LSB INDUSTRIES, INC.
AND
BANK ONE, N.A.
(Rights Agent)
RENEWED RIGHTS AGREEMENT
________________________
Dated as of January 6, 1999
TABLE OF CONTENTS
_________________
Page
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . .2
Section 2. Appointment of Rights Agent . . . . . . . . . . . . .9
Section 3. Issue of Right Certificates . . . . . . . . . . . . .9
Section 4. Form of Right Certificates. . . . . . . . . . . . . 12
Section 5. Countersignature and Registration . . . . . . . . . 13
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates. . . . . . . . . . . . 14
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. . . . . . . . . . . . . . . . . . . 15
Section 8. Cancellation and Destruction of Right Certificates. 17
Section 9. Availability of Preferred Shares. . . . . . . . . . 18
Section 10. Preferred Shares Record Date. . . . . . . . . . . . 19
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights. . . . . . . . . . . . . . . . . . 19
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . . . . . . . . . . . . . . . 33
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . 33
Section 14. Fractional Rights and Fractional Shares . . . . . . 35
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . 37
Section 16. Agreement of Right Holders. . . . . . . . . . . . . 38
Section 17. Right Certificate Holder Not Deemed a Stockholder . 39
Section 18. Concerning the Rights Agent . . . . . . . . . . . . 40
Section 19 Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . 40
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . 41
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . 44
Section 22. Issuance of New Right Certificates. . . . . . . . . 46
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . 46
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . 48
Section 25. Notice of Certain Events. . . . . . . . . . . . . . 50
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . 51
Section 27. Supplements and Amendments. . . . . . . . . . . . . 52
Section 28. Successors. . . . . . . . . . . . . . . . . . . . . 53
Section 29. Determinations and Actions by the Board of
Directors . . . . . . . . . . . . . . . . . . . . . 53
Section 30. Benefits of this Agreement. . . . . . . . . . . . . 54
Section 31. Severability. . . . . . . . . . . . . . . . . . . . 54
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . 54
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . 55
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . 55
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 56
Exhibit A - Certificate of Designations for Series 3
Participating Class C Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
RENEWED RIGHTS AGREEMENT
This RENEWED RIGHTS AGREEMENT, dated as of the 6th day of
January, 1999, between LSB INDUSTRIES, INC., a Delaware corporation
(the "Company"), and BANK ONE, N.A. (the "Rights Agent").
WITNESSETH
__________
WHEREAS, on February 17, 1989, the Board of Directors of the
Company (the "Board") adopted a preferred share purchase rights
plan (the "Existing Rights Plan") and executed a Rights Agreement
between the Company and the Liberty National Bank and Trust Company
of Oklahoma City (a predecessor to Bank One, N.A.), as rights agent
(the "1989 Agreement"); and
WHEREAS, the Existing Rights Plan is scheduled to expire on
February 27, 1999 ("Existing Rights Plan Expiration Date"); and
WHEREAS, on January 5, 1999, the Board determined it desirable
and in the best interest of the Company and its stockholders for
the Company to renew the Existing Rights Plan, with certain changes
thereto, upon its expiration and to implement such renewal by
executing this Agreement (as hereinafter defined) and declaring the
dividend distribution referred to in the fourth WHEREAS clause
herein; and
WHEREAS, on January 5, 1999 (the "Rights Dividend Declaration
Date"), the Board authorized and declared a dividend distribution
of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Company outstanding upon the
Existing Rights Plan Expiration Date (the "Record Date") and
authorized the issuance of one Right (as such number may hereafter
be adjusted pursuant to the provisions of Section 11 hereof) for
each share of Common Stock of the Company that shall become
outstanding between the Record Date and the earlier of the
Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined), and under the certain
circumstances thereafter, each Right initially representing the
right to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions
herein set forth (the "Rights").
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (as hereinafter
defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be
the Beneficial Owner (as hereinafter defined) of 20% or more of the
shares of Common Stock of the Company then outstanding (other than
as a result of a Permitted Offer (as hereafter defined)), but shall
not include any of the following Persons (collectively, the
"Excluded Persons"): (i) the Company, (ii) any Subsidiary (as
hereinafter defined) of the Company, (iii) any employee benefit
plan of the Company or any Subsidiary of the Company, (iv) any
entity holding Common Stock of the Company for or pursuant to the
terms of any such plan, and/or (v) any member or combination of
members of the Golsen Group (as hereinafter defined).
