XXXX BURNIE BANCORP
and
THE BANK OF XXXX BURNIE
Rights Agent
Rights Agreement
Amended and Restated as of December 27, 1999
________________________________________________________________
TABLE OF CONTENTS
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Section Page
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1 Certain Definitions . . . . . . . . . . . . . 1
2 Appointment of Rights Agent . . . . . . . . . 9
3 Issuance of Rights Certificates . . . . . . . 9
4 Form of Rights Certificates . . . . . . . . .12
5 Countersignature and Registration . . . . . .13
6 Transfer, Split Up, Combination and Ex-
change of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certifi-
xxxxx . . . . . . . . . . . . . . . . . . . .14
7 Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . .15
8 Cancellation and Destruction of Rights
Certificates. . . . . . . . . . . . . . . . .19
9 Reservation and Availability of Capital
Stock . . . . . . . . . . . . . . . . . . . .19
10 Record Date for Securities Issued Upon
Exercise. . . . . . . . . . . . . . . . . . .21
11 Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. . . . . .22
12 Certificate of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . . . . .34
13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . . .35
14 Fractional Rights and Fractional Shares . . .40
15 Rights of Action. . . . . . . . . . . . . . .41
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16 Agreement of Rights Holders . . . . . . . . .42
17 Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . .43
18 Concerning the Rights Agent . . . . . . . . .43
19 Merger or Consolidation or Change of Name
of Rights Agent. . . . . . . . . . . . . . .44
20 Duties of Rights Agent. . . . . . . . . . . .45
21 Change of Rights Agent. . . . . . . . . . . .48
22 Issuance of New Rights Certificates . . . . .49
23 Redemption and Termination . . . . . . . . .50
24 Exchange . . . . . . . . . . . . . . . . . .51
25 Notice of Certain Events. . . . . . . . . . .52
26 Notices . . . . . . . . . . . . . . . . . . .54
27 Supplements and Amendments. . . . . . . . . .55
28 Successors. . . . . . . . . . . . . . . . . .56
29 Determinations and Actions by the Board,
etc.. . . . . . . . . . . . . . . . . . . . .56
30 Benefits of this Agreement. . . . . . . . . .57
31 Severability. . . . . . . . . . . . . . . . .57
32 Governing Law . . . . . . . . . . . . . . . .57
33 Counterparts. . . . . . . . . . . . . . . . .58
34 Descriptive Headings. . . . . . . . . . . . .58
Exhibit A -- Form of Rights Certificate
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Exhibit B -- Summary of Rights
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ii
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, between Xxxx Burnie Bancorp, a
Maryland corporation (the "Company"), and The Bank of Xxxx
Burnie (the "Rights Agent"), as amended and restated as of
December 27, 1999.
W I T N E S S E T H
WHEREAS, on February 13, 1998, (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company (the
"Board") authorized and declared a dividend distribution of one
Right (as hereinafter defined) for each share of Common Stock
(as hereinafter defined) of the Company outstanding at the close
of business on February 13, 1998 (the "Record Date") and
authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of Section
11(i) hereof) for each share of Common Stock of the Company
issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and the Distribution Date
(as hereinafter defined) and under certain circumstances
thereafter, each Right initially representing the right to
purchase one share of Common Stock of the Company, upon the
terms and subject to the conditions hereinafter set forth (the
"Rights"); and
WHEREAS, the Company and the Rights Agent desire to
restate the Rights Agreement in its entirety to incorporate the
amendments thereto dated December 9, 1999 and December 27, 1999;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements hereinafter set forth, the parties hereby
agree as follows:
Section 1. Certain Definitions. For purposes of this
-------------------
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person
(as hereinafter defined) who or which, together with all
Affiliates and Associates (as hereinafter defined) of such
Person, shall be the Beneficial Owner (as hereinafter defined)
of 10% or more of the shares of Common Stock of the Company then
outstanding, but
shall not include an Exempt Person (as hereinafter defined).
(b) "Act" shall mean the Securities Act of 1933,
as amended.
(c) "Adjustment Shares" shall have the meaning
set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act (as
hereinafter defined).
(e) "Agreement" shall mean this Rights Agreement
as originally executed or as it may from time to time be
supplemented, amended, renewed, restated or extended pursuant to
the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to beneficially own," any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, owns or has the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights,
warrants, options or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," (A) securities tendered pursuant
to a tender or exchange offer made by 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) securities issuable upon
exercise of Rights at any time prior to the occurrence of
a Triggering Event (as hereinafter defined), or (C)
securities issuable upon exercise of Rights from and
after the occurrence of a Triggering Event which Rights
are Original Rights (as hereinafter defined) or
securities issued pursuant to Section 11(i) hereof in
connection
2
with an adjustment made with respect to any Original
Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the
Exchange Act), including pursuant to any agreement,
arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding (whether or not
in writing) to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a
revocable proxy or consent given in response to a public
proxy or consent solicitation and, if the Common Stock is
then registered under Section 12 of the Exchange Act,
made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor statement) or, in the event the
Common Stock is not then registered under Section 12 of
the Exchange Act, would not then be so reportable if the
Common Stock were registered under Section 12 of the
Exchange Act; or
(iii) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in
clause (A) of the proviso to subparagraph (ii) of this
paragraph (f)) or disposing of any voting securities of
the Company;
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provided, however, that nothing in this paragraph (f) shall
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cause a Person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to be deemed to
"beneficially own," any securities acquired, or which that
Person has the right to acquire, through such Person's
participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such
acquisition.
(g) "Board" shall have the meaning set forth in
the first "WHEREAS" clause at the beginning of this Agreement.
(h) "Business Day" shall mean any day other than a
Saturday, Sunday or day on which banking institutions in the
State of Maryland are authorized or obligated by law or
executive order to close.
(i) "Close of Business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
--------
however, that if such date is not a Business Day, it shall mean
5:00 P.M., New York City time, on the next succeeding Business
Day.
(j) "Common Stock" when used in reference to the
Company shall mean the common stock, par value $1.00 per share,
of the Company or any other shares of capital stock of the
Company into which such stock shall be reclassified or changed.
"Common Stock" when used with reference to any Person other than
the Company organized in corporate form shall mean (i) the
capital stock or other equity interest in such Person with the
greatest voting power, (ii) the equity securities or other
equity interest having power to control or direct the management
of such Person or (iii) if such Person is a Subsidiary (as
hereinafter defined) of another Person, the capital stock,
equity securities of or other equity interest in the Person or
Persons which ultimately control such first-mentioned Person and
which has issued any such outstanding capital stock, equity
securities or equity interest. "Common Stock" when used with
reference to any Person not organized in corporate form shall
mean units of beneficial interest which (x) represent the right
to participate generally in the profits and losses of such
Person (including without limitation any flow-through
4
tax benefits resulting from an ownership interest in such
Person) and (y) are entitled to exercise the greatest voting
power of such Person or, in the case of a limited partnership,
have the power to remove the general partner or partners.
(k) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(l) "Company" shall have the meaning set forth in
the first paragraph of this Agreement until a successor
corporation or entity shall have become such or until a
Principal Party (as hereinafter defined) shall assume, and
thereafter be liable for, all obligations and duties of the
Company hereunder pursuant to the applicable provisions of this
Agreement, and thereafter, "Company" shall mean such successor
or Principal Party, respectively.
(m) "Continuing Outside Directors" shall mean (i)
the members of the Board, while such person are members of the
Board, who are not Acquiring Persons, or Affiliates or
Associates of any Acquiring Person or representatives of an
Acquiring Person or of any such Affiliate or Associate and who
are not officers of the Company or any of its Subsidiaries, and
were members of the Board prior to the date of this Agreement,
or (ii) Persons who subsequently became members of the Board,
while such Persons are members of the Board, who are not
Acquiring Persons or Affiliates or Associates of an Acquiring
Person, or representatives of an Acquiring Person or of any such
Affiliate or Associate, and who are not officers of the Company
or any of its Subsidiaries, if such Persons' nominations for
election or election to the Board are recommended or approved by
a majority of the Continuing Outside Directors.
