PAGE
Exhibit 4.1
AMENDED AND RESTATED RIGHTS AGREEMENT
-------------------------------------
Amended and Restated Rights Agreement (this "Agreement"), dated as of
February 2, 1999, between SELECTIVE INSURANCE GROUP, INC. , a New Jersey
corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW YORK, a
New York corporation (the "Rights Agent").
WHEREAS on November 3, 1989, the Board of Directors of the Company
(the "Board of Directors") authorized and declared a dividend of one
preferred share purchase right (a "Right") for each Common Share (as
hereinafter defined) of the Company outstanding on November 17, 1989 (the
"Record Date"), each Right 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 in the Rights Agreement dated as
of November 3, 1989 with respect to Rights (the "1989 Rights Agreement"),
and further authorized and directed the issuance of one Right with respect
to each Common Share to become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are defined in the 1989 Rights Agreement);
and
WHEREAS, on October 28, 1997, the Board of Directors of the Company
declared a two-for-one stock division of Common Shares for holders of record
of Common Shares on December 1, 1997
PAGE
with the effect pursuant to the Agreement that each Right became a right to
purchase one two-hundredth of a Preferred Share; and
WHEREAS, the Board of Directors has determined that the 1989 Rights
Agreement should be amended and restated as provided herein effective as of
the date hereof (the "Effective Date").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan, (iv) any Person who becomes the Beneficial Owner of
15% or more of the Common Shares then outstanding as a result of a
reduction in the number of Common Shares outstanding due to the
repurchase of Common Shares by the Company unless and until such
Person, after becoming aware that such Person has become the
-2-
PAGE
Beneficial Owner of 15% or more of the then outstanding Common
Shares, acquires beneficial ownership of additional Common Shares, or
(v) any Person who or which the Board of Directors shall determine in
good faith acquired 15% or more of the then outstanding Common Shares
inadvertently (including, without limitation, because (x) such Person
was unaware that he or it beneficially owned a percentage of Common
Shares that would otherwise cause such Person to be an Acquiring Person
or (y) such Person was aware of the extent of his or its Beneficial
Ownership of Common Shares but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the
Company, and such Person, together with all Affiliates and Associates,
as promptly as practicable (as determined, in good faith, by the Board
of Directors) divested or divests himself or itself of Beneficial
Ownership of a sufficient number of Common Shares so that such Person
is or would no longer be an Acquiring Person, and, together with all
Affiliates and Associates, thereafter does not acquire additional
Common Shares.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-
-3-
PAGE
2 of the General Rules and Regulations under the Exchange Act as in
effect on the Effective Date.
(c) A Person shall be deemed the "Beneficial Owner" of, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially owns, directly or indirectly,
within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the Effective
Date;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to
-4-
PAGE
beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or 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
-5-
PAGE
offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to
Section l(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, shall mean the number of such
securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New
Jersey are authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M., New
Jersey time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., New Jersey time, on the next
succeeding Business Day.
-6-
PAGE
(f) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $2 per share, of the Company.
"Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as in effect on the Effective Date.
(i) "Exchange Date" shall have the meaning set forth in Section 7
hereof.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) to
such entity.
(l) "Preferred Shares" shall mean shares of Series A Junior Preferred
Stock, without par value, of the Company having the rights and
preferences set forth in
-7-
PAGE
the Company's Restated Certificate of Incorporation, as amended, as in
effect on the Effective Date.
(m) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(n) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(o) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(p) "Section 13 Event" shall mean the event described in clauses (i),
(ii) and/or (iii) of Section 13(a) hereof.
(q) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(r) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by
such Person.