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" solely as the result of the acquisition of Common Stock by
the Company and/or any Subsidiary of the Company which, by the
Company reducing the number of shares of Common Stock outstanding,
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increases the proportionate number of shares of Common Stock of the
Company then outstanding beneficially owned by such Person to 20%
or more; provided, however, that if a Person (other than any of the
Excluded Persons) shall become the Beneficial Owner of 20% or more
of the Common Stock of the Company then outstanding by reason of
share purchases by the Company and/or any Subsidiary of the Company
and shall, after such share purchases by the Company and/or any
Subsidiary of the Company, become the Beneficial Owner of
additional shares of Common Stock of the Company constituting 1% or
more of the then outstanding shares of Common Stock of the Company,
then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the
Company determines (upon approval by a majority of the members of
the Board of Directors of the Company) in good faith that a Person
who would otherwise be an "Acquiring Person," as defined pursuant
to the foregoing provisions of this Section 1(a), has become such
inadvertently, and such Person divests, within 10 Business Days (as
hereinafter defined) from the date of such determination by the
Board of Directors of the Company, a sufficient number of shares of
Common Stock so that such Person would no longer be an "Acquiring
Person" (as defined pursuant to the foregoing provisions of this
Section 1(a)), then such Person will not be deemed to be an
"Acquiring Person" for any purpose of this Agreement.
(b) "Affiliate" and "Associate" have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as in effect on the date of this
Agreement.
(c) A Person will be deemed the "Beneficial Owner" of,
and will be deemed to "beneficially own", any securities:
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(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
or
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), whether or not in writing, or upon the exercise of
conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided, however, that
a Person will 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 or exchanged
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 will 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 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); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to
a bona fide public offering of securities) for the purpose of
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acquiring, holding, voting (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B)) or disposing of any securities
of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding", when used
with reference to a Person's Beneficial Ownership of securities of
the Company, means 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.
(d) "Agreement" shall mean this Renewed Rights Agreement
as originally executed or as it may from time to time be
supplement, amended, renewed, restated or extended pursuant to
applicable provisions hereof.
(e) "Business Day" means any day other than a Saturday,
a Sunday, or a day on which banking institutions in the State of
Oklahoma are authorized or obligated by law or executive order to
close.
(f) "Close of Business" on any given date means 5:00
P.M., Oklahoma City, Oklahoma time, on such date; provided,
however, that if such date is not a Business Day, Close of Business
will mean 5:00 P.M., Oklahoma City, Oklahoma time, on the next
succeeding Business Day.
(g) "Common Stock" when used with reference to the
Company means the shares of common stock, par value $.10 per share,
of the Company. "Common Stock" when used with reference to any
Person other than the Company means 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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(h) "Distribution Date" has the meaning set forth in
Section 3 hereof.
(i) "Excluded Persons" has the meaning set forth in
Section 1(a) hereof.
(j) "Existing Rights Plan" has the meaning set forth in
the first "WHEREAS" clause hereof.
(k) "Existing Rights Plan Expiration Date" has the
meaning set forth in the second WHEREAS clause hereof.
(l) "Final Expiration Date" has the meaning set forth in
Section 7(a) hereof.
(m) "Golsen Group" means:
(i) Xxxx X. Xxxxxx;
(ii) the spouse of Xxxx X. Xxxxxx;
(iii) Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx and
Xxxxx Xxxxxx Xxxxxxxxx, who are the children of Xxxx X. Xxxxxx;
(iv) any spouse or children of any Person
described in subparagraph (iii) of this Section 1(m);
(v) any estate of, or the executor or administrator
of any estate of, or any guardian or custodian for, any Person
described in subparagraphs (i), (ii), (iii) or (iv) of this Section
1(m), so long as such executor, administrator, guardian or
custodian is acting only in his, her or its capacity as such;
(vi) any corporation (including, but not limited to,
SBL Corporation, an Oklahoma Corporation, ("SBL"), and Golsen
Petroleum Corporation, an Oklahoma corporation ("GPC")), general
partnership, limited partnership, limited liability company,
organization or other entity (whether now existing or hereafter
formed) of which at least 80% of the outstanding beneficial voting
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or equity interest are beneficially owned, directly or indirectly,
either (a) by one or more of the Persons described in subparagraphs
(i), (ii), (iii), (iv), (v), (vii), and (viii) of this Section 1(m)
or (b) by any combination of one or more of the Persons described
in subparagraphs (i), (ii), (iii), (iv), (v), (vii) and (viii) of
this Section 1(m);
(vii) Any trust (including any voting trust) of
which at least 80% of the outstanding beneficial voting interest or
presumptive interest in principal and income are beneficially
owned, directly or indirectly, either (a) by one or more of the
persons described in subparagraphs (i), (ii), (iii), (iv), (v), and
(vi) of this Section 1(m) or (b) by any combination of one or more
of the person described in subparagraphs (i), (ii), (iii), (iv),
(v), and (vi) of this Section 1(m); and
(viii) any other Person who or which is or
becomes an Affiliate or Associate of any Person described in
subparagraphs (i), (ii), (iii), (iv), (v), (vi), or (vii) of this
Section 1(m).
