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Exhibit 4.2
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FORM OF
RIGHTS AGREEMENT
DATED AS OF JANUARY 16, 1998
BETWEEN
HAWK CORPORATION
AND
CONTINENTAL STOCK
TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
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TABLE OF CONTENTS
Page
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Defined Term Cross Reference Sheet.........................................................................iv
Section 1. Certain Definitions.............................................................................1
Section 2. Appointment of Rights Agent.....................................................................6
Section 3. Issue of Rights Certificates....................................................................6
Section 4. Form of Rights Certificate......................................................................8
Section 5. Countersignature and Registration...............................................................9
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates...................................................................9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.................................................................................10
Section 8. Cancellation and Destruction of Rights
Certificates...................................................................................12
Section 9. Reservation and Availability of Preferred Stock................................................13
Section 10. Preferred Shares Record Date...................................................................14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.....................................................................14
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares...............................................................................21
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power........................................................................21
Section 14. Fractional Rights and Fractional Shares........................................................23
Section 15. Rights of Action...............................................................................25
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Section 16. Agreement of Rights Holders....................................................................25
Section 17. Rights Certificate Holder Not Deemed a
Stockholder....................................................................................26
Section 18. Concerning the Rights Agent....................................................................26
Section 19. Merger or Consolidation or Change of Name of
Rights Agent...................................................................................27
Section 20. Duties of Rights Agent.........................................................................27
Section 21. Change of Rights Agent.........................................................................29
Section 22. Issuance of New Rights Certificates............................................................30
Section 23. Redemption and Termination.....................................................................30
Section 24. Exchange.......................................................................................32
Section 25. Notice of Certain Events.......................................................................33
Section 26. Notices........................................................................................34
Section 27. Supplements and Amendments.....................................................................34
Section 28. Determination and Actions by the Board of
Directors, etc.................................................................................35
Section 29. Successors.....................................................................................35
Section 30. Benefits of this Agreement.....................................................................35
Section 31. Severability...................................................................................36
Section 32. Governing Law..................................................................................36
Section 33. Counterparts...................................................................................36
Section 34. Descriptive Headings...........................................................................36
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DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person..................................................................................Section 1(a)
Act...............................................................................................Section 1(b)
Adjustment Shares............................................................................Section 11(a)(ii)
Adjusted Number of Shares...................................................................Section 11(a)(iii)
Adjusted Purchase Price.....................................................................Section 11(a)(iii)
Affiliate.........................................................................................Section 1(c)
Agreement.............................................................................................Preface
Associate........................................................................................Section 1 (c)
Beneficial Owner..................................................................................Section 1(d)
beneficially own..................................................................................Section 1(d)
Business Day......................................................................................Section 1(e)
capital stock equivalent....................................................................Section 11(a)(iii)
close of business.................................................................................Section 1(f)
Class A Common Shares.............................................................................Section 1(g)
Class B Common Shares.............................................................................Section 1(h)
Common Shares.....................................................................................Section 1(i)
Company...............................................................................................Preface
current per share market price...............................................................Section 11(d)(ii)
Disinterested Director............................................................................Section 1(j)
Distribution Date.................................................................................Section 1(k)
Effective Date........................................................................................Preface
equivalent preferred shares......................................................................Section 11(b)
Exchange Act......................................................................................Section 1(l)
Exchange Ratio...................................................................................Section 24(a)
Exempt Event......................................................................................Section 1(m)
Exempt Person.....................................................................................Section 1(n)
Final Expiration Date.............................................................................Section 1(o)
Interested Stockholder............................................................................Section 1(p)
NASDAQ............................................................................................Section 1(q)
Permitted Offer...................................................................................Section 1(r)
Person............................................................................................Section 1(s)
Preferred Shares..................................................................................Section 1(t)
Principal Party..................................................................................Section 13(b)
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Proration Factor............................................................................Section 11(a)(iii)
Purchase Price....................................................................................Section 1(u)
Redemption Date...................................................................................Section 1(v)
Redemption Price..............................................................................Section 23(a)(i)
Right.................................................................................................Preface
Rights Certificate................................................................................Section 3(a)
Rights Agent..........................................................................................Preface
Rights Agreement..................................................................................Section 3(c)
Section 11(a)(ii) Event...........................................................................Section 1(w)
Section 13 Event..................................................................................Section 1(x)
Security......................................................................................Section 11(d)(i)
Shares Acquisition Date...........................................................................Section 1(y)
Subsidiary........................................................................................Section 1(z)
Summary of Rights.................................................................................Section 3(b)
then outstanding.............................................................................Section 1(d)(iii)
Trading Day...................................................................................Section 11(d)(i)
Triggering Event.................................................................................Section 1(aa)
voting securities................................................................................Section 13(a)
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FORM OF
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of January 16, 1998 (the "Agreement"), is
made and entered into between HAWK CORPORATION, a Delaware corporation (the
"Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Rights Agent (the
"Rights Agent").
On November 13, 1997, the Board of Directors of the Company authorized and
declared a dividend of one preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding at the close of
business on January 16, 1998 (the "Effective Date"), each Right representing the
right to purchase one one-thousandth of a share of Series E Preferred Stock, par
value $0.01 par value, of the Company, having the rights, powers and preferences
set forth in the form of Certificate of Designation attached hereto as Exhibit
A, upon the terms and subject to the conditions hereinafter set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Effective Date and the
Distribution Date (as such terms are hereinafter defined), provided, however,
that Rights may be issued with respect to Common Shares that shall become
outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with the provisions
of Section 22 of this Agreement.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby 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
15% or more of the then outstanding Class A Common Shares (other than as a
result of a Permitted Offer (as hereinafter defined)) or was such a Beneficial
Owner at any time after the date hereof, whether or not such Person continues to
be the Beneficial Owner of 15% or more of the then outstanding Class A Common
Shares, but shall not include the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock ownership plan of the Company or of any
Subsidiary of the Company or any person organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant to the terms of any
such plan. In any case, an Exempt Person (as such term is hereinafter defined),
so long as such Person remains an Exempt Person, is not an Acquiring Person and
an acquisition of Class A Common Shares by an Exempt Person is not a Triggering
Event, so long as such acquisition is an Exempt Event.