(s) A "Trigger Event" shall mean a Section 11(a)(ii) Event or any
Section 13 event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3
-8-
PAGE
hereof, shall prior to the Distribution Date also be the holders of the
Common Shares) in accordance with, and only to the extent provided by, 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 on ten (10) days prior written
notice to the Rights Agent. The Rights Agent shall have no duty to
supervise and shall in no event be liable for the acts or omissions of any
such co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the earlier of the
close of business on (i) the tenth day after the Shares Acquisition Date or
(ii) the tenth Business Day (or such later date as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of any such plan)
is first published, sent or given within the meaning of Rule 14d-2(a) under
the Exchange Act, the consummation of which would result in any Person
becoming an Acquiring Person (including any such date which is after the
date of this Agreement and prior to the issuance of any Rights; the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject
-9-
PAGE
to the provisions of Section 3(b) hereof) by the certificates for Common
Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be 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 Common Shares. 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 Common Shares
as of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right Certificate"),
evidencing one Right for each Common Share so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) As promptly as practicable after the Effective Date, the Company
will make available a copy of a Summary of Rights to Purchase Preferred
Shares in substantially the form of Exhibit B hereto (the "Summary of
Rights") to any holder of Rights who may so request from time to time prior
to the earliest of the Redemption Date, the Exchange Date or the Final
Expiration Date. With respect to certificates for Common Shares outstanding
as of the Effective Date, until the
-10-
PAGE
Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the
earliest of the Redemption Date, the Exchange Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
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 Common Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this paragraph (c)) after the Effective Date but prior to
the earliest of the Distribution Date, the Redemption Date, the Exchange
Date or the Final Expiration Date shall have impressed on, printed on,
written on or otherwise affixed to them a legend substantially in the form
of the following:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in an Amended and
Restated Rights Agreement between Selective Insurance
Group, Inc. (the "Company") and First Chicago Trust
Company of New York, dated as of February 2, 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 the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
-11-
PAGE
certificate. The Company 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, as set forth in the Rights
Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement)
may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or acquires
any Common Shares after the Record Date, but prior to the Distribution Date,
any Rights associated with Common Shares shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
Section 4. Form of 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
-12-
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions
of Section 22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one two-hundredths of a Preferred Share
as shall be set forth therein at the price per one two-hundredth of a
Preferred Share set forth therein (the "Purchase Price"), but the number of
such one two-hundredths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Without limiting the generality of the foregoing, any Rights
Certificate issued pursuant to this Agreement that represents Rights
beneficially owned by: (i) an Acquiring Person or Any Associate or
Affiliate of an Acquiring Person, (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors has determined is part of a
plan, arrangement or understanding that has a primary purpose or effect
avoidance of Section 7(e) hereof, and any Right
-14-
PAGE
Certificate issued pursuant to this Agreement upon transfer, exchange,
replacement or adjustment of any other Rights Certificate referred to in
this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may
become null and void in the circumstances specified
in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall 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, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by
the Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The 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
-14-
PAGE
signed such Right Certificate had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the 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 principal corporate trust office, 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 14 hereof, at any time after the close
of business on the Distribution Date, and at or prior to the close of
business on the earliest of the Redemption Date, the Exchange 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) may be transferred, split up, combined or
exchanged for another Right
-15-
PAGE
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of one two-hundredths of a Preferred Share 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 shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the principal corporate trust office of the Rights
Agent. Thereupon the Rights Agent shall countersign and make available for
delivery to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment by the registered holder 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
-16-
PAGE
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) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal corporate
trust office of the Rights Agent, together with payment of the Purchase
Price for each one two-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
February 2, 2009 (the "Final Expiration Date"), or (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof (the "Redemption
Date"), or (iii) the time at which the Rights are exchanged for Common
Shares as provided in Section 24 hereof (the "Exchange Date").
(b) The Purchase Price for each one two-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $80.00, shall be
subject to adjustment from time to time as provided in Section 11 or 13
hereof and shall be payable
-17
PAGE
in lawful money of the United States of America in accordance with paragraph
(c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one two-hundredth of a share of Preferred Stock
(or other shares, securities, cash or other assets, as the case may be) to
be purchased as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent, shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the shares
of Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the total number of one two-
hundredths of a share of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one two-hundredths of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary
-18-
PAGE
agent to comply with such request, (ii) requisition from the Company the
amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or, upon the order
of the registered holder of such Rights Certificate, registered in such name
or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase
Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or bank draft payable to
the order of the Company. In the event that the Company is obligated to
issue other securities (including Common Shares), pay cash and/or distribute
other property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or property
are available for distribution by the Rights Agent, if and when appropriate.
The Company reserves the right to require prior to the occurrence of a
Trigger Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be issued.