(n) "Current Market Price" shall have the meaning
set forth in Section 11(d) hereof.
(o) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(p) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
5
(q) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(r) "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof.
(s) "Exempt Person" shall mean (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit
plan or employee stock plan of the Company or of any Subsidiary
of the Company, (iv) any Person or entity organized, appointed,
established or holding Common Stock of the Company by, for or
pursuant to the terms of any employee benefit plan or employee
stock plan, (v) a Person who, together with its Affiliates and
Associates, becomes the Beneficial Owner of 10% or more of the
shares of Common Stock of the Company then outstanding solely as
a result of a reduction in the number of shares of Common Stock
of the Company outstanding due to the repurchase of shares of
Common Stock of the Company by the Company, unless and until
such time as such Person shall purchase or otherwise become (as
a result of actions taken by such Person or its Affiliates or
Associates) the Beneficial Owner of additional shares of Common
Stock of the Company constituting 1% or more of the then
outstanding shares of Common Stock of the Company, or(vi) any
Person who becomes the Beneficial Owner of 10% or more of the
shares of Common Stock then outstanding (but less than 10 1/4%)
and who(x)reported or is required or permitted to report such
ownership on Schedule 13G under the Exchange Act (or any
comparable or successor report), or on Schedule 13D under the
Exchange Act (or any comparable or successor report), which
Schedule 13D does not state any intention to or reserve the
right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the Common
Stock),and(y), within five Business Days of being requested by
the Company, certifies to the Company that they become the
Beneficial Owner of 10% or more of the outstanding shares of
Common Stock inadvertently or without knowledge of the terms of
the Rights and divests sufficient shares of Common Stock such
that such Person together with their Affiliates or Associates is
no longer the Beneficial Owner of 10% or more of the shares of
Common Stock then outstanding,
6
and (z), in the event a record date shall have been fixed for
the purpose of determining the stockholders entitled to vote at
an annual or special meeting of stockholders while such Person,
together with its Affiliates and Associates, was the Beneficial
Owner of 10% or more of the Common Stock then outstanding, such
Person shall cause to be voted on each proposal presented at
such annual or special meeting in the same proportion as the
votes cast by all other stockholders an amount of shares of
Common Stock Beneficially Owned by such Person equal to the
difference between the aggregate number of shares of Common
Stock Beneficially Owned by it and the number of shares equal to
10% of the shares of Common Stock outstanding on such record
date; provided, however, that if the Person requested to so
certify and divest as provided in clause (y) fails to do so
within five Business Days of such request, then such Person
shall cease to be an Exempt Person immediately after such
five-Business-Day Period.
(t) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(u) "Final Expiration Date" shall mean the Close
of business on February 13, 2008.
(u-1) "Interested Person" with respect to a
Transaction shall mean any Person who (i) is or will become an
Acquiring Person if such Transaction were to be consummated or
an Affiliate or Associate of such a Person, and (ii) is, or
directly or indirectly proposed, nominated or financially
supported, a director of the Company in office at the time of
consideration of such Transaction who was elected at an annual
or special meeting of stockholders.
(v) "Original Rights" shall mean Rights acquired
by a Person or such Person's Affiliates or Associates prior to
the Distribution Date or issued pursuant to Section 3(a) or
Section 22 hereof.
(w) "Person" shall mean any individual, firm,
corporation, partnership, trust or other entity and includes
without limitation an unincorporated group of persons who, by
formal or informal agreement or arrangement (whether or not in
writing), have embarked on a common purpose or act.
7
(x) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(y) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(z) "Record Date" shall have the meaning set forth
in the First "WHEREAS" clause at the beginning of this
Agreement.
(aa) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(bb) "Rights" shall have the meaning set forth in
the First "WHEREAS" clause at the beginning of this Agreement.
(cc) "Rights Agent" shall mean the Person named as
the "Rights Agent" in the first paragraph of this Agreement
until a successor Rights Agent shall have become such pursuant
to the applicable provisions hereof, and thereafter "Rights
Agent" shall mean such successor Rights Agent. If at any time
there is more than one Person appointed by the Company as Rights
Agent pursuant to the applicable provisions of this Agreement,
"Rights Agent" shall mean and include each such Person.
(dd) "Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(ee) "Rights Dividend Declaration Date" shall
have the meaning set forth in the First "WHEREAS" clause at the
beginning of this Agreement.
(ff) "Section 11(a)(ii) Event" shall have the
meaning set forth in Section 11(a)(ii) hereof.
(gg) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(hh) "Section 13 Event" shall have the meaning set
forth in Section 13(a) hereof.
8
(ii) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(jj) "Stock Acquisition Date" shall mean the first
date of public announcement by the Company that an Acquiring
Person has become such.
(kk) "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which securities or
other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or
other persons performing similar functions of such corporation
or other entity are at the time directly or indirectly
beneficially owned or otherwise controlled by such Person and
any Affiliate or Associate of such Person.
(ll) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(mm) "Summary of Rights" shall have the meaning set
forth in Section 3(b) hereof.
(nn) "Trading Day" shall have the meaning set forth
in Section 11(d) hereof.
(nn-1) "Transaction" shall mean any merger,
consolidation or sale of assets described in Section 13(a)
hereof or any acquisition of Common stock which would result in
a Person becoming an Acquiring Person.
(oo) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
---------------------------
has appointed the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of the Common Stock of the Company) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable,
upon ten days' prior written notice to the Rights Agent. The
Rights Agent shall have no
9
duty to supervise, and in no event shall be liable for, the acts
or omissions of any such Co-Rights Agent. In the event that the
Company appoints one or more Co-Rights Agents, the respective
duties of the Rights Agent and any Co-Rights Agents shall be as
the Company shall determine, and any actions which may be taken
by the Rights Agent pursuant to the terms of this Agreement may
be taken by any such Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
-------------------------------
(a) Until the earlier of (i) the Close of Business
on the tenth Business Day (or such specified or unspecified
later date as may be determined by the Board before the
occurrence of a Distribution Date) after the Stock Acquisition
Date (or, if the tenth Business Day (or such later date) after
the Stock Acquisition Date occurs before the Record Date, the
Close of Business on the Record Date) or (ii) the Close of
Business on the tenth Business Day (or such specified or
unspecified later date as may be determined by the Board before
the occurrence of a Distribution Date) after the date that a
tender or exchange offer by any Person is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act if upon
consummation thereof such Person would be the Beneficial Owner
of 10% or more of the Common Stock of the Company then
outstanding (the earlier of (i) and (ii) being herein referred
to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraphs (b) and (c) of this
Section 3) by the certificates for the Common Stock of the
Company registered in the names of the holders thereof (which
certificates shall be deemed also to be certificates for Rights)
and not by separate certificates and (y) the Rights will be
transferable only in connection with the transfer of the
underlying shares of Common Stock of the Company (including a
transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class,
insured, postage prepaid mail, to each record holder of the
Common Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates,
substantially in the form attached hereto as Exhibit A (the
"Rights
10
Certificates"), evidencing one Right for each share of Common
Stock of the Company so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of
Rights per share of Common Stock of the Company has been made
pursuant to Section 11(i) hereof, at the time of distribution of
the Rights Certificates, the Company shall not be required to
issue Rights Certificates evidencing fractional Rights, but may,
in lieu thereof, make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) The Company will send a copy of a Summary of
Rights, in substantially the form attached hereto as Exhibit B
(the "Summary of Rights"), by first-class, postage prepaid mail,
to each record holder of the Common Stock of the Company who may
so request from time to time. With respect to certificates for
the Common Stock of the Company outstanding as of the Record
Date, as set forth in paragraph (a) above, until the earlier of
the Distribution Date or the Expiration Date, the Rights will be
evidenced by such certificates for the Common Stock of the
Company with or without a copy of the Summary of Rights attached
and the registered holders of the Common Stock of the Company
shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates representing shares of
Common Stock of the Company in respect of which Rights have been
issued shall also constitute the transfer of the Rights
associated with such shares of Common Stock of the Company.