(n) "Group" has the meaning ascribed to such term in
Section 13(d)(3) of the Exchange Act, as in effect on the date of
this Agreement.
(o) "Permitted Offer" means a tender or exchange offer
which is for all outstanding shares of Common Stock of the Company
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
members of the Board of Directors of the Company who are not
officers of the Company and who are not Acquiring Persons or
Affiliates, Associates, nominees or representatives of an Acquiring
Person, to be adequate (taking into account all factors that such
Board of Directors of the Company deem relevant including, without
limitation, prices that could reasonably be achieved if the Company
or its assets were sold on an orderly basis designed to realize
maximum value) and otherwise in the best interests of the Company
and its stockholders (other than the Person or any Affiliate or
7
Associate thereof on whose behalf the offer is being made) taking
into account all factors that such directors may deem relevant.
(p) "Person" means any individual, firm, corporation,
limited liability company, partnership (general or limited) or
other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" means shares of Series 3
Participating Class C Preferred Stock, no par value, of the Company
having the rights and preferences set forth in the Certificate of
Designations attached to this Agreement as Exhibit A.
(r) "Record Date" has the meaning set forth in the
fourth "WHEREAS" clause hereof.
(s) "Redemption Date" has the meaning set forth in
Section 7 hereof.
(t) "Shares Acquisition Date" means the first date of
public announcement (which includes, without implied limitation, a
report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has
become such.
(u) "Subsidiary" of any Person means any corporation,
partnership (general or limited), limited liability company or
other entity of which securities or other ownership interest having
ordinary voting power sufficient, in the absence of contingencies,
to elect a majority of the board of directors or other persons
performing similar functions of such corporation or other entity
are at the time directly or indirectly beneficially owned or
otherwise controlled by such Person and any Affiliate or Associate
of such Person.
(v) "1989 Agreement" shall have the meaning set forth in
the first "WHEREAS" clause at the beginning of this Agreement.
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Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the Close of Business on the 10th day after the Share
Acquisition Date or (ii) the Close of Business on the 10th Business
Day (or such later date as may be determined by approval of a
majority of the members of the Board of Directors of the Company
prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than any of the
Excluded Persons) of, or after the date of the first public
announcement of the intention of any Person (other than any of the
Excluded Persons) to commence (which intention to commence remains
in effect for 5 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 shares of Common Stock
registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right Certificates
will be transferable only in connection with the transfer of shares
of Common Stock, subject to the provision of Section11(a)(ii)
hereof. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of shares of Common
9
Stock (subject to Section 11(a)(ii) hereof) as of the Close of
Business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"),
evidencing one Right for each share of Common Stock so held. As of
the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On the Record Date, or as soon as practicable there-
after, the Company will send a copy of a Summary of Rights to
Purchase 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 shares of Common Stock as of the
Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates
for shares of Common Stock outstanding as of the Record Date, until
the earlier of (i) the Distribution Date or (ii) the Final
Expiration Date, or (iii) the Redemption 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 shares of Common Stock
outstanding on the Record Date, with or without a copy of the
Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the shares of Common Stock
represented thereby, subject to the provision of Section 11(a)(ii)
hereof.
(c) Rights shall be issued in respect of all shares of
Common Stock of the Company which are issued or transferred by the
Company after the Record Date but prior to the earlier of the
Distribution Date, the Redemption Date or the Final Expiration
Date, subject to the provisions of Section 11(a)(ii) hereof.