(d) In case the registered holder of any Rights Certificate will
exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights
-19-
PAGE
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person to holders of equity interests in such Acquiring
Person or any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer that is part of a plan, arrangement or understanding that has
a primary purpose or effect the avoidance of this Section 7(d), shall become
null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of
-20-
PAGE
this Section 7(e) and Section 4(b) hereof are complied with, but shall have
no liability to any holder of Rights Certificates or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise of Rights unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of 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, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent
-21-
PAGE
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, retain such cancelled Right Certificates.
Section 9. Reservation and Availability of Capital Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and,
following the occurrence of a Trigger Event, out of its other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earliest of (i) the Final Expiration Date, or (ii) the
Redemption Date, or (iii) the Exchange Date.
(b) 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 or other
applicable governmental tax, assessment or charge 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
-22-
PAGE
Certificate evidencing Rights surrendered for exercise, transfer, split-up,
combination or exchange or to issue or to deliver any certificates or
depositary receipts for Preferred Shares upon the exercise of any Rights
until any such tax, assessment or charge shall have been paid (any such tax,
assessment or charge 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, assessment or charge 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 for which the
-23-
PAGE
Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of Shares;
Number of Rights; Purchase Price. The Purchase Price, the number and kind
of shares covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of
the Preferred Shares (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
-24-
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, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock,
or fraction thereof, of the Company issuable upon exercise of one Right.
(ii) In the event (a "Section 11(a)(ii) Event") that any
Person shall at any time after the Effective Date become an Acquiring
Person, unless the event causing such person to become an Acquiring Person
is a transaction set forth in Section 13(a) hereof, then, promptly following
the occurrence of such event, proper provision shall be made so that each
holder of a Right (except as provided below and in Section 7(e) hereof)
shall thereafter have a right to receive, upon exercise of such
Right at a price equal to the then current Purchase Price multiplied by the
number of one two-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 Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by
the number of one two-hundredths of a Preferred Share for which a Right is
then
-25-
PAGE
exercisable and dividing that product by (y) 50% of the then current
per share market price of the Company's Common Shares (determined pursuant
to Section 11(d) hereof) on the date of the occurrence of such event. In
the event that any Person shall become an Acquiring Person and the Rights
shall then be outstanding, subject to the provisions of Section 23, the
Company shall not take any action which would eliminate or diminish the
benefits intended to be afforded by the Rights.
From and after the occurrence of a Section 11(a)(ii) Event,
any Rights that are or were acquired or beneficially owned by any Acquiring
Person (or any Associate or Affiliate of such Acquiring Person) shall be
void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate thereof;
no Right Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee
of such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence shall be cancelled.
-26-
PAGE
(iii) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii), the Company shall, to the extent permitted by applicable law and any
material agreements in effect on the date hereof to which the Company is a
party: (A) determine the value of the Common Shares issuable upon the
exercise of a Right and (B) with respect to each Right, upon exercise of
such Right, issue Common Shares to the extent available for the exercise in
full of such Right and, to the extent Common Shares are not so available,
make adequate provision to substitute for the Common Shares not received
upon exercise of such Right (1) cash, (2) other equity securities of the
Company (including, without limitation, shares or units of
shares, of preference stock which, by virtue of having dividend, voting and
liquidation rights substantially comparable to those of the Common Shares,
are deemed in good faith by the Board of Directors to have substantially the
same value as Common Shares) (such shares or units of shares of preference
stock or other equity securities are herein called "Common Share
equivalents"), (3) debt securities of the Company, (4) other assets, (5) a
reduction of the Purchase Price or (6) any combination of the foregoing,
having a value which, when added to the value of the Common Shares actually
issued upon exercise of such Right, shall have an aggregate value equal to
the value of the Common Shares
-27-
PAGE
for which such Right is exercisable, where such aggregate value has been
determined in good faith by the Board of Directors based upon the advice
of a nationally recognized independent investment banking firm selected in
good faith by the Board of Directors; provided, however, if the Company
shall not have made adequate provision to deliver value pursuant to clause
(B) above within thirty days following the date which is the later of (x)
the first occurrence of a Section 11(a)(ii) Event and (y) the date on which
the Company's right of redemption pursuant to Section 23 expires, then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common Shares (to
the extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the excess of (x) value of the Common
Shares for which such Right is exercisable over (y) the Purchase Price times
the number of one two-hundredths of a share of Preferred Shares for which a