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person:" (i) as the result of an acquisition of Class A Common Shares by the
Company that, by reducing the number
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of shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Class A Common Shares then
outstanding; (ii) as the result of such Person becoming the Beneficial Owner of
15% or more of the Class A Common Shares then outstanding as determined above
solely as a result of an Exempt Event; provided, however, that if a Person
becomes the Beneficial Owner of 15% or more of the Class A Common Shares then
outstanding by reason of such a share acquisition by the Company or the
occurrence of such an Exempt Event and such Person shall, after becoming the
Beneficial Owner of any such Class A Common Shares, become the Beneficial Owner
of any additional Class A Common Shares by any means whatsoever (other than as a
result of the subsequent occurrence of an Exempt Event, a share acquisition by
the Company, a stock dividend or a subdivision of the Class A Common Shares into
a larger number of shares or a similar transaction), then such Person shall be
deemed to be an "Acquiring Person;" or (iii) if (A) within five Business Days
after such Person would otherwise have become an Acquiring Person (but for the
operation of this subclause (iii)), such Person notifies the Board of Directors
that such Person did so inadvertently, and (B) within two Business Days after
such notification (or such greater period of time as may be determined by action
of the Board of Directors, but in no event greater than five Business Days),
such Person divests itself of a sufficient number of Class A Common Shares so
that such Person is the Beneficial Owner of less than 15% of the outstanding
Class A Common Shares.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act; provided, however, that, for purposes of this Agreement, the terms
"Affiliate" and "Associate" shall not include any Person that is an Exempt
Person.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or Associates
has (A) the right or obligation to acquire (whether such right or obligation is
exercisable or effective 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 (other than the
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or
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consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); and provided further, that prior to the occurrence of a
Triggering Event, a Person shall not be deemed to be the "Beneficial Owner" of
or to "beneficially own" securities issuable upon exercise of the Rights; or
(iii) that 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) (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to Section l(d)(ii)(B)) or
disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, (x) the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder, and (y) no Person is to be deemed
a "Beneficial Owner" of, or to "beneficially own," any securities owned by any
other Person that is an Exempt Person.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday or a day on which banking institutions in the State of Ohio are
authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00 P.M., Cleveland,
Ohio time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Cleveland, Ohio time, on the next succeeding
Business Day.
(g) "Class A Common Shares" when used with reference to the Company shall
mean shares of the Class A Common Stock, par value $0.01 per share, of the
Company.
(h) "Class B Common Shares" when used with reference to the Company shall
mean shares of the Class B Non-Voting Common Stock, par value $0.01 per share,
of the Company.
(i) "Common Shares" when used with reference to the Company shall mean the
shares of Class A Common Stock and Class B Common Stock. "Common Shares" when
used with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
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(j) "Disinterested Director" means any director of the Board of Directors
of the Company who is not (i) a Person proposing or attempting to effect a
business combination or similar transaction with the Company (including, without
limitation, a merger, tender offer or exchange offer, sale of substantially all
of the Company's assets, or liquidation of the Company's assets) or any
Affiliate or Associate of such Person or Person acting directly or indirectly on
behalf of, or as a representative of, or in concert with, any such Person,
Affiliate or Associate, (ii) an Acquiring Person, an Affiliate or Associate of
an Acquiring Person, or a Person acting directly or indirectly on behalf of, or
as a representative of, or in concert with, an Acquiring Person or an Affiliate
or Associate of an Acquiring Person, or (iii) any Person who was directly or
indirectly proposed or nominated as a director of the Company by an Acquiring
Person.
(k) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(m) "Exempt Event" shall mean (i) the acquisition of additional Common
Shares by an Exempt Person, so long as such Person does not cease to be an
Exempt Person under Section 1(n), or (ii) with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Class A Common Shares
solely as a result of the occurrence of a Triggering Event and the effect of
such Triggering Event on the last proviso of Section 1(d)(ii), other than a
Triggering Event in which such Person becomes an Acquiring Person.
(n) "Exempt Person" shall mean: (i) the Company; (ii) any Subsidiary; (iii)
any employee benefit plan of the Company or of any Subsidiary; (iv) any Person
holding Common Shares for any such employee benefit plan or for employees of the
Company or of any Subsidiary pursuant to the terms of such employee benefit
plan; (v) Xxxxxx X. Xxxxxxx, his spouse or issue, any trust of which Xx. Xxxxxxx
and/or his spouse is the grantor of or of which Xx. Xxxxxxx, his spouse, his
issue or any charity is a beneficiary, the Xxxxxxx Family Limited Partnership,
an Ohio limited partnership, and any Person controlled, directly or indirectly,
by Xx. Xxxxxxx; (vi) Xxxxxx X. Xxxxxxxx, his spouse or issue, any trust of which
Xx. Xxxxxxxx and/or his spouse is the grantor of or of which Xx. Xxxxxxxx, his
spouse, his issue or any charity is a beneficiary, the Xxxxxxxx Family Limited
Partnership, an Ohio limited partnership, and any Person controlled, directly or
indirectly, by Xx. Xxxxxxxx; and (vii) Xxxxxxx X. X'Xxxxx, Xx., his spouse or
issue, any trust of which Xx. X'Xxxxx and/or his spouse is the grantor of or of
which Xx. X'Xxxxx, his spouse, his issue or any charity is a beneficiary, and
any Person controlled, directly or indirectly, by Xx. X'Xxxxx; provided,
however, that an Exempt Person shall cease to be an Exempt Person at the time
that all or any part of such Exempt Person's interest in the Common Shares
becomes reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report) as part of a "group" (as that term is used in Rule 13d- 5(b)
of the General Rules and Regulations under the Exchange Act, or any successor
provision) that beneficially owns 15% or more of the then outstanding Class A
Common Shares and includes one or more Persons (including any Affiliate or
Associate thereof) who are not Exempt Persons and who individually or in the
aggregate beneficially own in excess of 1% of the then outstanding Class A
Common Shares (other than any group that may arise solely because of the (A)
Shareholders'
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Agreement, dated June 30, 1995, by and among Xxxxxx X. Xxxxxxx, the Xxxxxxx
Family Limited Partnership, Xxxxxx X. Xxxxxxxx, the Xxxxxxxx Family Limited
Partnership, Xxxxx X. Xxxxxx, the Xxxxxx Family Limited Partnership, Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxx Xxxxxxxxx, Xxxxxxx X. Xxxxxx and the Company, (B) Stockholders' Voting
Agreement, dated November 22, 1996, by and among Xxxxxx X. Xxxxxxx, the Xxxxxxx
Family Limited Partnership, Xxxxxx X. Xxxxxxxx, the Xxxxxxxx Family Limited
Partnership, Xxxxx X. Xxxxxx, the Xxxxxx Family Limited Partnership and the
Company and/or (C) Stockholders' Agreement, dated as of June 6, 1991, by and
among Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx and Xxx X. Xxxxx,
each as may be amended from time to time); and provided further that each of the
Persons named in Section 1(n)(vii) shall cease to be an Exempt Person at the
closing of the Company's initial public offering.
(o) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(p) "Interested Stockholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest which represents
in excess of 5% of the total combined economic or voting power of such Person,
or any other Person acting directly or indirectly on behalf of, or in concert
with, any such Acquiring Person, Affiliate or Associate.
(q) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.
(r) "Permitted Offer" shall mean a tender or exchange offer for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the Disinterested Directors to be adequate (taking into account all factors
that such directors deem relevant) and otherwise in the best interests of the
Company and its stockholders (other than the Person or any Affiliate or
Associate thereof on whose behalf the offer is being made) taking into account
all factors that such directors may deem relevant.
(s) "Person" shall mean any individual, firm, partnership, corporation,
limited liability company, trust, association, joint venture or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(t) "Preferred Shares" shall mean the Series E Preferred Stock, $0.01 par
value per share, of the Company, having the rights, powers and preferences set
forth in the form of Certificate of Designation attached hereto as Exhibit A.
(u) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof, subject to adjustment as set forth in Section 7(b) hereof.
(v) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(w) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
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(x) "Section 13 Event" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof.