Certificates for shares of Common Stock which become outstanding
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(including, without limitation, reacquired shares of Common Stock
referred to in the last sentence of this paragraph (c)) after the
Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date will be deemed also to
be Certificates for Rights and will have impressed on, printed on,
written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in the Renewed Rights Agreement between
LSB Industries, Inc. and Bank One, N.A. dated
January 6, 1999 (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 LSB
Industries, Inc. Under certain circumstances,
as set forth in the Rights Agreement, such
Rights will be evidenced by separate
certificates and will no longer be evidenced
by this certificate. LSB Industries, Inc.
will mail to the holder of this certificate a
copy of the Rights Agreement without charge
after receipt of a written request therefor.
Under certain circumstances described in the
Rights Agreement, Rights issued to any Person
who becomes an Acquiring Person (as defined in
the Rights Agreement), whether currently held
by or on behalf of such person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of the Final Expiration Date or the Distribution
Date or the Redemption Date, the Rights associated with the shares
of Common Stock represented by such certificates will be evidenced
11
by such certificates alone, and the surrender for transfer of any
such certificate will also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby,
subject to provisions of Section 11(a)(ii) hereof. In the event
that the Company purchases or acquires any shares of Common Stock
after the Record Date but prior to the Distribution Date, any
Rights associated with such shares of Common Stock will be deemed
canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse thereof)
shall be substantially the same as Exhibit B hereto and may have
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
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 or transaction reporting
system on which the Rights may from time to time be listed or to
conform to usage. Subject to the provisions of Section 22 hereof,
the Right Certificates shall entitle the holders thereof to
purchase such number of one one-hundredth of a Preferred Share as
shall be set forth therein at the price per one one-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the
number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents a Right or Rights which are
null and void pursuant to Section 11(a)(ii) of this Agreement and
any Right Certificate issued pursuant to Section 6 or Section 11
12
hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Right Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Renewed Rights Agreement).
Accordingly, this Right Certificate and the Rights
represented hereby are null and void.
Provisions of Section 11(a)(ii) of this Agreement shall be
operative whether or not the foregoing legend is contained on any
such Right Certificate.
Section 5. Countersignature and Registration. The Right
Certificates will be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive Officer, its President,
any of its Vice Presidents, or its Treasurer, either manually or by
facsimile signature, will 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 Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force
and effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate,
13
shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its designated office for such purpose, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights
evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 11(a)(ii), 14
and 24 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
Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share and such other rights as the
Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or
Right Certificates will make such request in writing delivered to
the Rights Agent, and will surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at
the principal office of the Rights Agent designated for such
purpose, subject to the provisions of Sections 11(a)(ii), 14 and 24
hereof. Thereupon the Rights Agent will countersign and deliver to
the person entitled thereto a Right Certificate or Right
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Certificates, as the case may be, as so requested, subject to the
provisions of Sections 11(a)(ii), 14 and 24 hereof. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
them, and, 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
Right Certificate if mutilated, the Company will make and deliver
a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right Certificate
so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 11(a)(ii) hereof, the registered
holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided in this Agreement), in whole
or in part at any time after the Distribution Date upon surrender
of the Right Certificate, with the form of election to purchase and
certification on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such
purposes, together with payment of the Purchase Price (as
hereinafter defined) for each one one-hundredth of a Preferred
Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on the 10th anniversary of the
date of this Agreement (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
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(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially
be $20.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
Preferred Shares (or other security 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 Right Certificate in
accordance with Sections 6 and 9 hereof by certified check or
cashier's check payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or in the case of exercise
under Section 11(a)(ii) hereof, any transfer agent of the shares of
Common Stock) a certificate or certificates for the number of
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 total number of Preferred Shares issuable upon exercise
of the Rights hereunder with a depository agent, requisition from
the depositary agent depositary receipts representing such number
of one one-hundredths of a Preferred Share (or in the case of
exercise under Section 11(a)(ii) such number of shares of Common
Stock) as are to be purchased (in which case certificates for the
applicable Preferred Shares or shares of Common Stock represented
by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or depositary
16
receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when
appropriate, after receipt, deliver such cash to or upon the order
of the registered holder of such Right Certificate.
(d) If the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised will be issued by the Rights Agent to the registered
holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Sections 6 and 14 hereof.
Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will 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 will have (a) completed and signed the
certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such
exercise (b) paid to the Company the Purchase Price for the
Preferred Shares (or in the case of exercise under Section
11(a)(ii) hereof, the Common Stock) to be purchased pursuant to
such exercise, and (c) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company will reasonably
request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange, shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, will be cancelled by it, and no
Right Certificates will be issued in lieu thereof except as
17
expressly permitted by any of the provisions of this Agreement.
The Company will deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire any
other Right Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent will
deliver all cancelled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Right
Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The
Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares
or any 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 in accordance with Section 7. The
Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery
of the Right Certificates or of any Preferred Shares upon the
exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than,
or the issuance or delivery of certificates or depositary receipts
for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates
or depositary receipts for Preferred Shares upon the exercise of
18
any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in
whose name any certificate for Preferred Shares is issued upon the
exercise of Rights shall for all purposes be deemed to have become
the holder of record of the Preferred Shares represented thereby
on, and such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes)
was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of
the Company are closed, such person shall be deemed to have become
the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred
Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of
Preferred Shares or other securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights. The Purchase Price, the number of Preferred
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
19
outstanding Preferred Shares, (C) combine the outstanding Preferred
Shares into a smaller number of Preferred Shares or (D) issue any
shares of its capital stock in 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), 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, will be
proportionately adjusted so that the holder of any Right exercised
after such time will 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, the
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 will 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.
(ii) Subject to Section 24 of this Agreement, if any
Person becomes, alone or with it's Affiliates and Associates, an
Acquiring Person, each holder of a Right, from and after the
Distribution Date and except as provided below, shall have a right
to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of shares of Common Stock of
the Company (or, in the discretion of the Board of Directors, one
one-hundredth of a Preferred Share pursuant to Section 11(a)(ii)
hereof) as shall equal the result obtained by (x) multiplying the
20
then current Purchase Price by the number of one one-hundredths of
a Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share
market price of the Company's shares of Common Stock (determined
pursuant to Section 11(d) hereof) on the date such Person became an
Acquiring Person, (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); and provided further,
that the adjustment set forth in this Section 11(a)(ii) shall be
effective only at and after the time at which the authorization of
the Board of Directors of the Company to redeem the Rights pursuant
to Section 23(a), as said Section may be amended pursuant to
Section 27, shall have terminated. If any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the
Company will not take any action which would eliminate or diminish
the benefits intended to be afforded by the Rights.
Notwithstanding anything herein to the contrary, from and
after the date such Person becomes an Acquiring Person, any Rights
that are beneficially owned by (i) any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person), (ii) a transferee
of any Acquiring Person (or any Affiliate or Associate thereof) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) any 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 such
Acquiring Person has a continuing agreement, arrangement or
21
understanding (whether or not in writing) regarding the transferred
Rights or (B) a transfer which the Board of Directors of the
Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 11(a)(ii), 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. No Right Certificate
will be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be
void pursuant to the proceeding sentence or any Associate or
Affiliate of such Acquiring Person or to any nominee of such
Acquiring Person or Affiliate or Associate thereof or to any
transferee of an Acquiring Person (or of any Affiliate or Associate
thereof) whose Rights would be void pursuant to the preceding
sentence. No Right Certificate will be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be
null and void pursuant to the preceding sentence or any Associate
or Affiliate thereof or to any nominee or transferee of such
Acquiring Person, Associate or Affiliate of such Acquiring Person;
and any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person or any Associate or Affiliate of
such Acquiring Person or to any nominee of such Acquiring Person or
Affiliate or Associate thereof or to any transferee of an Acquiring
Person or any Associate or Affiliate of such Acquiring Person whose
Rights would be void pursuant to the preceding sentence will be
cancelled. The Company shall use all reasonable efforts to ensure
that the provisions of this Section11(a)(ii) and Section 4(b)
hereof are complied with but shall have no liability to any holder
of Rights Certificates or other Persons as a result of its failure
to make any determinations with respect to an Acquiring Person or
any of its Affiliates, Associates or transferees hereunder.