Right was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event. If the Board of Directors shall determine in good faith
that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the thirty day
period set forth above may be extended to the extent necessary, but not more
than ninety days after the date of the Trigger Event, in order that the
Company may seek stockholder approval for the authorization of such
additional Common Shares
-28-
PAGE
(such thirty day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that
some action must be taken pursuant to this Section 11(a)(iii), the Company
(x) shall provide, subject to Section 11(a)(ii) hereof and the last sentence
of this Section 11(a)(iii), that such action shall apply uniformly to all
outstanding exercisable Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares and/or to decide the appropriate form
of distribution to be made pursuant hereto and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii)
the value of the Common Shares shall be the current per share market price
calculated as of the date of the Trigger Event and the per share or per unit
value of any "Common Share equivalent" shall be deemed to equal the current
per share market price on such date. The Board of Directors may, but shall
not be required to, establish procedures to allocate the right to receive
Common Shares upon the exercise of the Rights among holders of Rights
pursuant to this Section 11(a)(iii).
-29-
PAGE
(b) In case the Company shall fix 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 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 defined in 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 date plus the number of Preferred Shares
which the aggregate offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase at such current 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
-30-
PAGE
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, or fraction thereof, of
the Company issuable upon exercise of one Right. In case the subscription
price may be paid in 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, 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) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the
-31-
PAGE
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then current per
share market price of the Preferred Shares on such record date, less the
fair market value (as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such 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, or fraction
thereof, of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading
-32-
PAGE
Days (as such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share market price
of the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of 30 Trading Days after the ex-
dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case,
the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Security is
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the
last quoted
-33-
PAGE
sale price or, if not so quoted, the average of the high bid and
low asked prices on the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") National Market, or in the over-the-
counter market as reported by NASDAQ, or such other system then in use, or,
if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by 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.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined
in accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "current per share market
price" of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant
to Section 11(d)(i) (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by a factor of one hundred. If neither the Common Shares nor the
Preferred Shares are
-34-
PAGE
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, 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 after 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 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
-35-
PAGE
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 shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
Purchase, at the adjusted Purchase Price, the number of one two-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), 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 two-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 two-hundredths of a 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.
-36-
PAGE
(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 two-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 two-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the 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
-37-
PAGE
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company,
new Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and 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 two-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one two-
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 two-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
-38-
PAGE
and nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date 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 notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that the Board of Directors in their good faith judgment
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
-39-
PAGE
by their terms are convertible into or 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 Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common Shares, then, in
any such case, (i) the number of one two-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one two-hundredths of a Preferred
Share so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of Common Shares outstanding immediately
before such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (ii) each Common Share
outstanding immediately after such event shall have issued with respect to
it that number of Rights which each Common Share outstanding immediately
prior to such event had issued with respect to it. The adjustments provided
for in this
-40-
PAGE
Section 11(n) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(o) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(p) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(p)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets
or earning power aggregating more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(p) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights
-41-
PAGE
previously owned by such Person or any of its Affiliates and Associates.