(y) "Shares 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 the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such; provided, that if
such Person is determined not to have become an Acquiring Person pursuant to
Section 1(a) hereof, then no Shares Acquisition Date shall be deemed to have
occurred.
(z) "Subsidiary" of any Person shall mean any corporation or other Person
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(aa) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
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 Common Shares) 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. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agents and any Co-Rights Agents shall be as the
Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the Shares Acquisition Date or (ii) the close
of business on the tenth day (or such later date as may be determined by action
of the Company's Board of Directors) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan or employee stock ownership plan of the Company or of any
Subsidiary of the Company or any Person organized, appointed or established by
the Company or of any Subsidiary of the Company for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan or employee stock ownership plan of the Company or of any
Subsidiary of the Company or any Person or entity organized, appointed or
established by the Company or of any Subsidiary of the Company for or pursuant
to the terms of any such plan) to commence (which intention to commence remains
in effect for five Business Days after such announcement), a tender or exchange
offer the consummation of which would result in any Person becoming an Acquiring
Person (including, in the case of both (i) and (ii), any such date which is
after the date of this Agreement and prior to the issuance of the Rights), the
earlier of such dates being herein referred to as the "Distribution Date," (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Rights Certificates) and
not by separate Rights Certificates, and (y) the right to receive Rights
Certificates will be transferable only
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in connection with the transfer of the underlying Common Shares (including a
transfer to the Company); provided, however, that if a tender offer is
terminated prior to the occurrence of a Distribution Date, then no Distribution
Date shall occur as a result of such tender offer. As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate, in substantially the form of
Exhibit B hereto (a "Rights Certificate"), evidencing one Right for each Common
Share so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Effective Date, the Company
will send a copy of a Summary of Rights to Purchase Series E Preferred Shares,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of
the close of business on the Effective Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Effective Date, until the Distribution Date, the Rights
will be evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights attached thereto. Until
the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Effective Date, with or without a copy of the Summary
of Rights attached thereto, shall also constitute the transfer of the Rights
associated with such Common Shares. As a result of the execution of this
Agreement on January 16, 1998, each Common Share outstanding as of the Close of
Business on January 16, 1998 shall, subject to the terms and conditions of this
Agreement, also represent one Right and shall, subject to the terms and
conditions of this Agreement, represent the right to purchase one one-thousandth
of a share of Preferred Stock.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Effective Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall be
deemed also 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 a Rights Agreement between
Hawk Corporation and Continental Stock Transfer & Trust
Company, as Rights Agent, dated as of January 16, 1998 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of Hawk Corporation.
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. Hawk Corporation will mail to the holder of this
certificate a summary of the Rights Agreement (as in effect on
he date of mailing) without charge
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promptly after receipt of a written request therefor. Under
certain circumstances, Rights that are or were beneficially
owned by Acquiring Persons or their Affiliates or Associates
(as such terms are defined in the Rights Agreement) and any
subsequent holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Effective Date but prior to the Distribution Date, any Rights associated with
such Common Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. Form of Rights Certificate.
(a) The Rights Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Effective Date, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a Preferred Share as
shall be set forth therein at the price per one one-thousandth of a Preferred
Share 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 represents Rights which are null and void pursuant to Section 7(e)
of this Agreement, any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, and any Rights
Certificate transferred pursuant to a plan, arrangement or understanding that a
majority of the Disinterested Directors has determined is part of or has, as a
primary purpose or effect, the avoidance of Section 7(e) shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and
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void in the circumstances specified in Section 7(e) of the Rights
Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights Certificate.
Section 5. Countersignature and Registration. The Rights Certificates shall
be executed on behalf of the Company by its Chairman of the Board, its
Vice-Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the 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 any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated as the appropriate place for surrender of such
Rights Certificate for 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
certificate number 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. 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 earlier of the Redemption Date or the Final
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of one one-thousandths of a Preferred Share (or, following a Triggering Event,
other securities, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights 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 shall have completed and signed
the
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certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to 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.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder 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) in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the appropriate 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 for the total number of one one-thousandths of a Preferred Share (or other
securities, as the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the close of business on January
16, 2008 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), (iii) the
time at which the Rights are exchanged as provided in Section 24 hereof, or (iv)
the consummation of a transaction contemplated by Section 13(d) hereof.
(b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant to the exercise of a Right shall initially be $70.00, shall be subject
to adjustment from time to time as provided in the next sentence and in Sections
11 and 13(a) hereof and shall be payable in accordance with paragraph (c) below.
Anything in this Agreement to the contrary notwithstanding, in the event that,
at any time after the date of this Agreement and prior to the Distribution Date,
the Company shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment of dividends
in Common Shares) into a greater or lesser number of Common Shares, then in any
such case, each Common Share outstanding following such subdivision, combination
or consolidation shall continue to have a Right associated therewith and the
Purchase Price following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price immediately prior to
such event by a fraction the numerator of which
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shall be the total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total number
of Common Shares outstanding immediately following the occurrence of such event.
The adjustment provided for in the preceding sentence shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the appropriate form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the Preferred Shares
(or other securities, as the case may be) to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of such Rights
Certificate in accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent) certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company, in its sole discretion,
shall have elected to deposit the Preferred Shares issuable upon exercise of the
Rights hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares 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 requests, (ii) when appropriate, requisition from the
Company the amount of cash, if any, to be paid in lieu of issuance 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) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Rights Certificate. In the event that the Company
is obligated to issue other securities (including Common Shares) of the Company
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities are available for distribution by the
Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder pursuant
to Section 11(a)(ii), the Rights Agent shall return such Rights Certificate to
the registered holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement and if less
than all the Rights represented by such Rights Certificate were so exercised,
the Rights Agent shall indicate on the Rights Certificate the number of Rights
represented thereby which continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall exercise
(except pursuant to Section 11(a)(ii)) less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject
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to the provisions of Section 14 hereof, or the Rights Agent shall place an
appropriate notation on the Rights Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of any Affiliate or
Associate thereof) 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 a continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that a majority of the
Disinterested Directors 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 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 shall have (i)
completed and signed the certificate contained in the appropriate 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 (other than a partial
exercise), transfer, split up, combination or exchange shall, if surrendered to
the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Rights Agreement.
The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other 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 Preferred Shares. The Company
covenants and agrees that at all times prior to the occurrence of a Section
11(a)(ii) Event it will cause to be
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reserved and kept available out of its authorized and unissued Preferred Shares,
or any authorized and issued Preferred Shares held in its treasury, the number
of Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights and, after the occurrence of a Section 11(a)(ii) Event,
shall, to the extent reasonably practicable, so reserve and keep available a
sufficient number of Common Shares (and/or other securities) which may be
required to permit the exercise in full of the Rights pursuant to this
Agreement.
So long as the Preferred Shares (and, after the occurrence of a Section
11(a)(ii) Event, Common Shares or any other securities) issuable 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 (or other securities) reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Preferred Shares (or Common Shares and/or other
securities, as the case may be) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any Preferred Shares (or Common Shares 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 which may be payable in respect of any transfer or delivery
of Rights Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in 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 Preferred Shares or
depositary receipts for Preferred Shares (or other securities, as the case may
be) upon the exercise of any Rights, until any such tax shall have 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 reasonable
satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as soon as practicable
following the Shares Acquisition Date (or, if required by law, at such earlier
time following the Distribution Date as so required), a registration statement
under 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 (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by Section 11(a)(ii).