22
(iii) In the event that there shall not be
sufficient treasury shares or authorized but unissued (and
unreserved) shares of Common Stock 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)
shares of Common Stock (up to the maximum number of shares of
Common Stock which may permissibly be issued) and (y) one
one-hundredth 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 of the
Company has determined to have the same aggregate current market
value (determined pursuant to Section 11(d)(i) and (ii) hereof, to
the extent applicable,) as one share of Common Stock (such number
of, or fractions of, Preferred Shares, debt, 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 shares of
Common Stock 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 shares
of Common Stock 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 shares of Common Stock 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
23
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) shares of Common Stock (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 shares of Common Stock (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 shares of Common Stock 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 procedures to allocate the
right to receive shares of Common Stock and capital stock
equivalents upon exercise of the Rights among holders of Rights.
(b) If the Company sets a record date for the issuance
of 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, privileges and preferences 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)) 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
24
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 to be
offered) would purchase at such current 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 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 as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent. 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) If the Company sets 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
25
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 of the Preferred Shares on such record date,
less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent and will be
binding on the Rights Agent and the holder of Rights) of the
portion of the assets or evidences of indebtedness so to be
distributed or of 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 will 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")
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 Security, or
(B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record
26
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 the American Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange or the
American 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 the
National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or,
if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. If on
any such date no market maker is making a market in the Security,
the "current per share market price" of such Security on such date
will be the price determined in good faith by the Board of
Directors. 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.
27
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares will
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
shares of Common Stock 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 hundred. If neither the shares of Common Stock 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 Board of Directors of the Company,
whose determination shall be described in a statement filed with
the Rights Agent.
(e) 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-
millionth 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 requires such
adjustment or (ii) the date of the expiration of the right to
exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) 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
28
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 and 13 with
respect to the Preferred Shares will apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subse-
quent to any adjustment made to the Purchase Price hereunder will
evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-hundredths of a Preferred Share purchasable from
time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(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 (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-
hundredths of a Preferred Share (calculated to the nearest one one-
millionth of a Preferred Share) obtained by (i) multiplying (x) the
number of one one-hundredths of a Preferred Share covered by a
Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths
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-hundredths
of a Preferred Share for which a Right was exercisable immediately
29
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will 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
will make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders will be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders will be entitled
after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided
for herein and shall be registered in the names of the holders of
record of Right 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 one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right Certifi-
xxxxx theretofore and thereafter issued may continue to express the
30
Purchase Price and the number of one one-hundredths of a Preferred
Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of
the then par value, if any, of the Preferred Shares issuable upon
exercise of the Rights, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any
Right exercised after such record date of the Preferred Shares and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary not-
withstanding, the Company will 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 any
consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current
market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or
31
exchangeable for Preferred Shares, dividends on Preferred Shares
payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made
by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) 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 shares of Common Stock payable
in shares of Common Stock or (ii) effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification
or otherwise than by payment of dividends in shares of Common
Stock) into a greater or lesser number of shares of Common Stock,
then in any such case (x) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise
of each Right will be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately before
such event and the denominator of which is the number of shares of
Common Stock outstanding immediately after such event, and (y) each
share of Common Stock outstanding immediately after such event
shall have issued with respect to it that number of Rights which
each share of Common Stock outstanding immediately prior to such
event had issued with respect to it. The adjustments provided for
in this Section 11(n) will be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or
consolidation is effected.
(o) 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 Agreement, including the
rights represented by Section 13.
32
(p) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit any Subsidiary to take) any action
for 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.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 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 shares of Common
Stock and the Preferred Shares a copy of such certificate, and (c)
mail a brief summary thereof to each holder of a Right Certificate
in accordance with Section 25 hereof. Notwithstanding the
foregoing sentence, the failure by the Company to make such
certification or give such notice will not effect the validity of
or the force or effect of the requirement for such adjustment
period. The Rights Agent will be fully protected in relying on any
such certificate and on any adjustment contained therein and will
not be deemed to have knowledge of such adjustment unless and until
it will have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) If, directly or indirectly, (i) the Company will
consolidate with, or merge with and into, any other Person, in
which the Company is not the continuing or survivor corporation,
(ii) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such
merger, all or part of the shares of Common Stock of the Company
33
shall be changed into or exchanged for stock or other securities of
any other Person (or the Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person other than the Company or
one or more of its wholly-owned Subsidiaries, then, and in each
such case, proper provision shall be made so that (A) each holder
of a Right (except as otherwise provided herein or a Right that has
become void pursuant to the provisions of Section 11(a)(ii) hereof)
shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable, in accordance with the terms
of this Agreement and in lieu of Preferred Shares, such number of
shares of Common Stock of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall
equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, and dividing that
product by (2) 50% of the then current per share market price of
the shares of Common Stock of such other Person (determined
pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (B) the issuer of
such shares of Common Stock shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement; (C) the term "Company" shall thereafter be deemed
to refer to such issuer; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Sections 11
and 24 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
34
applicable, as nearly as reasonably may be, in relation to the
shares of Common Stock thereafter deliverable upon the exercise of
the Rights. The Company will not consummate any such
consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the
Rights Agent a supplemental agreement so providing. The Company
will not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
(b) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (i) and (ii) of Section 13(a) if
(i) such transaction is consummated with a Person or Persons (or a
wholly owned Subsidiary of any such Person or Persons) who acquired
shares of Common Stock solely pursuant to a Permitted Offer;
(ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock
paid to all holders of Common Stock 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(b), 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 Right Certificates which evidence fractional Rights.