(p) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 24 hereof,
take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
and describing such adjustment, and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with each
transfer agent for the Common Shares or 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.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Shares Acquisition
Date, directly or indirectly, (i) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(p) hereof), and the
Company shall not be the continuing or surviving corporation of such
-42-
PAGE
consolidation or merger, (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(p) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall
be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (iii)
the Company shall sell or otherwise transfer (on one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions each of which complies
with Section 11(p) hereof), then, and in each such case (except as may be
contemplated by Section 13(d) hereof), proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable Common Shares of the Principal Party (as
such term is hereinafter defined), not subject to any liens, rights of first
-43-
PAGE
refusal or other adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number of one two-
hundredths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such one two-hundredths of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product
(which, following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the current per-share market price (determined
pursuant to Section 11(d)(i) hereof) of the Common Shares of such Principal
Party on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provision of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation
of a sufficient number of its Common
-44-
PAGE
Shares) in connection with the consummation of any such
transaction as may be necessary to assure that provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer or
any securities into which Common Shares of the Company are converted in such
merger or consolidation, and if no securities are so issued, the Person that
is the other party to such merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case,
(1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Shares of which are and
have been so registered, "Principal Party" shall refer to such other
Person; and (2) in case such
-45-
PAGE
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Shares which have not been issued
or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a)
and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times meeting the requirements of the Act) until the Expiration Date;
-46-
PAGE
(ii) take all such other action as may be necessary to enable
the Principal Party to issue the securities purchasable upon exercise of the
Rights, including but not limited to the registration or qualification of
such securities under all requisite securities laws of jurisdictions of the
various states and the listing of such securities on such exchanges and
trading markets as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the
-47-
PAGE
current market value of a whole Right. For the purposes of this Section
14(a), the current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed 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 NASDAQ National Market System, or 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. If on any such date no such market maker is making a
market in the Rights, the fair value of the
-48-
PAGE
Rights on such date shall be determined in good faith by the Board of
Directors.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
two-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 two-hundredth of a
Preferred Share). Fractions of Preferred Shares in integral multiples of
one two-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 two-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 the 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
-49-
PAGE
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 (or, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and 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
-50-
PAGE
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 Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal corporate trust office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificate or the associated Common
Shares certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary.
-51-
PAGE
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.
Section 18. Concerning the Rights Agent. The Company agrees to pay
to the Rights Agent such compensation as shall be agreed to in writing by
the Company and the Rights Agent 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 expenses 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
-52-
PAGE
to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without gross negligence, bad faith
or willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses
(including counsel fees 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 Common Shares or for
other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, 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
-53-
PAGE
Agent shall be a party, or any corporation succeeding to the corporate trust
or stock transfer 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 counter-signature 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
-54-
PAGE
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:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement
(including in determining the identity of an Acquiring Person or its
Affiliates or Associates) the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman of the Board, the President, a Vice
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such
-55-
PAGE
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. In any event, the Rights Agent shall not be liable hereunder
for consequential or special damages.
(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 as to 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 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 or transferability of the Rights (including
-56-
PAGE
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 Section 3, 11, 13, 23 or 24 hereof, 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 the Rights Agent's actual receipt of
notice that such change or adjustment is required); 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 President, a 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 to be taken by it in good faith in
accordance with instructions of any such
-57-
PAGE
officer or for any delay in acting while waiting for those instructions.
(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, subcontractors or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, subcontractors 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.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds
-58-
PAGE
or adequate indemnification against such risk or liability is not
reasonably assured to it.
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 by
registered or certified mail. In the event of such resignation, the Company
shall mail a notice thereof to each transfer agent of the Common Shares 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, with or without cause, upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of
any Right Certificate or the Rights Agent
-59-
PAGE
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 a court,
shall be (a) a corporation organized and doing business under the laws of
the United States or of the State of New York or New Jersey (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 New York or New Jersey or
has arranged for such a banking institution to act on its behalf as a
service bureau or agent), in good standing (both itself and its service
bureau or agent), having a principal office in the State of New York or New
Jersey, which is authorized under any 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 combined capital and surplus of at least $50 million (or such
lower amount as approved by the Board of Directors) or (b) an affiliate of a
corporation described in clause (a) of this sentence. After appointment,
the successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time
held y it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the
-60-
PAGE
purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares and 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.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights Certificates 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 Board of Directors may, at its option, at any time prior to
the earlier of the close of business on (i) the Shares Acquisition Date or
(ii) the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.0l per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
-61-
PAGE
occurring after the Effective Date (such redemption price being hereinafter
referred to as the "Redemption Price"). Subject to the foregoing, the
redemption of the Rights by the Board of Directors may be made effective at
such time on such basis and with such conditions as the Board of Directors
in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors 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 shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. The Company shall promptly mail a notice of
redemption to all the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase for value any Rights
-62-
PAGE
at any time in any manner other than that specifically set forth in this
Section 23, and other than in connection with the purchase of Common Shares
prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors may, at its
option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
such Subsidiary, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of Directors 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
-63-
PAGE
Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall 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,
or, prior to the Distribution Date, as they appear on the registry books of
the transfer agent for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by
which the exchange of Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute for each Common Share that would otherwise be
issuable upon the exchange of a Right a number of Preferred Shares or
fractions thereof (or equivalent preferred shares, as such term is defined
in Section 11(b) hereof) having an aggregate current per share market price
-64-
PAGE
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of a Common Share (determined pursuant to Section 11(d) hereof)
as of the date of issuance of such Preferred Shares or fractions thereof (or
equivalent preferred shares).