The Company will also take such action as may be appropriate under the blue sky
laws of the various states.
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Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares 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 the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the Preferred Shares (or
Common Shares 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 Shares (or Common Shares and/or other
securities, as the case may be) transfer books of the Company are open.
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 the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares or (C) combine the
outstanding Preferred Shares into a smaller number of Preferred Shares or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a) 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 capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
If an event occurs which would require an adjustment under both Section 11(a)(i)
and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event that any Person, alone or together with its Affiliates
and Associates, shall become an Acquiring Person, then proper provision shall be
made so that each holder of a Right (except as provided below and in Section
7(e) hereof) shall, for a period of 60 days after the later of the occurrence of
any such event or the effective date of an appropriate registration statement
under the Act pursuant to Section 9 hereof, have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of Class A or Class B
Common Shares, as the case may be (or, in the discretion of the
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Board of Directors, one one-thousandths of a Preferred Share), as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
then number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product by 50% of the then current per share market
price of the Company's Class A Common Shares (determined pursuant to Section
11(d) hereof) on the date of such first occurrence (such number of shares being
referred to as the "Adjustment Shares"); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). Holders of Class B Common Shares that exercise Rights
associated with such Class B Common Shares in accordance with this Section
11(a)(ii) shall only be entitled to receive Class B Common Shares upon such
exercise.
(iii) In the event that there shall not be sufficient treasury shares or
authorized but unissued (and unreserved) Common Shares to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii) and the
Rights become so exercisable (and the Board of Directors has determined to make
the Rights exercisable into fractions of a Preferred Share), notwithstanding any
other provision of this Agreement, to the extent necessary and permitted by
applicable law, each Right shall thereafter represent the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, (x) a number of (or fractions of) Common Shares (up to the
maximum number of Common Shares which may permissibly be issued) and (y) one
one-thousandth of a Preferred Share or a number of (or fractions of) other
equity securities of the Company (or, in the discretion of the Board of
Directors, debt) which the Board of Directors has determined to have the same
aggregate current market value (determined pursuant to Sections 11(d)(i) and
(ii) hereof, to the extent applicable) as one Common Share (such number of, or
fractions of, Preferred Shares (or other equity securities or debt of the
Company) being referred to as a "capital stock equivalent"), equal in the
aggregate to the number of Adjustment Shares; provided, however, if sufficient
Common Shares and/or capital stock equivalents are unavailable, then the Company
shall, to the extent permitted by applicable law, take all such action as may be
necessary to authorize additional Common Shares or capital stock equivalents for
issuance upon exercise of the Rights, including the calling of a meeting of
stockholders; and provided, further, that if the Company is unable to cause
sufficient Common Shares and/or capital stock equivalents to be available for
issuance upon exercise in full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Shares upon exercise at
the Adjusted Purchase Price (as such terms are hereinafter defined). As used
herein, the term "Adjusted Number of Shares" shall be equal to that number of
(or fractions of) Common Shares (and/or capital stock equivalents) equal to the
product of (x) the number of Adjustment Shares and (y) a fraction, the numerator
of which is the number of Common Shares (and/or capital stock equivalents)
available for issuance upon exercise of the Rights and the denominator of which
is the aggregate number of Adjustment Shares otherwise issuable upon exercise in
full of all Rights (assuming there were a sufficient number of Common Shares
available) (such fraction being referred to as the "Proration Factor"). The
"Adjusted Purchase Price" shall mean the product of the Purchase Price and the
Proration Factor. The Board of Directors may, but shall not be required to,
establish
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procedures to allocate the right to receive Common Shares and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) In case the Company shall fix a record date for the issuance of rights
(other than the Rights), options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights and privileges as the Preferred Shares ("equivalent preferred shares"))
or securities convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares or
equivalent preferred shares) less than the then current per share market price
of the Preferred Shares (as determined pursuant to Section 11(d) hereof) on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current per share market price, and the denominator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon the exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by a majority of the
Disinterested 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. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) 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 then current per share market price (as determined pursuant to
Section 11(d) hereof) of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by a majority of the Disinterested
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) of the
portion of the assets or evidences of indebtedness so to be distributed or of
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such subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, 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, such other
exchange or market system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Disinterested Directors if the Disinterested Directors
constitute a majority of the Board of Directors or, if the Disinterested
Directors do not constitute a majority of the Board of Directors, by an
independent investment banking firm selected by the Board of Directors. If on
any such date no such market maker is making a market in the Security, the fair
value of the Security on such date as determined in good faith by the
Disinterested Directors if the Disinterested Directors constitute a majority of
the Board of Directors or, if the Disinterested Directors do not constitute a
majority of the Board of Directors, by an independent investment banking firm
selected by the Board of Directors shall be used. The term "Trading Day" shall
mean a day on which the principal national securities exchange on which the
Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day. Subject to Section 11(d)(ii)
hereof, if any Security is not publicly held or so listed or traded, the
"current per share market price" of such Security shall mean the fair market
value per share as determined in good faith by the Disinterested Directors if
the Disinterested Directors constitute a
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majority of the Board of Directors or, if the Disinterested Directors do not
constitute a majority of the Board of Directors, by an independent investment
banking firm selected by the Board of Directors whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares (or one one-thousandth of a
Preferred Share) shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly traded, the "current
per share market price" of the Preferred Shares shall be conclusively deemed to
be the current per share market price of the Class A Common Shares as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one thousand. If neither the Class A Common Shares nor the
Preferred Shares are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the the Disinterested Directors if the Disinterested Directors constitute a
majority of the Board of Directors or, if the Disinterested Directors do not
constitute a majority of the Board of Directors, by an independent investment
banking firm selected by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent.
(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 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 one one-thousandth of a Preferred Share, or one
ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Final 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 shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Shares 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 one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
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(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and 11(c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a Preferred Share (calculated to the nearest one
ten-thousandth of a Preferred Share) obtained by (i) multiplying (x) the number
of Preferred Shares covered by a Right immediately prior to this adjustment of
the Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-thousandths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company 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 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 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 Preferred Shares issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
one-thousandths of a Preferred Share, Common Shares or other securities issuable
upon exercise of the Rights, the Company shall take any
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corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue such number of fully paid and
non-assessable one one-thousandths of a Preferred Share, Common Shares or other
securities at such adjusted Purchase Price.
(1) 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 number
of one one-thousandths of a Preferred Share, Common Shares or other securities
of the Company, if any, issuable upon such exercise over and above the number of
one one-thousandths of a Preferred Share, Common Shares or other securities of
the Company, if any, issuable upon exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Anything to the contrary in this Section 11 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 it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
stock dividends, or (v) issuance of rights, options or warrants referred to in
this Section 11, hereafter made by the Company to holders of its Preferred
Shares 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 does not violate Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which does not violate 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 any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
does not violate Section 11(o) hereof), if (x) at the time of or immediately
after such consolidation, merger, sale or transfer there are any charter or
bylaw provisions or any rights, warrants or other instruments or securities
outstanding or agreements in effect or other actions taken, which would
materially 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 stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of Section 13 hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(n).