(c) Rights shall be issued in respect of all shares of
Common Stock of the Company which are issued(whether originally
issued or from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration
Date and, to the extent provided in Section 22 hereof, in
respect of shares of Common Stock of the Company issued after
the Distribution Date and prior to the Expiration
11
Date. Certificates representing such shares of Common Stock of
the Company shall also be deemed to be certificates for Rights,
and shall, to the extent reasonably practicable following the
Record Date, bear the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between Xxxx Burnie Bancorp (the "Company")
and The Bank of Xxxx Burnie (the "Rights Agent") dated
as of February 13, 1998, as the same may be amended,
restated, renewed or extended from time to time (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal offices of the Company. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge, promptly
after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement,
Rights beneficially owned (as such term is defined in
the Rights Agreement) by any Person who is, was or
becomes an Acquiring Person or any Affiliate or
Associate thereof as such terms are defined in the
Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void. The Rights shall not be
exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite
qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be
obtainable.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii)
the Expiration Date, the Rights associated with the Common Stock
of the Company represented by such certificates shall be
evidenced by such certificates alone, and registered holders of
Common Stock of the Company shall also be the registered holders
of the associated Rights, and the
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transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the
Company represented by such certificates.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the forms of
election to purchase, assignment and certificate contained
therein to be printed on the reverse thereof) shall each be
substantially in the form attached hereto as Exhibit A and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and
on their face shall entitle the holders thereof to purchase such
number of shares of Common Stock of the Company as shall be set
forth therein at the exercise price set forth therein (such
exercise price per share of Common Stock of the Company, as
adjusted from time to time hereunder, the "Purchase Price"), but
the amount and type of securities purchasable upon the exercise
of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights beneficially
owned by: (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of
13
equity interests in the Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which the
Board, in its sole discretion, has determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect avoidance of the provisions of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or Section
11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certifi-
cate are or were beneficially owned by a Person
who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate
and the Rights represented hereby may become
null and void in the circumstances specified in
Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed
under seal on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually or
by facsimile signature, and by the Treasurer or any Assistant
Treasurer of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and
shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the
Company before countersignature by an authorized signatory of
the Rights Agent and issuance and delivery by the Company, such
Rights Certificates, nevertheless, may be countersigned by an
authorized signatory of the Rights Agent and issued and
delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not
ceased to be such
14
officer of the Company; and any Rights Certificate may be signed
on behalf of the Company by any person who, at the actual date
of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although
at the date of the execution of this Agreement any such person
was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
-----------------------------------
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
--------------------------------------------------------------
Stolen Rights Certificates.
--------------------------
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate
or Rights Certificates may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates
entitling the registered holder to purchase a like number of
shares of Common Stock of the Company (or, following the
occurrence of a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or
Rights Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent and
shall surrender the Rights Certificate or Rights Certificates to
be transferred, split up, combined or exchanged, with the forms
of assignment and certificate contained therein duly executed,
at the principal office or offices of the Rights Agent
designated for such purpose. Neither
15
the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such
surrendered Rights Certificate or Rights Certificates until the
registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse
side of such Rights Certificate or Rights Certificates and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company
may require payment from the holder of a Rights Certificate of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a valid Rights Certificate
and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and reimbursement to
the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor
to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
----------------------------------
Expiration Date of Rights.
-------------------------
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein,
including without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after
16
the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate
contained therein duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of shares of Common Stock
of the Company (or, following the occurrence of a Triggering
Event, other securities, cash or other assets, as the case may
be) as to which such surrendered Rights are then exercisable, at
or prior to the earliest of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in Section
23 hereof and (iii) the time at which the Rights expire pursuant
to Section 13(d) hereof (the earliest of (i), (ii) and (iii)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common
Stock of the Company pursuant to the exercise of a Right shall
initially be $100, shall be subject to adjustment from time
to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate contained therein duly executed,
accompanied by payment, with respect to each Right so exercised,
of the Purchase Price, as such amount may be reduced pursuant to
Section 11(a)(iii) hereof, for each share of Common Stock of the
Company (or, following a Triggering Event, for other 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 Sections 7(f) and 20(k)
hereof, thereupon promptly (i) (A) requisition from any transfer
agent of the shares of Common Stock of the Company (or make
available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of shares of Common
Stock of the Company 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 Common Stock of the
Company issuable upon
17
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of shares of Common Stock of the
Company as are to be purchased (in which case certificates for
the shares of Common Stock of the Company represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) requisition from the
Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause
the same to be delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv)
after receipt thereof, deliver such cash, if any, to, or upon
the order of, the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made in cash or
by certified check, cashier's check or bank draft payable to the
order of the Company. In the event that the Company is
obligated to issue other securities, pay cash or distribute
other property pursuant to this Section 7(c) or Section 11(a)
hereof, the Company will make all arrangements necessary so that
such other securities, cash or other property are available for
distribution by the Rights Agent, if and when appropriate. In
the event that, immediately prior to the occurrence of a
Distribution Date, the number of shares of Common Stock of the
Company which are authorized by the Company's articles of
incorporation, as amended and in effect at such time, but not
outstanding or reserved for issuance for purposes other than
upon exercise of the Rights is not sufficient to permit exercise
in full of the Rights in accordance with their terms, the
Company, acting by resolution of the Board, shall follow the
same procedures and may take any of the same actions in
connection with the exercise of Rights under this Section 7(c)
as are required or permitted to be followed or taken pursuant to
Section 11(a)(iii) hereof with respect to substitution of value
in connection with the exercise of Rights under Section
11(a)(ii) hereof. The Company reserves the right to require
prior to the occurrence
18
of a Triggering Event that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of
Common Stock of the Company would be issued.
(d) In case the registered holder of any
Rights Certificate shall 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 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 Affiliate or Associate of an Acquiring
Person which the Board, in its sole discretion, determines is or
was involved in or caused or facilitated, directly or indirectly
(including through any change in the Board), such Section
11(a)(ii) Event, (ii) a transferee of any such Acquiring Person
(or of any such Affiliate or Associate) who becomes a transferee
after such Acquiring Person becomes such or (iii) a transferee
of any such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently
with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for
consideration) from such 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 (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of this Section
7(e), shall become null and void without any further action, and
no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no
19
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 any of their 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 of any Rights Certificate upon the occurrence
of any purported assignment or exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment
or election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such assignment or exercise
and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
--------------------------------------
Certificates. All Rights Certificates surrendered for the
------------
purpose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or 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 Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions
of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled
Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Rights
Certificates and, in such case, shall deliver a certificate of
destruction thereof to the Company.
20
Section 9. Reservation and Availability of Capital
---------------------------------------
Stock.