(d) In the event that there shall not be sufficient Common 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
Common Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid to
the registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Common
Shares. For the purposes of this subsection (e), the current per share
market price of a whole Common Share shall be the closing price of a Common
Share (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.
-65-
PAGE
Section 25. Notice of Certain Events.
(a) In the 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, 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 of the Company, or (vi) to declare or pay any dividend on the
Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares), then, in each such
case, the Company shall give to each holder of a Right certificate and to
the Rights Agent, in accordance with Section 25 hereof, a notice of such
proposed action, which shall
-66-
PAGE
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 Common Shares 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 action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate and to the Rights Agent, in accordance
with Section 25 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. Unless otherwise provided herein, 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
-67-
PAGE
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Secretary
Unless otherwise provided herein, 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:
First Chicago Trust Company of New York
Suite 4660
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Att: Corporate Actions Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders
of 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
-68-
PAGE
other provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended
or supplemented in any manner which would adversely affect the interests of
the holders of Rights; and provided further that the Rights Agent's consent
must be obtained regarding any amendment or supplement pursuant to this
Section which materially adversely alters the Rights Agent's rights or
duties. 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 15% threshold set forth in Section l(a) to not less than the
greater of (i) the sum of .001% and the largest percentage of the
outstanding Common Shares then known by the Company to be beneficially owned
by any Person and all Affiliates and Associates of such Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) and (ii) 10%.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company
-69-
PAGE
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated.
Section 31. 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 New Jersey and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such
-70-
PAGE
counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions
hereof.
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.
ATTEST: SELECTIVE INSURANCE GROUP, INC.
By Xxxxxxx X. Xxxxxxx By Xxxxx X. Xxxxxxxxx
--------------------- --------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxxxxx
Title: Secretary Title: Chairman of the Board
and Chief Executive
Officer
ATTEST: First Chicago Trust Company of New York
By Xxxx X. Xxxxxx By Xxxxxx Xxxxxxxxxx
---------------------- --------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Customer Service Title: Assistant Vice President
Officer
-71-
PAGE
EXHIBIT A
---------
Form of Right Certificate
Certificate No. R- Rights
---------
NOT EXERCISABLE AFTER FEBRUARY __, 2009 OR
EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0l
PER RIGHT OR EXCHANGE FOR COMMON STOCK ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
SELECTIVE INSURANCE GROUP, INC.
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement, dated as of February 2, 1999 (the
"Rights Agreement"), between Selective Insurance Group, Inc., a New Jersey
corporation (the "Company"), and First Chicago Trust Company of New York
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M., New York City time, on February 2, 2009 at the principal
corporate trust office of the Rights Agent, or at the office of its
successor as Rights Agent, one two-hundredth of a fully paid nonassessable
share of Series A Junior Preferred Stock, without par value (the "Preferred
Shares"), of the Company, at a purchase price of $80.00 per one two-
hundredth of a Preferred Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate and Form of Election to Purchase duly
executed with the Purchase Price. The number of Rights evidenced by this
Right Certificate (and the number of one two-hundredths of a Preferred Share
which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of
February 2, 1999, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the
number of one two-hundredths of a Preferred Share which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain events.
A-1
PAGE
This Right Certificate Supercedes and replaces all Right Certificates
issued pursuant to the rights Agreement dated November 17, 1989 between the
Company and the Rights Agent.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the
Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at a redemption price of
$.0l per Right or exchanged by the Company for shares of its common stock,
$2.00 per value.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one two-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
this
A-2
PAGE
Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of , 19 .
ATTEST: SELECTIVE INSURANCE GROUP, INC.