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(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action the purpose of which is to, or if at
the time such action is taken it is reasonably foreseeable that the effect of
such action is to, materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of rights under Section 11(a)(ii) shall only result in the
loss of rights under Section 11(a)(ii) to the extent so exercised and shall not
otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares and the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Rights Certificate in accordance with Section 26 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any Interested Stockholder, or if in such merger or consolidation all
holders of Common Shares are not treated alike, (y) the Company shall
consolidate with, or merge with, any Interested Stockholder or, if in such
merger or consolidation all holders of Common Shares are not treated alike, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger (other than, in a case of any transaction described in
(x) or (y), a merger or consolidation which would result in all of the
securities generally entitled to vote in the election of directors ("voting
securities") of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving entity) all of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such merger or
consolidation), 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 Interested Stockholder or Persons or, if in such
transaction all holders of Common Shares are not treated alike (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which does not violate Section 11(o) hereof), then, and in each such case
(except as provided in Section 13(d) hereof), 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 a price
equal to the then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of freely tradable Common
Shares of the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current
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Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) hereof and dividing that product
by (B) 50% of the then current per share market price of the Common Shares of
such Principal Party (determined pursuant to Section 11(d) hereof) 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; and (iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common Shares) 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 the Common Shares thereafter deliverable upon
the exercise of the Rights.
(b) "Principal Party" shall mean (i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities into which Common Shares 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
(including, if applicable, the Company if it is the surviving corporation); and
(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 of the foregoing cases: (A) if
the Common Shares of such Person are not at such time and have not been
continuously over the preceding twelve month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Shares of which are and have been so registered,
"Principal Party" shall refer to such other Person; (B) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Shares
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 Shares having the
greatest aggregate market value; and (C) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (A)
and (B) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of its
authorized Common Shares 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
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after the date of any consolidation, merger, sale or transfer mentioned in
paragraph (a) of this Section 13, the Principal Party at its own expense shall:
(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 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 Final Expiration Date; and
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all material
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. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clauses (x) and (y) of Section 13(a) if: (i) such transaction is consummated
with a Person or Persons who acquired Common Shares pursuant to a Permitted
Offer (or a wholly owned Subsidiary of any such Person or Persons); (ii) the
price per Common Share offered in such transaction is not less than the price
per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted 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 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 the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price 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
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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 Disinterested Directors if the Disinterested
Directors constitute a majority of the Board of Directors or, if the
Disinterested Directors do not constitute a majority of the Board of Directors,
by an independent investment banking firm selected by the Board of Directors. If
on any such date no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by the
Disinterested Directors if the Disinterested Directors constitute a majority of
the Board of Directors or, if the Disinterested Directors do not constitute a
majority of the Board of Directors, by an independent investment banking firm
selected by the Board of Directors shall be used and shall be binding on the
Rights Agent.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are one one-thousandths or integral multiples
of one one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandths of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not one one-thousandths or integral
multiples of one one-thousandth of a Preferred Share, 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 Preferred Share. For purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (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 one of the transactions or events specified
in Section 11 giving rise to the right to receive Common Shares, capital stock
equivalents (other than Preferred Shares) or other securities upon the exercise
of a Right, the Company shall not be required to issue fractions of shares or
units of such Common Shares, capital stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractions of
such Common Shares, capital stock equivalents or other securities. In lieu of
fractional shares or units of such Common Shares, capital stock equivalents or
other securities, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of a share or
unit of such Common Shares, capital stock equivalents or other securities. For
purposes of this Section 14(c), the current
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market value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately prior to the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent shall
have the value of one one-thousandth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right expressly waives
the right to receive any fractional Rights or any fractional share upon exercise
of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such 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 under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares;
(b) after the Distribution Date, the 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 purpose, duly endorsed
or accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or the associated Common Shares 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
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(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 a beneficial interest in 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.
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 the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
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 25 hereof), or to receive dividends
or other distributions or to exercise any preemptive 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. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly.
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 Shares or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
all or substantially all of the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this
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Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the 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 Certificates 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.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of 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 an Acquiring Person and the
determination of the current per share market price of any Security) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the
Vice-Chairman of the Board, the Chief Executive Officer, the President, 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 full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
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(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment 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 receipt of the
certificate described in Section 12 hereof); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares, Common Shares or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
Preferred Shares, Common Shares or other securities will, when issued, be
validly authorized and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any one of the
Chairman of the Board, the Vice-Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and is
authorized to apply to such officers for advice or instructions in connection
with its duties, and shall not be liable for any action taken or suffered by it
in good faith or lack of action in accordance with instructions of any such
officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, omission, default, neglect or
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misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, omission, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights
hereunder 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), (2) and/or
(3) thereof, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (i)
a corporation organized and doing business under the laws of the United States
or of any other state of the United States, so long as such corporation complies
with the applicable rules and requirements of the New York Stock Exchange, as
such rules and requirements may be amended or modified from time to time, is
authorized to exercise stock transfer or corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 (or such lower number as approved by the Board of Directors),
or (ii) an affiliate of a corporation described in clause (i) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor
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Rights Agent and each transfer agent of the Common Shares or Preferred Shares
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.
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 Common Shares
following the Distribution Date and prior to the earliest of the Redemption
Date, the Final Expiration Date and the consummation of a transaction
contemplated by Section 13(d) hereof, the Company (i) shall with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, and (ii) may,
in any other case, if deemed necessary or appropriate by the Board of Directors,
issue Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that no 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 and Termination.
(a) (i) Subject to Section 23(a)(iii), the Board of Directors may, at its
option, redeem all, but not less than all, the then outstanding Rights at a
redemption price of $0.001 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"), at any time prior to the earlier of (A)
a Section 11(a)(ii) Event, or (B) the Final Expiration Date. The Company may, at
its option, pay the Redemption Price either in Common Shares (based on the
"current per share market price," as defined in Section 11(d)(i) hereof, of the
Common Shares at the time of redemption) or cash; provided that if the Company
elects to pay the Redemption Price in Common Shares, the Company shall not be
required to issue any fractional Common Shares and the number of Common Shares
issuable to each holder of Rights shall be rounded down to the next whole share.
(ii) In addition, subject to Section 23(a)(iii), the Board of Directors
may, at its option, at any time following a Shares Acquisition Date but prior to
any Section 13 Event, redeem all, but not less than all, of the then outstanding
Rights at the Redemption Price in connection with any merger, consolidation,
sale or other transfer (in one transaction or in a series of related
transactions) of assets or earning power aggregating 50% or more of the earning
power of the Company and its Subsidiaries (taken as a whole) in which all
holders of Common Shares are treated
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alike and not involving (other than as a holder of Common Shares being treated
like all other such holders) an Interested Stockholder.
