of Common Stock pursuant to a tender offer or exchange
offer for all outstanding shares of Common Stock that complies with the
provisions of SECTION 11(a)(ii)(b) hereof (or a wholly owned subsidiary
of any such Person or Persons), (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose
shares where purchased pursuant to such tender offer or exchange offer,
and (iii) the form of
22
consideration being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this SECTION
13(d), all Rights hereunder shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in SECTION 11(P) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to 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 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 of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this SECTION 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
SECTION 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of
23
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this SECTION 14(c), the current market value of
one share of Common Stock (as determined pursuant to SECTION 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) 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, except as permitted by this SECTION 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement other than rights of action vested in the Rights Agent pursuant to
SECTION 18 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
SECTION 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
24
(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, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of shares of Preferred Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in SECTION 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim or liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any 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
25
any corporation succeeding to the corporate trust business of the Rights Agent
or any Successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; PROVIDED, HOWEVER, 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 Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights either in the name of the predecessor
or in the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases the Rights Certificates shall have
the full force provided in the Rights 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, but all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chief Executive Officer, the Chief Operating Officer, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
fully authorization by 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 gross
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 Rights
Certificates or be required to verify the
26
same (except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of SECTION 11 or
SECTION 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock
or Preferred Stock will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, the Chief Operating Officer, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any such officer of the Company actually receives such application, unless any
such officer has consented in writing to an effective date in the case of an
omission), unless the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
27
(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, HOWEVER, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to CLAUSE 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be. If the Company fails to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation by the resigning Rights Agent, the such
resigning Rights Agent or any registered holder of any Rights Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of the State of Texas (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of Texas), in good standing, having an office in any
one or more of such States, which is authorized under such laws to exercise
corporate trust or shareholder services 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
$100,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties, and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this SECTION 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
28
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; PROVIDED, HOWEVER that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to SUBSECTION (b) of this SECTION 23 or by stockholder action pursuant
to SUBSECTION (c) of this SECTION 23 and shall not be redeemed in any other
manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the close of business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the close of business on the tenth day
following the Record Date), or (ii) the Final Expiration Date, redeem all but
not less than all the outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
PROVIDED, HOWEVER that if, following the occurrence of a Stock Acquisition Date
and following the expiration of the right of redemption hereunder but prior to
any Triggering Event, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event such that such Person is thereafter a Beneficial Owner of 10%
or less of the outstanding shares of Common Stock, and (ii) there are no other
Persons, immediately following the occurrence of the event described in CLAUSE
(i), who are Acquiring Persons, then the right of redemption shall be reinstated
and thereafter be subject to the provisions of this SECTION 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a SECTION 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired.
(c) (i) In the event the Company receives an Offer from any Offeror,
the Board of Directors of the Company shall call a special meeting of holders of
Voting Stock (the "Special
29
Meeting") for the purpose of voting on a resolution requesting the Board of
Directors to accept such offer, as such Offer may be amended or revised by the
Offeror from time to time to increase the price per share in cash to be paid to
holders of shares of Voting Stock (the "Resolution"). The Special Meeting shall
be held on a date selected by the Board of Directors, which date shall not be
less than sixty (60) and not more than one hundred twenty (120) days after the
later of (A) the date such Offer is received by the Company (the "Offer Date")
and (B) the date of any meeting of holders of Voting Stock already scheduled as
of the Offer Date; PROVIDED, HOWEVER, that if (x) such other meeting shall have
been called for the purpose of voting on a resolution with respect to another
Offer and (y) the Offer Date shall be not later than fifteen (15) days after the
date such other Offer was received by the Company, then both the Resolution and
such other resolution shall be voted on at such meeting and such meeting shall
be deemed to be the Special Meeting. The Board of Directors shall set a date for
determining the recordholders of Voting Stock entitled to notice of and to vote
at the Special Meeting in accordance with the Company's certificate of
incorporation and bylaws and with applicable law. At the Offeror's request, the
Company shall include in any proxy soliciting material prepared by it in
connection with the Special Meeting proxy soliciting material submitted by the
Offeror; PROVIDED, HOWEVER, that the Offeror shall by written agreement with the
Company contained in or delivered with such request indemnify the Company
against any and all liabilities resulting from any misstatements, misleading
statements and omissions contained in the Offeror's proxy soliciting material
and agrees to pay the Company's incremental costs incurred as a result of
including such material in the Company's proxy soliciting material.
Notwithstanding the foregoing, no Special Meeting shall be held from and after
such time as any Person becomes an Acquiring Person, and any Special Meeting
scheduled prior to such time and not theretofore held shall be canceled.