-----
(a) The Company covenants and agrees that, from
and after the Distribution Date, it will cause to be reserved
and kept available out of its authorized and unissued shares of
Common Stock of the Company (and, following the occurrence of a
Triggering Event, other securities) or out of its authorized and
issued shares of Common Stock of the Company held in its
treasury, the number of shares of Common Stock of the Company
(and, following the occurrence of a Triggering Event, the amount
of other securities) that, as provided in this Agreement
(including Section 11(a)(iii) hereof), will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock of the
Company (and, following the occurrence of aTriggering Event,
other securities) issuable and deliverable upon the exercise of
the Rights may be listed on any national securities exchange,
the Company shall use all reasonable efforts to cause, from and
after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use all reasonable efforts
to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Triggering Event in which the
consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with this
Agreement, or as soon as required by law following the
Distribution Date, as the case may be, a registration statement
under the Act on an appropriate form with respect to the Common
Stock or other securities purchasable upon exercise of the
Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii)
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Expiration
Date. The Company will also
21
take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the
various states and other jurisdictions in connection with the
exercisability of the Rights. The Company may, acting by
resolution of the Board, temporarily suspend, for a period of
time not to exceed 90 days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. 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 and shall issue a public
announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a
registration statement is required in other circumstances
following the Distribution Date, the Company may similarly
temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been
obtained, or the exercise thereof shall not otherwise be
permitted under applicable law or a registration statement shall
not have been declared effective.
(d) The Company covenants and agrees that it
will take all such action as may be necessary to ensure that all
shares of Common Stock of the Company (and, following the
occurrence of a Triggering Event, other securities) delivered
upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and agrees
that, except as set forth in Section 6(a) hereof and this
Section 9(e), it will pay when due and payable any and all
federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of shares of
Common Stock
22
of the Company (or other securities, as the case may be) upon
the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Rights Certificates to a Person
other than, or the issuance or delivery of a number of shares of
Common Stock of the Company (or other securities, as the case
may be) in respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights surrendered
for exercise, nor shall the Company be required to issue or
deliver any certificates for a number of shares of Common Stock
of the Company (or other securities, as the case may be) in a
name other than that of the registered holder upon the exercise
of any Rights until such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Record Date for Securities Issued Upon
--------------------------------------
Exercise. Each Person in whose name any certificate for a
--------
number of shares of Common Stock of the Company (or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the
holder of record of such shares of Common Stock of the Company
(or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the
Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the transfer books
for the Common Stock (or other securities, as the case may be)
of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the transfer books for the
Common Stock (or other securities, as the case may be) of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate, as such, shall not
be entitled to any rights of a stockholder of the Company (or
the Principal Party) with respect to shares for which the Rights
shall be exercisable, including without limitation the right to
vote, to
23
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 (or the Principal
Party), except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
----------------------------------------
Kind of Shares or Number of Rights. The Purchase Price, the
----------------------------------
number and kind of shares, or fractions thereof, purchasable
upon exercise of 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 outstanding shares of Common Stock of the
Company payable in shares of Common Stock of the Company,
(B) subdivide or split the outstanding shares of Common
Stock of the Company, (C) combine or consolidate the
outstanding shares of Common Stock of the Company into a
smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Common Stock of
the Company (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of
such subdivision, split, combination, consolidation or
reclassification, and the number and kind of shares of
Common Stock (or other securities, as the case may be)
issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of
shares of Common Stock or capital stock, as the case may be,
which, if such Right had been exercised immediately prior
to such date, whether or not such Right was then
exercisable, and at a time when the transfer books for the
Common Stock (or other capital stock, as the case may be) of
the Company were open, he would have owned upon such
exercise and been entitled to receive by
24
virtue of such dividend, subdivision, split, combination,
consolidation or reclassification. If an event occurs which
would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii)
Event") that any Person (other than an Exempt Person), alone
or together with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration Date, become
the Beneficial Owner of 10% or more of the shares of Common
Stock of the Company then outstanding, unless the event
causing (A) the 10% threshold to be crossed is a transaction
set forth in Section 13(a) hereof or (B) is an acquisition
of shares of Common Stock of the Company pursuant to a
tender offer or an exchange offer for all outstanding shares
of Common Stock of the Company at a price and on terms
determined by at least a majority of the Continuing Outside
Directors, after receiving advice from one or more
investment banking firms, to be (x) at a price that is fair
to stockholders (taking into account all factors which such
Continuing Outside Directors deem relevant, including
without limitation prices which could reasonably be achieved
if the Company or its assets were sold on an orderly basis
designed to realize maximum value) and (y) otherwise in the
best interests of the Company and its stockholders, then
promptly after the date of occurrence of a Section 11(a)(ii)
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 the right to receive, upon
exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of
shares of Common Stock of the Company as shall equal the
result obtained by (1) multiplying the then current Purchase
Price by the then number of shares of Common Stock of the
Company for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event
(whether
25
or not such Right was then exercisable) and (2)
dividing that product (which following such first
occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of
Common Stock of the Company on the date of such first
occurrence (such number of shares being referred to as the
"Adjustment Shares"), provided, however, that if the
--------
quotient obtained by dividing the Purchase Price (as in
effect immediately following such first occurrence) by the
number of Adjustment Shares is less than one, then the
number of Adjustment Shares shall be reduced to the
extent necessary so that such quotient shall be equal to
one.
(iii) In lieu of issuing any shares of
Common Stock of the Company in accordance with Section
11(a)(ii) hereof, the Company, acting by resolution of the
Board, may, and in the event that the number of shares of
Common Stock of the Company which are authorized by the
Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than
upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the
Company, acting by resolution of the Board, shall: (A)
determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price attributable to each
Right (such excess being referred to as the "Spread") and
(B) with respect to all or a portion of each Right (subject
to Section 7(e) hereof), make adequate provision to
substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) equity securities of the Company other
than Common Stock of the Company (such equity securities
being referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any
combination of the foregoing which, when added to any shares
of Common Stock of the Company issued upon such exercise,
has an
26
aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board based
upon the advice of a nationally recognized investment
banking firm selected by the Board; provided, however, that
--------
if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) hereof, as
such date may be extended pursuant to Section 23(a) hereof
or amended pursuant to Section 27 hereof, expires (the later
of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price,
shares of Common Stock of the Company (to the extent
available) and then, if necessary, cash, which shares and
cash have an aggregate value equal to the Spread. If the
Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock of the Company
could be authorized for issuance upon exercise in full of
the Rights, the 30-day period set forth above may be
extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization
of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken
pursuant to the first or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares or to decide the appropriate form of
distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended and a
27
public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii),
the value of the Common Stock of the Company shall be the
Current Market Price per share of the Common Stock of the
Company on the Section 11(a)(ii) Trigger Date, and the value
of any Common Stock Equivalent shall be deemed to be equal
to the value of the Common Stock of the Company on such
date.
(b) In case the Company shall fix a record
date for the issuance of rights, options or warrants to all
holders of Common Stock of the Company entitling them to
subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Stock of the
Company or securities convertible into Common Stock of the
Company or Common Stock Equivalents at a price per share of
Common Stock of the Company or per share of Common Stock
Equivalents (or having a conversion price per share, if a
security convertible into Common Stock of the Company or Common
Stock Equivalents) less than the Current Market Price per share
of Common Stock of the Company 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 sum of (i) the number of shares of Common Stock of the
Company or Common Stock Equivalents outstanding on such record
date, (ii) the number of shares of Common Stock of the Company
or Common Stock Equivalents underlying securities outstanding on
such record date which are convertible into Common Stock of the
Company or Common Stock Equivalents and (iii) the number of
shares of Common Stock of the Company which the aggregate
subscription price of the total number of shares of Common Stock
of the Company or Common Stock Equivalents so to be offered (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 sum of
(i) the number of shares of Common Stock of the Company
outstanding on such record date, (ii) the number of shares of
Common Stock of the Company or Common Stock Equivalents
underlying securities outstanding on such record date which are
convertible into Common Stock of the Company or Common Stock
Equivalents and (iii) the
28
number of additional shares of Common Stock of the Company or
Common Stock Equivalents to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of
which may be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board,
which determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
Shares of Common Stock of the Company 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 a distribution to all holders of Common Stock of the
Company (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, cash
(other than a regular, periodic cash dividend out of the
earnings or retained earnings of the Company), assets (other
than a dividend payable in Common Stock of the Company, but
including any dividend payable in stock other than Common Stock
of the Company) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price
to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the Current Market Price per share of Common Stock of the
Company on such record date, less the fair market value (as
determined in good faith by the Board, which determination shall
be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes) of the portion of the
cash, assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to a share
of Common Stock of the Company and the denominator of which
shall be such Current Market Price per share of Common Stock of
the Company.