(iii) The Board of Directors may only redeem Rights pursuant to Section
23(a)(i) or Section 23(a)(ii) hereof if a majority of the Disinterested
Directors authorizes such redemption.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the date for redemption set forth (or determined in the manner
specified in) in a resolution of the Board of Directors ordering the redemption
of the Rights, evidence of which shall have been filed with the Rights Agent,
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. In the case of
a redemption permitted only under Section 23(a)(ii), evidence of which shall
have been filed with the Rights Agent, the right to exercise the Rights will
terminate and represent only the right to receive the Redemption Price upon the
later of ten Business Days following the giving of such notice or the expiration
of any period during which the rights under Section 11(a)(ii) may be exercised.
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 days after such date for
redemption set forth in a resolution of the Board of Directors ordering the
redemption of the Rights, the Company shall mail a notice of redemption to all
the 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.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
(c) The Company may, at its option, discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the manner of
redemption of the Rights in accordance with this Agreement and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at their
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent of
the Common Shares, and upon such action, all outstanding Rights and Rights
Certificates shall be null and void without any further action by the Company.
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Section 24. Exchange.
(a) Subject to Section 24(e), the Board of Directors may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) and Section
11(a)(ii) hereof) for Common Shares of the Company at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction involving either the Common Shares or the
Preferred Shares occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, any entity
holding Common Shares for or pursuant to the terms of any such plan or any
trustee, administrator or fiduciary of such a plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to Section 24(a) hereof and without any further
action and without any notice, the right to exercise such rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of Common Shares equal to the number of such rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) and Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for some or all of the Common Shares
exchangeable for Rights, at the initial rate of one one-thousandth of a
Preferred Share (or equivalent preferred share) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Shares pursuant to the terms thereof, so that the fraction of a
Preferred Share delivered in lieu of each Common Share shall have the same
voting rights as one Common Share.
(d) The Board of Directors shall not authorize any exchange transaction
referred to in Section 24(a) hereof unless at the time such exchange is
authorized there shall be sufficient Common Shares or Preferred Shares issued
but not outstanding, or authorized but unissued, to permit the exchange of
Rights as contemplated in accordance with this Section 24.
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(e) The Board of Directors may only exchange Rights pursuant to Section
24(a) hereof if a majority of the Disinterested Directors authorizes such
exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular quarterly
cash dividend), (ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which does not
violate 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 or more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which does not violate 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, in
accordance with Section 26 hereof, a notice of such proposed action to the
extent feasible and file a certificate with the Rights Agent to that effect,
which shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Preferred Shares, 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 20
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and in the case of any such other action, at least
20 days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof and (ii) all references in the
preceding Section 25(a) to Preferred Shares shall be deemed thereafter to refer
also, if appropriate, to Common Shares and/or, if appropriate, other securities
of the Company.
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Section 26. 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:
Hawk Corporation
000 Xxxxxx Xxxxxx
Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
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:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Compliance Department
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 Common
Shares shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments.
(a) Prior to the Distribution Date, subject to Section 27(b) hereof, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing Common Shares. From and after the Distribution Date,
subject to Section 27(b) hereof, 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, however, that 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
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of a certificate from an appropriate officer of the Company which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment,
provided that such supplement or amendment does not adversely affect the rights
or obligations of the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
(b) The Company shall not supplement or amend any provision of this
Agreement unless a majority of the Disinterested Directors authorizes such
supplement or amendment.
Section 28. Determination and Actions by the Board of Directors, etc. The
Board of Directors (and where expressly provided for herein, the Disinterested
Directors) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors (or the Disinterested Directors, as the case may be), or 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,
without limitation, a determination to redeem or not redeem the Rights or to
amend the Agreement and whether any proposed amendment adversely affects the
interests of the holders of Rights Certificates). For all purposes of this
Agreement, any calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares or any other securities
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 as in effect on the date of this 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 of Directors (or the Disinterested Directors) in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights Certificates and all other parties, and
(y) not subject the Board of Directors (or the Disinterested Directors) to any
liability to the holders of the Rights Certificates.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Rights Agent, the Exempt Persons and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent,
the Exempt Persons and the registered holders of the Rights Certificates (and,
prior to the Distribution Date, the Common Shares).
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Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
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 a majority of the
Disinterested Directors determine in their good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 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 Disinterested
Directors.
Section 32. 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.
Section 33. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 34. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date and year first above written.
Attest: HAWK CORPORATION
By: By:
-------------------------------- ----------------------------------
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxx
Secretary Chairman of the Board
Attest: CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By: By:
-------------------------------- ----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
------------------------------ --------------------------------
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EXHIBIT A
[FORM OF CERTIFICATE OF DESIGNATION
OF THE SERIES E PREFERRED STOCK]
CERTIFICATE OF DESIGNATION
OF THE SERIES E PREFERRED STOCK OF
HAWK CORPORATION
PURSUANT TO SECTION 151 OF THE DELAWARE GENERAL CORPORATION LAW
Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxx, being the Chairman of the Board and
Secretary, respectively, of Hawk Corporation, a Delaware corporation (the
"Corporation"), hereby certify that:
Pursuant to authority conferred upon the Board of Directors of the
Corporation by the Certificate of Incorporation of the Corporation, and
pursuant to the provisions of Section 151 of the Delaware General
Corporation Law, the Board of Directors, at a telephonic meeting held on
November 13, 1997, duly adopted a resolution creating a new series of
Serial Preferred Stock, par value $0.01 per share, of the Corporation, as
follows:
RESOLVED, that pursuant to the authority expressly vested in the Board
of Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a new series of Serial Preferred Stock of the
Corporation is hereby created (the "Series E Preferred Stock"), of which
the powers, designations, preferences and relative, participating, optional
or other rights, and qualifications and restrictions, shall be as follows:
Section 1. Designation and Amount. There shall be a series of the Serial
Preferred Stock of the Corporation that shall be designated as the "Series E
Preferred Stock," par value $0.01 per share, and the number of shares
constituting such series shall be 100,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided that no
decrease shall reduce the number of shares of Series E Preferred Stock to a
number less than that of the shares then outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
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Section 2. Dividends and Distributions. The holders of shares of Series E
Preferred Stock shall be entitled to receive, out of any funds legally
available and when and as declared by the Board of Directors, dividends and
other distributions of the same kind but at the rate of 1,000 times the
aggregate amount per share of the dividends or other distributions received by
the holders of shares of Common Stock, par value $0.01 per share, of the
Corporation (the "Common Stock"). Dividends and other distributions shall be
declared and paid to the holders of shares of Series E Preferred Stock of
record, on such dates respectively preceding the payment thereof as may be
fixed by the Board of Directors in declaring any such dividends, at the same
time that dividends or other distributions are declared and paid to holders of
shares of Common Stock. Such dividends shall not accrue or be cumulative. In
the event the Corporation shall, at any time after January 16, 1998 (the
"Effective Date"), (i) declare any dividend on the Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock
or (iii) combine the outstanding shares of Common Stock into a smaller number
of shares, then in each such case the number of votes per share to which
holders of shares of Series E Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of shares of Common Stock that were outstanding immediately prior to
such event.