In lieu of such Fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which
such Fractional Rights would otherwise be issuable, an amount in
35
cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which
such Fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or the American Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange or the American Stock Exchange as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are integral
multiples of one one-hundredth 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-hundredth of a Preferred Share).
36
Fractions of Preferred Shares in integral multiples of one one-
hundredth 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 integral multiples of
one one-hundredth of a Preferred Share, the Company shall pay to
the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one 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 the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided
above).
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 Right Certificates (and, prior
to the Distribution Date, the registered holders of the shares of
Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the shares of Common
Stock), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of
the shares of Common Stock, may, in his own behalf and for his own
37
benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate
and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right, by accepting the same, consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the shares of
Common Stock, subject to the provisions of Section 11(a)(ii)
hereof;
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(c) subject to Sections 6(a) and 7(b) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or
the associated Common Stock certificate made by anyone other than
38
the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any
notice to the contrary;
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
an order, decree or ruling issued by a court of competent
jurisdiction or by 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
obligations under this Agreement; provided, however, the Company
must use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of 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 Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
39
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 any action taken,
suffered or omitted by the Rights Agent in connection with the
execution, acceptance and administration of this Agreement and the
exercise and performance hereunder of its duties, including the
costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for
the Preferred Shares or shares of Common Stock or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
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
40
Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as
a successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement any of the Right Certificates
shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
41
(a) The Right Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any
42
Right Certificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence
of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right
Certificates after receipt of the Certificate described in Section
12 hereof or has actual knowledge of such change or adjustment);
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 to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Preferred Shares will,
when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it
in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions.
43
(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,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
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 Stock or
Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such
44
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights
Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of
a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the
State of Oklahoma (or of any other state of the United States so
long as such corporation is authorized to do business as a banking
institution in the State of Oklahoma), in good standing, having an
office in the State of Oklahoma, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority
and which has at the time of its appointment as Rights Agent a com-
bined capital and surplus of at least $50 million. After appoint-
ment, 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 here-
under, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Not later than the effec-
tive date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock or Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case
may be.
45
Section 22. Issuance of New Right Certificates. Not-
withstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its 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 Right
Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption.
(a) The Company may, at its option, upon approval by a
majority of the members of the Board of Directors, at any time
prior to the earlier of (i) the Distribution Date and (ii) the
Final Expiration Date, redeem all, but not less than all, of the
then outstanding Rights at a redemption price of $0.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the Redemption
Price either in cash, shares of Common Stock (based on the current
per share market price thereof, as determined pursuant to Section
11(d) hereof, at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors;
provided that if the Company elects to pay the redemption price in
shares of Common Stock, the Company will not be required to issue
any fractional shares of Common Stock, and the number of shares of
Common Stock issuable to each holder of Rights will be rounded down
to the next whole share. The redemption of the Rights by the
Board of Directors may be made effective at such time and on such
basis and with such conditions as a majority of the Board of
Directors in its sole discretion may establish.