29
Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record
date had not been fixed.
(d) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, the "Current Market Price" per share of
Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the Current Market Price per share of Common Stock on
any date shall be deemed to be the average of the daily closing
prices per share of such Common Stock for the 10 consecutive
Trading Days immediately following such date; provided, however,
that in the event that the Current Market Price per share of
the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares
of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights) or (B) any
subdivision, combination, consolidation, reverse stock split or
reclassification of such Common Stock, and prior to the
expiration of the requisite 30-Trading Day or 10-Trading Day
period, as set forth above, after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination, consolidation, reverse stock split or
reclassification, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system or as quoted by the Nasdaq National Market with respect
to securities listed or admitted to trading on another
30
national securities exchange or quoted by the Nasdaq National
Market, respectively or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange or quoted by the Nasdaq National Market, the last
quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported
by The Nasdaq Stock Market or such other quotation system then
in use or, if on any such date the shares of Common Stock are
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board. If
on any such date the Common Stock is not publicly held or not so
listed, admitted to trading or quoted, and no market maker is
making a market in such Common Stock, Current Market Price shall
mean the fair value of such shares on such date as determined in
good faith by the Board, which determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes. The term "Trading Day" shall mean
a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on
any national securities exchange, a Business Day.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease in the Purchase Price of at least one percent;
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 one cent or to the nearest one-thousandth of a share of
Common Stock of the Company as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction
which mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a)
31
hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other
than Common Stock of the Company, thereafter the number of such
other shares so receivable upon exercise of any Right and the
Purchase Price thereof (or the number of Rights) shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock of the Company contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k), (l) and (m)
hereof, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Common Stock of the Company shall
apply on like terms to any such other shares; provided, however,
that the Company shall not be liable for its inability to
reserve and keep available for issuance upon exercise of the
Rights pursuant to Section 11(a)(ii) hereof a number of shares
of Common Stock of the Company greater than the number then
authorized by the Company's articles of incorporation, but not
outstanding or reserved for any other purpose.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares of Common Stock of the
Company purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised
its election as provided in Section 11(i) hereof, upon each
adjustment of the Purchase Price as a result of the calculations
made in Sections 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of shares of Common Stock of the
Company (calculated to the nearest one-thousandth of a share of
Common Stock) obtained by (i) multiplying (x) the number of
shares of Common Stock of the Company 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.
32
(i) The Company may elect on or after the date
of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of shares of
Common Stock of the Company purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of
shares of Common Stock of the Company for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of that number of Rights
shall become the number of Rights (calculated to the nearest
one-thousandth of a Right) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates
have been issued, shall be at least 10 days later than the date
of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights ertificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
33
(j) Irrespective of any adjustment or change
in the Purchase Price or the number of shares of Common Stock of
the Company issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to
express the Purchase Price per share of Common Stock of the
Company and the number of shares Common Stock of the Company
which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause
an adjustment reducing the Purchase Price below the then stated
or par value, if any, of the number of shares of Common Stock of
the Company issuable upon exercise of the Rights, the Company
shall use all reasonable efforts to take any corporate action
which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue, fully paid
and nonassessable, such number of shares of Common Stock of the
Company 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 number of shares of Common Stock of the Company or
other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of
shares of Common Stock of the Company or other capital stock or
securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to make
such adjustments in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in its good
34
faith judgment the Board shall determine to be advisable in
order that any (i) consolidation or subdivision of the Common
Stock of the Company, (ii) issuance wholly for cash of any
shares of Common Stock of the Company at less than the Current
Market Price, (iii) issuance wholly for cash of shares of Common
Stock of the Company or securities which by their terms are
convertible into or exchangeable for shares of Common Stock of
the Company, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Common Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that it
shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction or a series
of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any of its Subsidiaries in
one or more transactions each of which complies with Section
11(o) hereof) if (x) at the time of or immediately after such
consolidation, merger, sale or transfer there are any rights,
warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale or transfer, the stockholders
of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that,
after the Distribution Date, it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any Subsidiary
to take) any action if at
35
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 Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent, and with each transfer
agent for the Common Stock of the Company, a copy of such
certificate and (c) mail a brief summary thereof to each record
holder of a Rights Certificate (or, if prior to the Distribution
Date, to each record holder of a certificate representing shares
of Common Stock of the Company) in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of
the Company to prepare such certificate or statement or make
such filings or mailings shall not affect the validity of, or
the force or effect of, the requirement for such adjustment.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall
not be deemed to have knowledge of any such adjustment unless
and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer
-----------------------------------------
of Assets or Earning Power.
--------------------------
(a) In the event (a "Section 13 Event") that,
on or after the Stock Acquisition Date, directly or indirectly,
(x) the Company shall consolidate or otherwise combine with, or
merge with or into, any other Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) and the Company shall not be the
continuing or surviving corporation of such consolidation,
combination or merger, (y) any Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate or otherwise combine
with, or merge with or into, the Company and the Company shall
be the continuing or surviving corporation of such
consolidation, combination or merger and, in connection with
such consolidation, combination or merger, all or
36
part of the outstanding shares of Common Stock of the Company
shall be changed into or exchanged for stock
or other securities of any other Person or Persons or cash or
any other property or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole and calculated on the basis of
the Company's most recent regularly prepared financial
statements) to any Person or Persons (other than the Company or
any Subsidiary of the Company in one or more transactions each
of which complies with Section 11(o) hereof); provided, however,
--------
that this clause (z) of Section 13(a) hereof shall not apply to
the pro rata distribution by the Company of assets (including
securities) of the Company or any of its Subsidiaries to all
holders of Common Stock of the Company; 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, on or after the later of (A) the date of the first
occurrence of any such Section 13 Event or (B) the date of the
expiration of the period within which the Rights may be redeemed
pursuant to Section 23 hereof (as the same may be extended
pursuant to Section 23(a) hereof or amended pursuant to Section
27 hereof), 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, nonassessable and
freely tradeable shares of Common Stock of the Principal Party,
not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by
the number of shares of Common Stock of the Company 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 shares of Common Stock of the
Company 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 (2)
37
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 50% of
the Current Market Price per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13
Event; (ii) the shares of Common Stock of such Principal Party
received by each holder of a Right upon exercise of that Right
shall be fully paid and nonassessable; (iii) 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; (iv) the term
"Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (v)
such Principal Party shall take such steps (including without
limitation the reservation of a sufficient number of shares of
its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (vi)
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) hereof, (A) the Person that is the
issuer of any securities into which shares of Common
Stock of the Company are converted, changed or
exchanged in such merger, consolidation or
combination (or, if there is more than one such
issuer, the issuer the Common Stock of which has the
greatest market value) or (B) if no securities are so
issued, the Person that is the other party to such
merger (and survives the merger), consolidation or
combination (or, if there is more than one such
Person, the Person the Common Stock of which has the
greatest market value), or if the other party to the
merger does
38
not survive the merger, the Person that does survive
the merger (including the Company, if it survives);
and
(ii) in the case of any transaction
described in clause (z) of the first sentence of
Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or
earning power transferred pursuant to such
transaction or transactions or, if each Person that
is a party to such transaction or transactions
receives the same portion of the assets or earning
power so transferred or if the Person receiving the
greatest portion of the assets or earning power
cannot be determined, whichever of such Persons is
the issuer of Common Stock having the greatest market
value;
provided, however, that in any such case, (1) if the Common
--------
Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to
such other Person; (2) if the Common Stock of such Person is not
and has not been so registered and such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is
the issuer of the Common Stock having the greatest aggregate
market value; and (3) if the Common Stock of such Person is not
and has not been so registered and such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to
each of the chains of ownership having an interest in such joint
venture as if such party were a Subsidiary of both or all of
such joint venturers, and the Principal Parties in each such
chain shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such
Person bear to the total of such interests.