Section 3. Voting Rights. The holders of shares of Series E Preferred Stock
shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set forth, each
share of Series E Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the holders of shares of Class A
Common Stock of the Corporation (the "Class A Common Stock"). In the event the
Corporation shall, at any time after the Effective Date, (i) declare any
dividend on shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of Series E
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares of
Series E Preferred Stock and the holders of shares of Class A Common Stock shall
vote together as one class on all matters submitted to a vote of the holders of
the Class A Common Stock.
(c) Except as set forth herein, holders of shares of Series E Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of shares
of Class A Common Stock as set forth herein) for taking any corporate action.
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Section 4. Reacquired Shares. Any shares of Series E Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Serial Preferred Stock and may be reissued as part of a new series of Serial
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 5. Liquidation, Dissolution or Winding Up. The holders of shares of
Series E Preferred Stock shall, in case of liquidation, dissolution, or winding
up of the affairs of the Corporation, be entitled to receive in full, out of the
assets of the Corporation, including its capital, an amount equal to 1,000 times
the aggregate amount to be distributed per share to holders of Common Stock,
subject to the provision for adjustment hereinafter set forth. In the event the
Corporation shall at any time (i) declare any dividend on shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, then in each such case the aggregate amount to which
holders of shares of Series E Preferred Stock were entitled immediately prior to
such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event. Except as set forth above, the holders of shares of Series E
Preferred Stock shall have the same rights and shall be treated in the same
manner with respect to any liquidation, dissolution or winding up as holders of
shares of Common Stock.
Section 6. Consolidation, Merger, Etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the holders of
shares of Series E Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Effective Date (i)
declare any dividend on the Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series E Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding immediately prior to such
event.
Section 8. Redemption. The Series E Preferred Stock shall not be
redeemable.
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Section 9. Ranking. The Series E Preferred Stock shall rank junior to all
other series of the Serial Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall
specifically provide otherwise.
Section 10. Amendment. The Second Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or special rights
of the shares of Series E Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds (66 2/3%) of the
outstanding shares of Series E Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Shares of Series E Preferred Stock may be
issued in fractions of a share that are one one-thousandths or integral
multiples of one one-thousandths of a share, which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of the holders of Series E Preferred Stock.
IN WITNESS WHEREOF, the undersigned have executed and subscribed this
Certificate of Designation, and hereby affirm the foregoing as true under the
penalties of perjury, as of this _____ day of __________, 199___.
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board
Attest:
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Secretary
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EXHIBIT B
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R- Rights
----- ------------
NOT EXERCISABLE AFTER JANUARY 16, 2008, OR EARLIER IF NOTICE OF
REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO EXCHANGE, AT
THE OPTION OF THE COMPANY, AT ONE COMMON SHARE PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID TO THE EXTENT PROVIDED IN AND UNDER THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF THE RIGHTS AGREEMENT.]*
RIGHTS CERTIFICATE
This certifies that _________________________, or _______ registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of January 16, 1998 (the "Rights
Agreement") between HAWK CORPORATION, a Delaware corporation (the "Company"),
and Continental Stock Transfer & Trust Company, as Rights Agent (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Cleveland, Ohio time) on January 16, 2008 at the office of the Rights Agent in
New York, New York, one one-thousandth of a fully-paid, nonassessable share of
Series E Preferred Stock (the "Preferred Stock") of the Company, at a purchase
price of $70.00 per one one-thousandth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the appropriate Form
of Election to Purchase duly executed. 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 set forth above, are
the number and Purchase Price as of January 16, 1998, based on the Preferred
Stock as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number 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.
--------------------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentences.
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This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent, may be exercised 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 (other than pursuant to Section
11(a)(ii) of the Rights Agreement) 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. If this Rights Certificate shall
be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights
Agreement, the holder shall be entitled to receive this Rights Certificate duly
marked to indicate that such exercise has occurred as set forth in the Rights
Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate may be redeemed by the Company at its option at a
redemption price of $0.001 per Right, and the redemption price may be satisfied
by issuing Common Shares (pursuant to Section 23(a)(i) of the Rights Agreement).
In addition, the Rights evidenced by this Rights Certificate may be exchanged by
the Company at its option at an exchange ratio of one Common Share per Right.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Rights or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder, as such, of this or any other Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
the Preferred Shares or any other securities of the Company that may at any time
be issuable on the exercise of the Rights represented hereby or thereby, nor
shall anything contained herein or in any other 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
25 of the Rights Agreement), or to receive dividends or other distributions, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised.
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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.
Dated: January 16, 1998
Attested by: HAWK CORPORATION
By: By:
-------------------------------- ----------------------------------
Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxx
Secretary Chairman of the Board
Countersigned:
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:
--------------------------------
Authorized Officer
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[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:
-------------------------
-------------------------------
Signature
Signature Guaranteed:
-------------------------------
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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:
-------------------------
-------------------------------
Signature
Signature Guaranteed:
-------------------------------
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.
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FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate)
To: HAWK CORPORATION
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or assets issuable upon the exercise
of the Rights and requests that certificates for such shares be issued in the
name of and deliverable 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: Signature Guaranteed:
--------------------------
-------------------------------- ------------------------------
Signature
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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) the Rights evidenced by this Rights Certificate are [ ] are not [ ]
being sold, assigned or transferred by or on behalf of a Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person;
(3) 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:
----------------------
----------------------------
Signature
Signature Guaranteed:
-----------------------------
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.
B-7
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SERIES E PREFERRED SHARES
On November 13, 1997, the Board of Directors of Hawk Corporation, a
Delaware corporation (the "Company"), declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of Class A Common
Stock, par value $0.01 per share (the "Class A Common Shares" and Class B
Common Stock, par value $0.01 per share (the "Class B Common Shares and
together with the Class A Common Shares, the "Common Shares"), of the Company.
The dividend is payable to the stockholders of record as of 5:00 P.M.,
Cleveland, Ohio time, on January 16, 1998 (the "Effective Date"), and with
respect to Common Shares issued thereafter until the Distribution Date (as
hereinafter defined) and, in certain circumstances, with respect to Common
Shares issued after the Distribution Date. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered holder to purchase
from the Company one one-thousandth of a share of Series E Preferred Stock, par
value $0.01 per share (the "Preferred Shares"), at a price of $70.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement, dated as of January 16, 1998 (the "Rights Agreement"), between the
Company and Continental Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent").
A. Issue of Right Certificates
The Rights are attached to all certificates representing outstanding Common
Shares, and no separate Right Certificates (as hereinafter defined) have been
distributed. The Rights will separate from the Common Shares on the earliest to
occur of (i) the first date of public announcement that a Person (defined in the
Rights Agreement), alone or together with its Affiliates and Associates (defined
in the Rights Agreement), other than those that are exempt persons, has acquired
beneficial ownership (as defined in the Rights Agreement) of 15% or more of the
outstanding Class A Common Shares (except pursuant to a Permitted Offer); or
(ii) the close of business on the tenth (10th) business day (or such later date
as the Board of Directors may determine) following the commencement of, or first
public announcement of an intention to commence, a tender or exchange offer the
consummation of which would result in any Person becoming an Acquiring Person
(as hereinafter defined), including, in the case of both (i) and (ii), any such
date which is after the date of this Rights Agreement and prior to the issuance
of the Rights (the earliest of such dates being called the "Distribution Date").