(ii) If at the Special Meeting the Resolution receives the affirmative
vote of a majority of the shares of Voting Stock outstanding as of the record
date of the Special Meeting, then all of the Rights shall be redeemed by such
action of holders of Voting Stock at the Redemption Price, effective immediately
prior to the consummation of any tender offer (provided that such tender offer
is consummated prior to sixty (60) days after the date of the Special Meeting)
pursuant to which any Person offers to purchase all of the shares of Voting
Stock held by Persons other than such Person and its Affiliates and Associates
at a price per share in cash equal to or greater than the price contained in the
Resolution approved at the Special Meeting; PROVIDED, HOWEVER, that the Rights
shall not be redeemed at any time from and after such time as any Person becomes
and Acquiring person.
(iii) Nothing contained in this SUBSECTION (c) shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any Offer, or to recommend that holders of shares of
Voting Stock reject any tender offer, or to take any other action (including,
with-out limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative Offers or other
proposals to the Special Meeting) with respect to any Offer or any tender offer
that the Board of Directors believes is necessary or appropriate in the exercise
of such fiduciary duty.
30
(iv) Nothing in this SUBSECTION (c) shall be construed as limiting or
prohibiting the Company or any Offeror from proposing or engaging, at any time,
in any acquisition, disposition or other transfer of any securities of the
Company, any merger or consolidation involving the Company, any sale or other
transfer of assets of the Company, any liquidation, dissolution or winding-up of
the Company, or any other business combination or other transaction, or any
other action by the Company or such Offeror; PROVIDED, HOWEVER, that the holders
of Rights shall have the rights set forth in this Agreement with respect to any
such acquisition, disposition, transfer, merger, consolidation, sale,
liquidation, dissolution, winding-up, business combination, transaction or
action.
(d) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to SUBSECTION (b) of this
SECTION 23, or upon the effectiveness of the redemption of the Rights pursuant
to SUBSECTION (c) of this SECTION 23, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly give public notice of any such
redemption; PROVIDED, HOWEVER, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within ten (10)
days after such action of the Board of Directors ordering the redemption of the
Rights pursuant to SUBSECTION (b) or the effectiveness of the redemption of the
Rights pursuant to SUBSECTION (c), as the case may be, the Company shall mail a
notice of redemption to all holders of the then outstanding Rights 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.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with SECTION 11(o) hereof), 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 transaction or a series of related 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 (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with SECTION 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with SECTION 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the
31
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 shares of Preferred Stock, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by CLAUSE (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.
(b) In case any of the events set forth in SECTION 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and 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 under SECTION 11(a)(ii) hereof, and (ii) all
reference in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
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 Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Proler International Corp.
0000 Xxx Xxxxxx, Xxxxx 000
P. O. Xxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Subject to the provisions of SECTION 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
KeyCorp Shareholder Services, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this SECTION 26, the Company and the
Rights Agent shall, if the
32
Company so directs, supplement or amend any provision of this Agreement without
the approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the penultimate sentence of
this SECTION 26, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Rights Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person); PROVIDED,
this Agreement may not be supplemented or amended to lengthen, pursuant to
CLAUSE (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this SECTION 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of shares of Preferred
Stock for which a Right is exercisable prior to a Triggering Event. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board to any liability to the holders of the Rights.
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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common
33
Stock) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock).
Section 30. SEVERABILITY. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgement that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in SECTION 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
SECTION 31. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT AND EACH RIGHTS
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAW
OF THE STATE OF DELAWARE AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: PROLER INTERNATIONAL CORP.
By:/s/ X.X. XXX By:/s/ XXXXXX X. XXXXXXXXX
Name: XXXXXXX X. XXX Name: XXXXXX X. XXXXXXXXX
Title: SECRETARY Title: PRESIDENT
ATTEST: KEYCORP SHAREHOLDER SERVICES,
INC.
By:/s/ XXXXXXX X. XXXXXXXX By:/s/ XXX X. XXXXXXXXX
Name: XXXXXXX X. XXXXXXXX Name: XXX X. XXXXXXXXX
Title: VICE PRESIDENT Title: VICE PRESIDENT
35
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- _________Rights
NOT EXERCISABLE AFTER OCTOBER 10, 1998 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1
Rights Certificate
Proler International Corp.
This certifies that Proler International Corp. , 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 ______________, 19__ (the "Rights Agreement"),
between Proler International Corp., Delaware corporation (the "Company"), and
KeyCorp Shareholder Services, Inc. (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 p.m. (Houston time) on October 10, 1998, at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of $200.00 per one one-hundredth of a share
(the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The Purchase Price shall be paid in cash. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-hundredth of a share set forth above, are the number and Purchase Price as
of _____________, 19__, based on the Preferred Stock as constituted at such
date.