39
(c) The Company shall not consummate any
Section 13 Event unless the Principal Party shall have a
sufficient number of authorized shares of its Common Stock which
have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section
13 and unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that the requirements of
Section 13(a) and Section 13(b) hereof shall promptly be
performed in accordance with their terms and that such Section
13 Event shall not result in a default by the Principal Party
under this Agreement as the same shall have been assumed by the
Principal Party pursuant to Section 13(a) and Section 13(b)
hereof and further providing that, as soon as practicable after
the date of any such Section 13 Event, the Principal Party will:
(i) prepare and file a registration
statement under the Act with respect to the Rights
and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A)
become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at
all times meeting the requirements of the Act) until
the Expiration Date and to similarly comply with
applicable state securities laws;
(ii) use its best efforts to list or
obtain quotation of (or continue the listing or
quotation of) the Rights and the securities
purchasable upon exercise of the Rights on a national
securities exchange or by an automated quotation
service;
(iii) deliver to holders of the Rights
historical financial statements for the Principal
Party and each of its Affiliates which comply in all
respects with the requirements for registration on
Form 10 (or any successor form) under the Exchange
Act; and
(iv) use its best efforts to obtain
waivers of any rights of first refusal or
40
preemptive rights in respect of the shares of Common
Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to
successive mergers, consolidations, combinations or sales or
other transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in
Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement
to the contrary, Section 13 hereof shall not be applicable to a
transaction described in subparagraph (x) or subparagraph (y) of
Section 13(a) hereof if (i) such transaction is consummated with
a Person or Persons (or a wholly owned Subsidiary of any such
Person or Persons) who acquired shares of Common Stock of the
Company pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock of the Company which complies
with the exception provided for in Section 11(a)(ii) hereof,
(ii) the price per share of Common Stock of the Company offered
in such transaction is not less than the price per share of
Common Stock of the Company paid to all
holders of shares of Common Stock of the Company whose shares
were purchased pursuant to such tender offer or exchange offer
and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock of the Company
pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated
by this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any
such fractional Rights, there shall be paid to the
41
registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to the date
on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any Trading 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 or the
Nasdaq National Market with respect to securities listed on
another national securities exchange or quoted by the
Nasdaq National Market, respectively, or if the Rights are not
listed or admitted to trading on any national securities
exchange or quoted by the Nasdaq National Market, the last
quoted price or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market, as reported
by The Nasdaq Stock Market or such other quotation 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. If on any such date
no such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by
the Board shall be used.
(b) The Company shall not be required to issue
fractions of shares of Common Stock of the Company upon exercise
of the Rights or to distribute certificates which evidence
fractional shares of Common Stock of the Company. In lieu of
fractional shares of Common Stock of the Company, the Company
may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of
one share of Common Stock of the
42
Company. For purposes of this Section 14(b), the current market
value of one share of Common Stock of the Company shall be the
closing price of a share of Common Stock of the Company, or if
unavailable, the appropriate alternative price (in each case, as
determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of
that Right expressly waives such holder's right to receive any
fractional Rights or any fractional shares upon exercise of a
Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action
----------------
in respect of this Agreement, other than rights of action vested
in the Rights Agent in Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the
Common Stock of the Company), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or,
prior to the Distribution Date, of the Common Stock of the
Company), may, in the holder's own behalf and for the holder's
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or
otherwise act in respect of, the holder's right to exercise the
Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every
---------------------------
holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other
holder of a Right that:
43
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
shares of Common Stock of the Company;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices
of the Rights Agent designated for such purposes, duly endorsed
or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates contained therein duly
executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated certificate for Common Stock
of the Company) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Rights Certificate or the
associated certificate for Common Stock of the Company made by
anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof,
shall be required to be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement
to the contrary, neither the Company nor the Rights Agent shall
have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or by reason of any
statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however,
--------
that the Company must use its reasonable efforts to have any
such order, decree or ruling lifted or otherwise overturned as
soon as possible.
44
Section 17. Rights Certificate Holder Not Deemed a
--------------------------------------
Stockholder. No holder, as such, of any Rights Certificate shall
-----------
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of shares of Common Stock of
the Company or any other securities of the Company which may at
any time be issuable upon the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent,
reimbursement for its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
(b) The Rights Agent shall be protected and
shall incur no liability for or in respect of any action taken,
suffered or omitted by it in good faith in connection with its
administration of this Agreement in reliance upon any Rights
Certificate or certificate
45
for Common Stock of the Company or for other securities of the
Company or upon any instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document
reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name
-----------------------------------------
of Rights Agent.
---------------
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any
merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or 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, however, that such
--------
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. If at
the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall
have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so
countersigned; and if at that time any of the Rights
Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights certificates
shall have the full force provided in the Rights Certificates
and in this Agreement.
(b) If at any time the name of the Rights
Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and if at
that
46
time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name;
and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel, and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including without limitation
the identity of any Acquiring Person and the determination of
Current Market Price) be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the
Board, the President and Chief Executive Officer, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for
or by reason of any of the statements of fact or recitals
contained in this Agreement or in the
47
Rights Certificates, nor shall it be required to verify the same
(except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereon); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of a certificate describing
any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock of
the Company to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock
of the Company will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from the Chairman of the Board, the
President and Chief Executive Officer, or any Executive Vice
President 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
48
be taken by it in good faith in accordance with instructions of
any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be
taken by, or omission of, the Rights Agent under this Agreement
and the date on or after which such action shall be taken or
such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent
in accordance with a proposal included in any such application
on or after the date specified in such application (which date
shall not be less than five Business Days after the date the
Company actually receives such application, unless the Company
shall have consented in writing to an earlier date) unless,
prior to taking any such action (or prior to the effective date
in the case of an omission), the Rights Agent shall have
received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in any of the Rights or other securities of the Company,
become pecuniarily interested in any transaction in which the
Company may be interested, contract with or lend money to the
Company or otherwise act as fully and freely as though the
Rights Agent were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in
49
the performance of any of its duties hereunder (other than
internal costs incurred by the Rights Agent in providing
services to the Company in the ordinary course of its business
as Rights Agent) or in the exercise of its rights if there shall
be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment
or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to
clause 1 or clause 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent
----------------------
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock of the Company by registered or certified mail and to the
holders of the Rights Certificates, if any, by first-class mail.