A Person, alone or together with its Affiliates and Associates, whose
acquisition of Common Shares causes a Distribution Date pursuant to clause (i)
above is an "Acquiring Person." The first date of public announcement that a
Person, alone or together with its Affiliates and Associates, has become an
Acquiring Person is the "Shares Acquisition Date."
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The Rights Agreement provides that until the Distribution Date the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption, exchange, or expiration of the Rights), new Common
Share certificates issued after the Effective Date upon transfer or new issuance
of Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange, or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Effective Date, even without such notation
or a copy of the Summary of Rights to Purchase Series E Preferred Shares being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As promptly as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date (and to each
initial record holder of certain Common Shares issued after the Distribution
Date), and such separate Right Certificates alone will evidence the Rights.
B. Exercise of Rights; Final Expiration Date of Rights
The Rights are not exercisable until the Distribution Date and will expire
at 5:00 P.M., Cleveland, Ohio time, on January 16, 2008, unless earlier redeemed
or exchanged by the Company as described below. 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.
C. Flip-In Provision
In the event that any Person other than certain exempt persons becomes an
Acquiring Person (except pursuant to a Permitted Offer), each holder of a Right
will have (subject to the terms of the Rights Agreement) the right to receive
upon exercise the number of Common Shares, or, in the discretion of the Board of
Directors, the number of one one-thousandths of a Preferred Share (or, in
certain circumstances, other securities of the Company) having a value
(immediately prior to such "Triggering Event," as defined the Rights Agreement)
determined in accordance with a formula based on the then Purchase Price divided
by 50% of the then current per share market price of the Class A Common Shares
(the "Flip-In Right"). Notwithstanding the foregoing, following the occurrence
of the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person or any Affiliate or Associate thereof will be null and void. A
"Permitted Offer" shall mean a tender or exchange offer for all outstanding
Common Shares at a price and on terms determined, prior to the purchase of
shares under such tender or exchange offer, by at least a majority of the
Disinterested Directors to be adequate (taking into account all factors that
such directors deem relevant) and otherwise in the best interests of the Company
and its stockholders (other than the Person or any Affiliate or Associate
thereof on whose behalf the offer is being made) taking into account all factors
that such directors may deem relevant. "Disinterested Director" means any
director of the Board of Directors of the Company who is not (i) a Person
proposing or attempting to effect a business combination or similar transaction
with the Company (including, without limitation, a merger, tender offer or
exchange offer, sale of substantially all of the Company's assets, or
liquidation of the Company's assets) or any Affiliate or Associate of such
Person or Person acting directly or indirectly on behalf
C-2
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of, or as a representative of, or in concert with, any such Person, Affiliate or
Associate, (ii) an Acquiring Person, an Affiliate or Associate of an Acquiring
Person, or a Person acting directly or indirectly on behalf of, or as a
representative of, or in concert with, an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, or (iii) any Person who was directly or
indirectly proposed or nominated as a director of the Company by an Acquiring
Person.
D. Flip-Over Provision
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the holders of all of the outstanding Common Shares immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (ii) more than 50% of the Company's assets or
earning power is sold or transferred, in either case with or to an Acquiring
Person or any Affiliate or Associate thereof, or any other person in which such
Acquiring Person, Affiliate or Associate has an interest, or any person acting
on behalf of or in concert with such Acquiring Person, Affiliate or Associate,
or, if in such transaction all holders of Common Shares are not treated alike,
then each holder of a Right (except Rights which previously have been voided as
set forth above) shall thereafter have the right (the "Flip-Over Right") to
receive, upon exercise, common shares of the acquiring company having a value
determined in accordance with a formula based on the then Purchase Price divided
by 50% of the then current per share market price of the common stock of such
acquiring company. The holder of a Right will continue to have the Flip-Over
Right whether or not such holder exercises or surrenders the Flip-In Right.
E. Adjustment of Purchase Price
The Purchase Price payable, and the number of one one-thousandths of a
Preferred Share or other securities issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular quarterly cash dividends or a dividend payable in
preferred shares) or of subscription rights or warrants (other than "equivalent
preferred shares," as defined in the Rights Agreement).
The Purchase Price is also subject to adjustment in the event of a stock
split of the Common Shares, or a stock dividend on the Common Shares payable in
Common Shares, or subdivisions, consolidations or combinations of the Common
Shares occurring, in any such case, prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional one-thousandths of a Preferred Share will be
issued, and in lieu thereof, an adjustment in cash will
C-3
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be made based on the market price of the Preferred Shares on the last trading
day prior to the date of exercise.
F. Redemption of Rights
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"), which redemption shall be effective upon the action of the
Board of Directors. The Company may at its option pay the Redemption Price in
cash or Common Shares. Additionally, the Company may redeem the then outstanding
Rights in whole, but not in part, at the Redemption Price after a Shares
Acquisition Date and before the expiration of any period during which the
Flip-Over Right may be exercised in connection with a merger or other business
combination transaction or series of transactions involving the Company in which
all holders of Common Shares are treated alike but not involving (other than as
a holder of Common Shares being treated like all other such holders) any Person
acting directly or indirectly on behalf of, or in concert with, any Acquiring
Person, or its Affiliates or Associates. The Board of Directors may only redeem
Rights if a majority of the Disinterested Directors (as defined in the Rights
Agreement) authorizes such redemption. Upon the effective date of the redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
G. Exchange of Rights
At any time after a Person becomes an Acquiring Person but before such
Acquiring Person, together with all Affiliates and Associates of such Person,
becomes the "Beneficial Owner" (defined in the Rights Agreement) of 50% or more
of the Common Shares then outstanding, the Company may, at its option, exchange
all or part of the then outstanding and exercisable Rights (other than those
owned by the Acquiring Person, together with any Affiliates and Associates of
such Acquiring Person, which have become null and void) at an exchange ratio of
one Common Share per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction involving either the Common Shares or the
Preferred Shares occurring after the date of the Rights Agreement (the "Exchange
Ratio"). The Board of Directors may only exchange Rights if a majority of the
Disinterested Directors authorizes such exchange. Immediately upon the action of
the Board of Directors ordering the exchange of any Rights and without any
further action and without any notice, the right to exercise such rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Shares equal to the number of such rights held by
such holder multiplied by the Exchange Ratio.
H. Possible Tax Consequences
While the distribution of the Rights will not be taxable to stockholders of
the Company, stockholders may, depending upon the circumstances, recognize
taxable income should the Rights become exercisable or upon the occurrence of
certain events thereafter.
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I. Amendment of Rights Agreement
Prior to the Distribution Date, the Company may supplement or amend any
provision of the Rights Agreement without the approval of the holders of Common
Stock. From and after the Distribution Date, the Company generally may
supplement or amend the Rights Agreement without the approval of the holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision which may be defective or inconsistent with any other
provisions, (iii) to shorten or lengthen any time period or (iv) to change or
supplement the provisions 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). The Company may not supplement or amend any provision
of the Rights Agreement unless a majority of the Disinterested Directors
authorizes such supplement or amendment.
J. Copy Available
A copy of the Rights Agreement was filed with the Securities and Exchange
Commission as an exhibit to the Company's Registration Statement on Form S-1. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
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