------------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
Upon the occurrence of a Triggering Event (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder thereof shall have any right with respect to such Rights from and after
the occurrence of such SECTION 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities, which may be
Purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, 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 Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable upon the exercise hereof, nor shall anything
A-2
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ___________, 19__
ATTEST: PROLER INTERNATIONAL CORP.
By:__________________ By:_______________________
Name:________________ Name:_____________________
Title:_______________ Title:____________________
Countersigned:
KEYCORP SHAREHOLDER SERVICES, INC.
By:____________________
Authorized Signature
A-3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED hereby sells, assigns, and
transfers unto ______________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:__________________, 19__
_______________________
Signature
Signature Guaranteed:
1
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) After due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________, 19__
________________________
Signature
Signature Guaranteed:
2
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
3
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate)
TO: Proler International Corp.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to Purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please 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
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________
(Please print name and address)
Dated: ____________, 19__
_____________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined Pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________, 19__
____________________
Signature
Signature Guaranteed:
2
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
3
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On February 28, 1996, the Board of Directors of Proler International
Corp. (the "Company") declared a dividend distribution of one-third of one Right
for each outstanding share of Common Stock, $1.00 par value per share ("Common
Stock") of the Company to stockholders of record at ____ on February 28, 1996
(the "Record Date"). Each Whole Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $1.00 par value (the "Preferred Stock") at a Price of $200.00
per one one-hundredth of a share (the "Purchase Price"), subject to adjustment.
The Purchase Price shall be paid in cash. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and KeyCorp Shareholder Services, Inc. as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) ten business days following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be evidenced by the Common
Stock Certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after February 28, 1996
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and Xxxx
expire at the close of business on 10 years after the Record Date, unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that, at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
its Common Stock is not changed or exchanged, (ii) a Person becomes the
beneficial owner of more than 30% of the then outstanding shares of Common Stock
(unless such Person first acquires 30% or more of the outstanding Common Stock
pursuant to a cash tender offer for all of the Common Stock (a)
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which offer increases such Person's beneficial ownership to 80% or more and is
followed within 90 days by completion of a business combination in which all
remaining stockholders of the Company receive cash consideration per share at
least equal to the highest price paid in connection with such offer, or (b)
which is found by the Board of Directors to be at a price and on terms that are
fair and otherwise to be in the best interests of the Company and its
stockholders), (iii) an Acquiring Person engages in one or more "self-dealing"
transactions as set forth in the Rights Agreement, or (iv) during such time as
there is an Acquiring Person, certain events occur which result in such
Acquiring Person's ownership interest being increased by more than 1% (e.g., a
reverse stock split), each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. Notwithstanding any of the foregoing, following
the occurrence of any of the events set forth in CLAUSES (i), (ii), (iii) and
(IV) of this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not exercisable following the
occurrence of any of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation (other than a
merger following a tender offer of the type described in the parenthetical in
CLAUSE (ii) of the first sentence of the second preceding paragraph), or (ii)
50% or more of the Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously have been voided as set
forth above) shall thereafter have the right to receive, upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the Right. The events set forth in this paragraph and in the second
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock, or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock will be issued upon the exercise
of any Rights (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Xxxx, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right. After the redemption
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period has expired, the Company's right of redemption may be reinstated if any
Acquiring Person reduces his beneficial ownership to 10% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company. Immediately upon the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.01 redemption price.
In addition, the Rights may be redeemed by stockholder action at $.01
per Right when certain procedures are complied with in connection with an
acquisition proposal. If a bidder who does not own more than 1% of the Company's
stock (and who has not within one year prior to making an acquisition proposal
owned in excess of 1% of the Common Stock and disclosed a plan or intention to
acquire or influence control of the Company) proposes to buy all of the
Company's stock for cash at a price which a nationally recognized investment
banker selected by the bidder states in writing is fair, and the bidder has
obtained full financing commitments (or otherwise has full financing) to
complete the transaction and complies with certain procedural requirements, then
the Company, upon the request of the bidder, will hold a special meeting of
stockholders to consider a resolution requesting the Board of Directors to
accept the bidder's proposal. (The special meeting procedure would also be
available to a bidder who owns more than 1% of the Company's stock on February
28, 1996, if such holder does not increase his ownership interest by more than
1% prior to making a proposal. If a majority of the outstanding shares entitled
to vote on the proposal vote in favor of the resolution, then, so long as no
person or group acquires 20% or more of the Company's Common Stock, the Rights
will be automatically redeemed immediately prior to the consummation of any
tender offer (whether made by the bidder or by anyone else, provided the tender
offer is consummated within 60 days of the special stockholders meeting) for all
of the Company's stock at a price per share in cash no less than the price
offered by the bidder and approved by the stockholders.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Rights
Agreement; PROVIDED, HOWEVER, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-B dated
February 29, 1996. A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
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