-------------------- By:----------------------
Name: Name:
Title: Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By-------------------
Authorized Signatory
A-3
PAGE
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate)
FOR VALUE RECEIVED (Print name of registered holder) hereby sells,
assigns and transfers unto (Print name and addressof transferee) this Right
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint Attorney, to transfer
the within Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: , 19 .
-------- --
-----------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
---------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
-------------------------
---------------------------------------------------------------------------
A-4
PAGE
Form of Reverse Side of Right Certificate--continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
the Right Certificate.)
TO: SELECTIVE INSURANCE GROUP, INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to Purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of and delivered to:
Please insert social security
or other identifying number:
-------------------------------------
--------------------------------------------------------------------------
(Please Print name and address)
---------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
------------------------------------
---------------------------------------------------------------------------
(Please Print name and address)
---------------------------------------------------------------------------
Dated: , 19 .
--------- --
--------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-5
PAGE
Form of Reverse Side of Right Certificate -- continued
-------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
----------------------
-------------------------------------------------------------------------
NOTICE
------
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner
of the Rights evidenced by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and such Assignment or Election to Purchase will not be honored.
A-6
PAGE
EXHIBIT B
UNDER CERTAIN CIRCUMSTANCES AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 2, 1999 (the "Effective Date"), the Board of Directors
("Board of Directors") of Selective Insurance Group, Inc. (the "Company")
adopted an amended and Restated Stockholder Rights Plan and entered into an
Amended and Restated Rights Agreement (the "Rights Agreement") between the
Company and First Chicago Trust Company of New York, as Rights Agent (the
"Rights Agent"). The Rights Agreement amends and restates the Rights
Agreement dated November 17, 1989 between the Company and the Rights Agent.
Each share of the Company's outstanding common stock, par value $2.00
("Common Shares"), is entitled to one preferred share purchase right (a
"Right"). Giving effect to the Company's two-for-one stock split
distributed on December 1, 1997, each Right entitles the registered holder
to purchase from the Company one two-hundredth of a share of Series A Junior
Preferred Stock, without par value (the "Preferred Shares"), of the Company
at a price of $80.00 (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in the Rights Agreement.
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons
have acquired beneficial ownership of 15% or more of the outstanding Common
Shares (an "Acquiring Person") or (ii) 10 business days (or such later date
as may be determined by action of the Board of Directors prior to such time
as any person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming an Acquiring Person (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Share certificates outstanding as of the Record
Date, by such Common Share certificate with a copy of this Summary of Rights
attached thereto.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier
B-1
PAGE
redemption, exchange or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new issuance of
Common Shares, will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), the surrender for transfer of any certificates
for Common Shares, outstanding as of the Record Date, even without such
notation or a copy of this Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. The Rights are not exercisable
until the Distribution Date. The Rights will expire on February 2, 2009 (the
"Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each
case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights or warrants to subscribe for or purchase Preferred Shares at a price,
or securities convertible into Preferred Shares with a conversion price,
less than the then current market price of the Preferred Shares or (iii)
upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends or
dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one two-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares, or subdivisions,
consolidations or combinations of the Common Shares, occurring, in any such
case, prior to the Distribution Date.
In the event that Rights become exercisable for Common Shares and there
are not sufficient Common Shares authorized and unissued or held in treasury
to permit the exercise in full of Rights, the Company shall, to the extent
permitted by applicable law and any material agreements to which the Company
is a party: (i) determine the value of the Common Shares issuable upon the
B-2
PAGE
exercise of a Right and (ii) with respect to each Right, upon exercise
thereof, issue Common Shares to the extent available and, to the extent
Common Shares are not available, make adequate provision to substitute for
the Common Shares not received upon exercise thereof (1) cash, (2) other
equity securities of the Company, (3) debt securities of the Company, (4)
other assets, (5) a reduction of the Purchase Price or (6) any combination
of the foregoing, having a value which, when added to the value of the
Common Shares actually issued upon exercise of such Right, shall have an
aggregate value equal to the value of the Common Shares for which such Right
is exercisable.
Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common Share. In
the event of liquidation, the holders of the Preferred Shares will be
entitled to a minimum preferential liquidation payment of $100 per share but
will be entitled to an aggregate payment of 100 times the payment made per
Common Share. Each Preferred Share will have 1 vote, and each one two-
hundredth of a Preferred Share will have one two-hundredths vote, voting
together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged,
each Preferred Share will be entitled to receive 100 times the amount
received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend and liquidation
rights, the value of the one two-hundredth interest in a Preferred Share
issuable upon exercise of each Right should approximate the value of
one-half of a Common Share.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will have become void), will thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price, that number of Common Shares having a market value of two
times the Purchase Price. In the event that the Company is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power are sold, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by
the Acquiring Person (which will have become void), will thereafter have the
right to receive, upon the exercise thereof at the then current Purchase
Price, that number of shares of common stock of the acquiring company (or
its
B-3
page
parent) which at the time of such transaction will have a market value
of two times the Purchase Price.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an increase or decrease of at
least 1% in such Purchase Price. No fractional Preferred Shares will be
issued (other than fractions which are integral multiples of one two-
hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred Shares on the last
trading day prior to the date of exercise.
The Board of Directors may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price") at any time prior to
the time that a person has become an Acquiring Person. Subject to the
foregoing, the redemption of the Rights may be made effective at such time
and on such basis with such conditions as the Board of Directors in its sole
discretion may establish. Upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
At any time after a person has become an Acquiring Person and prior to
the acquisition by such person or group of 50% more of outstanding Common
Shares, the Board of Directors may exchange the rights (other than the
rights held by such person or group which have become void), in whole or in
part, for Common Shares at an exchange ratio of one Common Share, or one
two-hundredth of a share of Preferred Stock (or of a class or series of the
Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights, including an amendment to
lengthen or shorten any time periods pertaining to Rights or to lower
certain thresholds described above to not less than the greater of (i) the
sum of .001% and the largest percentage of the outstanding Common Shares
then known by the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, except that from and after
such time as any person or group of affiliated or associated persons becomes
an Acquiring Person no such amendment may adversely affect the interests of
the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
B-4
PAGE
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to Amendment No. 1 on Form 8-A/A dated
February 2, 1999 to the Registration Statement on Form 8-A dated November 6,
1989. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
B-5
PAGE
TABLE OF CONTENTS
-----------------
PAGE
----
Section 1. Certain Definitions.......................... 2
Section 2. Appointment of Rights Agent.................. 8
Section 3. Issue of Right Certificates.................. 9
Section 4. Form of Right Certificates................... 12
Section 5. Countersignature and Registration............ 14
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated,Destroyed, Lost or Stolen
Right Certificates........................... 15
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.................... 17
Section 8. Cancellation and Destruction of Right
Certificates................................. 21
Section 9. Reservation and Availability of Capital
Stock........................................ 22
Section 10. Preferred Shares Record Date................. 23
Section 11. Adjustment of Purchase Price; Number
and Kind of Shares; Number of Rights;
Purchase Price............................... 24
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares.......................... 42
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power................... 42
Section 14. Fractional Rights and Fractional Shares...... 47
Section 15. Rights of Action............................. 50
Section 16. Agreement of Right Holders................... 51
Section 17. Right Certificate Holder Not Deemed a
Stockholder.................................. 52
Section 18. Concerning the Rights Agent.................. 52
PAGE
TABLE OF CONTENTS
-----------------
(Continued)
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.............................. 53
Section 20. Duties of Rights Agent....................... 55
Section 21. Change of Rights Agent....................... 59
Section 22. Issuance of New Right Certificates........... 61
Section 23. Redemption................................... 61
Section 24. Exchange..................................... 63
Section 25. Notice of Certain Events..................... 66
Section 26. Notices...................................... 67
Section 27. Supplements and Amendments................... 68
Section 28. Successors................................... 69
Section 29. Benefits of this Agreement................... 70
Section 30. Severability................................. 70
Section 31. Governing Law................................ 70
Section 32. Counterparts................................. 70
Section 33. Descriptive Headings......................... 71
EXHIBIT A Form of Right Certificate........................ A-1
EXHIBIT B Summary of Rights to Purchase
Preferred Shares................................. B-1