The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock of the Company by registered
or certified mail and to the holders of the Rights Certificates,
if any, by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. If no successor Rights Agent shall have been
appointed within 30 days
50
from the effectiveness of such removal, resignation or
incapacity and no registered holder of any Rights Certificate
has applied pursuant to this Agreement for the appointment of a
new Rights Agent, the Company automatically shall be designated
as successor Rights Agent. Any successor Rights Agent appointed
by the Company or by such a court shall be (a) a corporation
organized and doing business under the laws of the United States
or of any state of the United States, in good standing, which is
authorized to do business as a banking institution in such
state, is authorized under such laws to exercise corporate trust
powers, is subject to supervision or examination by federal or
state authority and has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100,000,000 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 by it hereunder and shall execute
and deliver, if applicable, any further assurance, conveyance,
act or deed necessary for that purpose. Not later than the
effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock of the Company, and
shall mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of
the Rights Certificates to the contrary, the Company may, at its
option, issue new Rights Certificates evidencing Rights in such
form as may be approved by the Board to reflect any adjustment
or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the
Rights Certificates made in
51
accordance with the provisions of this Agreement. In addition,
in connection with the issuance or sale of shares of Common
Stock of the Company following the Distribution Date and prior
to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock of the Company so
issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement or upon the exercise,
conversion or exchange of securities hereafter issued by the
Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such
issuance or sale; provided, however, that
--------
(i) no such Rights Certificate shall be issued if and to the
extent that the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights
Certificate would be issued and (ii) no such Rights Certificate
shall be issued if and to the extent that appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
--------------------------
(a) The Board may, at its option, at any time
prior to the earlier of (i) the Close of Business on the tenth
Business Day (or such specified or unspecified later date as may
be determined by the Board before the Rights cease being
redeemable) following the Stock Acquisition Date (or, if the
Stock Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the tenth Business Day following
the Record Date) or (ii) the Final Expiration Date, direct the
Company to, and if directed, the Company shall, redeem all but
not less than all of the then outstanding Rights at a redemption
price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price")
provided, however, if the Board authorizes redemption of the
--------
Rights in either of the circumstances set forth in clauses (i)
or (ii) below, then there must be Continuing Outside Directors
then in office and such
52
authorization shall require the concurrence of a majority of
such Continuing Outside Directors: (i) such authorization occurs
on or after the time a Person becomes an Acquiring Person, or
(ii) such authorization occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority
of the directors in office at the commencement of such
solicitation, if any Person who is a participant in such
solicitation has stated (or, if upon the commencement of such
solicitation, a majority of the Board has determined in good
faith) that such Person (or any of its Affiliates or Associates)
intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which
would cause the occurrence of a Triggering Event unless,
concurrent with such solicitation, such Person (or one or more
of its Affiliates or Associates) is making a tender offer or
exchange offer in compliance with Section 11(a)(ii)(B).
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board
directing the Company to make the redemption of the Rights,
evidence of which shall have been filed with the Rights Agent,
and without any further action and without any notice, the right
to exercise the Rights will terminate, and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the
action of the Board directing the Company to make the redemption
of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to each record holder of the
Common Stock of the Company at the address of such holder shown
on the records of the Company. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption
Price will be made.
(c) Notwithstanding the provision of Section
23(a), in the event that a majority of the Board of Directors of
the Company is elected by
53
stockholder action at an annual or special meeting of
stockholders, then until the 180th day following the
effectiveness of such election (including any postponement or
adjournment thereof), the Rights shall not be redeemed if such
redemption is reasonably likely to have the purpose or effect of
facilitating a Transaction with an Interested Person.
Section 24. Exchange.
--------
(a) The Board may at its option, at any time
on or after a Section 11(a)(ii) Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock at an
exchange ratio of 1.5 shares of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board
ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 and without any further action and without
any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to
-------- -------
give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state
the method by which the exchange of the shares of Common Stock
for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to
the
54
provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit any exchange of the Rights as contemplated
in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares
of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to
issue fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common Stock.
In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of Rights with regard to
which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the
value of a whole share of Common Stock. For purposes of this
subsection (d), the value of a whole share of Common Stock shall
be the closing price (as determined pursuant to the second
sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this
Section 24.
(e) Notwithstanding the provision of Section
24(a), in the event that a majority of the Board of Directors of
the Company is elected by stockholder action at an annual or
special meeting of stockholders, then until the 180th day
following the effectiveness of such election (including any
postponement or adjournment thereof), the Rights shall not be
exchanged pursuant to Section 24(a) if such exchange is
reasonably likely to have the purpose or effect of facilitating
a Transaction with an Interested Person.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock of
the Company or to make any other
55
distribution to the holders of Common Stock of the Company
(other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), (ii) to offer to the holders
of Common Stock of the Company rights or warrants to subscribe
for or to purchase any additional shares of Common Stock of the
Company or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of the
Common Stock of the Company (other than a reclassification
involving only the subdivision or split of outstanding shares of
Common Stock of the Company), (iv) to effect any consolidation,
combination or merger into or with any other Person or Persons
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to
affect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or
any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof) or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on
which such reclassification, consolidation, combination, merger,
sale, transfer, liquidation, dissolution or winding up is to
take place and the date of participation therein by the holders
of the shares of Common Stock of the Company, if any such date
is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 20 days
prior to the record date for determining holders of the shares
of Common Stock of the Company for purposes of such action, and
in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Common
Stock of the Company, whichever shall be the earlier.
56
(b) In case any Section 11(a)(ii) Event shall
occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible in accordance with Section
26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders
of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Common Stock of the
Company shall be deemed thereafter to refer to, if appropriate,
other securities.
Section 26. Notices. Notices or demands authorized
-------
by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Xxxx Burnie Bancorp
000 Xxxxx Xxxxxxx, X.X.
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: President
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
The Bank of Xxxx Burnie
000 Xxxxx Xxxxxxx, X.X.
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention: President
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to
the holder of any certificate representing shares of Common
Stock of the Company) shall be sufficiently given or made if
sent by first-class mail, insured, postage prepaid, addressed to
such holder at the address of such holder as shown on the
registry books of the Company.
57
Section 27. Supplements and Amendments.
--------------------------
(a) Subject to the penultimate sentence of
this Section 27(a) and with the consent of the Rights Agent,
this Agreement may be supplemented or amended at the times and
for the purposes set forth below; provided, however, that no
-------- -------
proposed supplement or amendment to this Agreement shall be
effective unless (i) there are Continuing Outside Directors and
(ii) a majority of such Continuing Outside Directors, at a
meeting of the Board duly called and held, votes in favor of the
adoption of such proposed supplement or amendment. Prior to the
Distribution Date and subject to the first and penultimate
sentences of this Section 27(a), the Company and the Rights
Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders
of certificates representing shares of Common Stock of the
Company. From and after the Distribution Date and subject to
the first and penultimate sentences of this Section 27(a), the
Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of
the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person);
provided, that this Agreement may not be supplemented or amended
--------
to lengthen, pursuant to clause (iii) of this sentence, (A) a
time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Company to redeem the
Rights, in either case at such time as the Rights are not then
redeemable or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the
rights of, or the benefits to, the holders of Rights (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate that is signed by a
Continuing Outside Director and which states that the
58
proposed supplement or amendment is in compliance with the terms
of this Section 27(a), the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Stock of the
Company.
(b) Notwithstanding the provision of Section
27(a), in the event that a majority of the Board of Directors of
the Company is elected by stockholder action at an annual or
special meeting of stockholders, then until the 180th day
following the effectiveness of such election (including any
postponement or adjournment thereof), the Rights shall not be
supplemented or amended in any manner reasonably likely to have
the purpose or effect of facilitating a Transaction with an
Interested Person.
Section 28. Successors. All the covenants and
----------
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board,
---------------------------------------
etc. For all purposes of this Agreement, any calculation of the
---
number of shares of Common Stock of the Company outstanding at
any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of the Company of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board (with, where specifically provided
for herein, the concurrence of the Continuing Outside Directors)
shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for
herein, the concurrence of the Continuing Outside Directors) or
to the Company, or as may be necessary or advisable in the
administration of this Agreement, including without limitation
the right and power to (a) interpret the provisions of this
Agreement and (b) make all determinations deemed necessary or
advisable for the administration of this Agreement (including
without limitation a determination
59
to redeem or not redeem the Rights or to amend this Agreement).
All such actions, calculations, interpretations and
determinations (including without limitation for purposes of
clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board (with, where specifically
provided for herein, the concurrence of the Continuing Outside
Directors) or the Company in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject
the Board or the Continuing Outside Directors to any liability
to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in
--------------------------
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock of the Company) any legal
or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock of the Company).