46
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders
of Rights will be to receive the Redemption Price. The Company
will promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such
notice will not affect the validity of such redemption. Within 10
days after such action of a majority of the Board of Directors
ordering the redemption of the Rights, the Company will give notice
of such redemption to the Rights Agent and will 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 Stock. Any notice which
is mailed in the manner herein provided will 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 or in Section 24 hereof or in
connection with the purchase of shares of Common Stock 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
47
the Transfer Agent of the shares of Common Stock and, upon such
action, all outstanding Rights and Right Certificates shall be null
and void without any further action by the Company.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after any Person become 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 11(a)(ii) hereof) for
shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any
time after any Person (other than any of the Excluded Persons),
together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the then outstanding shares
of Common Stock.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of shares of Common
Stock 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
48
the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section
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 Common Stock exchangeable for Rights, at the
initial rate of one one-hundredth of a Preferred Share (or equiva-
lent preferred share) for each share of Common Stock, as
appropriately adjusted. If there are not sufficient shares of
Common Stock or Preferred Shares issued but not outstanding, or
authorized but unissued, to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional
shares of Common Stock or Preferred Shares for issuance upon
exchange of the Rights.
(d) The Company will not be required to issue fractions
of Common Stock or to distribute certificates which evidence
fractional Common Stock. In lieu of such fractional Common Stock,
the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Stock
would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of Common
Stock. For the purposes of this paragraph (d), the current market
value of a whole share of Common Stock shall be the closing price
of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section
24.
49
Section 25. Notice of Certain Events. 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 its 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 an a Subsidiary of the Company in a
transaction which complies with Section 11(p), 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, (v) to effect the liquidation, dissolution or winding up
the Company, or (vi) to declare or pay any dividend on the shares
of Common Stock payable in shares of Common Stock or to effect a
subdivision, combination or consolidation of the shares of Common
Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock then, in each such case, the
Company shall give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of
such stock dividend, 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 shares
of Common Stock and/or 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 10 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 10 days prior to the date of the taking of such proposed
50
action or the date of participation therein by the holders of the
shares of Common Stock and/or Preferred Shares, whichever shall be
the earlier.
(b) If any events set forth in Section 11(a)(ii) hereof
shall occur, then the Company will as soon as practicable
thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of
such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section
11(a)(ii) hereof.
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 Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights
Agent) as follows:
LSB Industries, Inc.
00 Xxxxx Xxxxxxxxxxxx
X.X. Xxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 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 Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
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Bank One, N.A.
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Dee Xxxx Xxxxxxx
Assistant Vice President
Stock Transfer 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 Right
Certificate will 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. Prior to the
Distribution Date and subject to the terms of this Section 27, the
Company may from time to time (and the Rights Agent shall, if the
Company so directs) supplement or amend this Agreement without the
approval of any holders of the Rights or the Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) shorten or lengthen any
period of time hereunder or (iv) to make any other changes or
amendments to the provisions contained herein or with respect to
the Rights which the Company may deem necessary or desirable;
provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in
any manner which would adversely affect the interests of the
holders of the Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person). Without limiting
the foregoing, the Company may at any time prior to such time as
any Person becomes an Acquiring Person amend this Agreement to
lower the thresholds set forth in Sections 1(a) and 3(a) hereof
from 20% to not less than the greater of (i) any percentage greater
than the largest percentage of the outstanding shares of Common
52
Stock then known by the Company to be beneficially owned by any
Person (other than any of the Excluded Persons) and (ii) 10%.
Notwithstanding any other provision of this Section 27, and
provided this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of the foregoing sentence, (A) a
time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable or (B) any other time
period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 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 shares of
Common Stock. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment shall be made which changes
the redemption price or the number of Preferred Shares or shares of
Common Stock for which a Right is exercisable or exchangeable.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock or any other securities of the
Company of which any Person is the Beneficial Owner, will be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of
53
Directors of the Company will 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
Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii)
make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing), which are done or made by the Board of
Directors in good faith, will (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 to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the shares of
Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the shares of Common Stock).
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.
54
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of 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 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
LSB INDUSTRIES, INC.
ATTEST:
By /s/ Xxxx X. Xxxxxx
_____________________________
Xxxx X. Xxxxxx, President
/s/ Xxxxx X. Xxxxx (the "Company")
______________________________
Xxxxx X. Xxxxx, Secretary
(S E A L)
BANK ONE, N.A.
By /s/ Dee Xxxx X. Xxxxxxx
_____________________________
ATTEST: Name: Dee Xxxx X. Xxxxxxx
________________________
Title: Asst. Vice President
________________________
(the "Rights Agent")
Name: /s/ Xxxxxx Xxxxxxxxx
__________________________
Assistant Secretary
(S E A L)
56