Section 31. Severability. If any term, provision,
------------
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in
--------
this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its
good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this
Agreement, the right of redemption set forth in Section 23
hereof shall be reinstated and shall not expire until the Close
of Business on the tenth Business Day following the date of such
determination by the Board.
60
Section 32. Governing Law. This Agreement, each
-------------
Right and each Rights Certificate issued hereunder shall be
deemed to be a contract under seal made under the laws of the
State of Maryland, and for all purposes this Agreement shall be
governed by and construed in accordance with the laws of the
State of Maryland applicable to contracts made and to be
performed entirely within the State of Maryland.
Section 33. Counterparts. This Agreement may be
------------
executed in any number of counterparts, and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
--------------------
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
61
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and attested,
all as of the day and year first above written.
ATTEST: XXXX BURNIE BANCORP
By:/s/Xxxx X. Xxxxxx By: /s/F. Xxxxxxx Xxxxxx, Xx.
--------------------------- --------------------------
Name: Xxxx X. Xxxxxx Name: F. Xxxxxxx Xxxxxx, Xx.
Title: Chairman of the Board Title: President and Chief
of Xxxx Burnie Executive Officer
Bancorp
ATTEST: THE BANK OF XXXX BURNIE,
as Rights Agent
By:/s/Xxxx X. Xxxxxx By: /s/F. Xxxxxxx Xxxxxx, Xx.
--------------------------- --------------------------
Name: Xxxx X. Xxxxxx Name: F. Xxxxxxx Xxxxxx, Xx.
Title: Chairman of the Board Title: President and Chief
of Xxxx Burnie Executive Officer
Bancorp
62
Exhibit A
---------
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER FEBRUARY 13, 2008, SUBJECT TO EARLIER
REDEMPTION OR EXPIRATION PURSUANT TO THE RIGHTS AGREEMENT. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. THE RIGHTS EVIDENCED BY THIS CERTIFICATE SHALL NOT
BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER
IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION FOR THE
ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE
RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY
SUCH PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF SUCH AGREEMENT.]*
_____________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
Rights Certificate
XXXX BURNIE BANCORP
This certifies that , or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the
Rights Agreement dated as of February 13, 1998, as amended,
restated, renewed or extended from time to time (the "Rights
Agreement"), between Xxxx Burnie Bancorp, a Maryland corporation
(the "Company"), and The Bank of Xxxx Burnie (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00
P.M. (New York City time) on February 13, 2008, at the office or
offices of the Rights Agent, or its successors as Rights Agent,
designated for such purpose, one fully paid, nonassessable share
of common stock, par value $1.00 per share, of the Company (the
"Common Stock"), at a purchase price of $100 per share (the
"Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase and
included Certificate duly completed and executed. The number of
Rights evidenced by this Rights Certificate (and the number of
shares of Common Stock which may be
A-2
purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase
Price as of February 13, 1998, based on the Common Stock as
constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of Rights
be exercised so that only whole shares of Common Stock will be
issued.
As more fully set forth in the Rights Agreement, from
and after the first occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights
Agreement), which is determined to have been involved in or
caused or facilitated, directly or indirectly, such Section
11(a)(ii) Event, (ii) a transferee of such Acquiring Person (or
of any such Associate or Affiliate) or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of
such Acquiring Person (or of any such Associate or Affiliate who
becomes a transferee prior
A-3
to or concurrently with such Acquiring Person becoming such),
such Rights shall become null and void without any further
action, and no holder hereof shall have any right with respect
to such Rights whether under the Rights Agreement or otherwise.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Common Stock or other
securities, which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain
events, including Triggering Events (as defined in the Rights
Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of
the Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific
A-4
circumstances set forth in the Rights Agreement. Reference is
also made to the Rights Agreement for definitions of capitalized
terms used and not defined herein. Copies of the Rights
Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the
Rights Agent.
This Rights Certificate, with or without other Rights
Certificates upon surrender at the office or offices of the
Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another
Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a
A-5
redemption price of $.01 per Right at any time prior to the
earlier of (i) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement) and (ii) the Final
Expiration Date (as defined in the Rights Agreement).
If the Company so determines, no fractional shares of
Common Stock will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral
multiples of one share of Common Stock (which may, at the
election of the Company, be evidenced by depository receipts)),
but in lieu thereof, a cash payment will be made, as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares of Common Stock 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
A-6
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 dividend or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
A-7
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of ___________________, ____
ATTEST: XXXX BURNIE BANCORP
By: ___________________ By:____________________
Secretary Title:
Countersigned:
THE BANK OF XXXX BURNIE
By: ____________________
Authorized Signature
A-8
[Form of Reverse Side of Rights Certificate]
ASSIGNMENT
----------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ___________________, ____
Signature
Signature Guaranteed:
A-9
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_________________, ____
Signature
Signature Guaranteed:
NOTICE
------
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
A-10
ELECTION TO PURCHASE
--------------------
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: XXXX BURNIE BANCORP
The undersigned hereby irrevocably elects to exercise
_______ Rights represented by this Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other Person which may be issuable or such other assets which
may be deliverable upon the exercise of the Rights) and requests
that certificates for any such shares or securities be issued in
the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name
of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
Dated:__________________, ____
Signature
Signature Guaranteed:
A-11
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of
the undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any Person who
is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:_________________, ____
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
A-12
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On February 13, 1998, the Board of Directors of Xxxx
Burnie Bancorp (the "Company") declared a dividend distribution
of one Right for each outstanding share of Company Common Stock
to stockholders of record at the close of business on February
13, 1998. Each Right entitles the registered holder to purchase
from the Company one share of Common Stock on the date of
exercise, at a Purchase Price of $100, subject to adjustment.
The terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and The Bank of Xxxx
Burnie, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights
will separate from the Common Stock and a Distribution Date will
occur upon the earlier of (i) 10 days following a public
announcement by the Company that a person (other than an Exempt
Person) or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date") or (ii) 10
business days following the commencement of a tender offer or
exchange offer that would result in a person or group
beneficially owning 10% or more of such outstanding shares of
Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after February 13,
1998 will contain a notation incorporating the Rights Agreement
by reference and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on February 13, 2008,
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will
represent the Rights. Except as otherwise determined by the
Board of Directors, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
In the event that at any time following the Rights
Dividend Declaration Date, a Person (other than an Exempt
Person) becomes the beneficial owner of 10% or more of the then
outstanding shares of Common Stock (except pursuant to an offer
for all outstanding shares of Common Stock which at least a
majority of the Continuing Outside Directors determined to be
fair to and otherwise in the best interests of the Company and
its stockholders) each holder of a Right (other than Rights held
by the party triggering the Rights and certain transferees which
are voided) will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company, subject to certain
limitations) having a value equal to two times the exercise
price of the Right. However, Rights are not exercisable
following the occurrence of the event set forth above until such
time as the Rights are no longer redeemable by the Company as
set forth below.
For example, at an exercise price of $100 per Right,
each Right not owned by an Acquiring Person (or by certain
related parties) following an event set forth in the preceding
paragraph would entitle its holder to purchase $200 worth of
Common Stock (or other consideration, as noted above) for $100.
Assuming that the Common Stock had a per share value of $30 at
such time, the holder of each valid Right would be entitled to
purchase 6.67 shares of Common Stock for $100.
The Board may, at its option, at any time after a person
becomes an Acquiring Person, exchange all or part of the
outstanding Rights (other than
B-2
Rights owned by an Acquiring Person, its affiliates, associates
or transferees, which will become void) for shares of Common
Stock at an exchange ratio of 1.5 shares of Common Stock per
Right.
In the event that, at any time following the date that any
Person becomes an Acquiring Person, (i) the Company engages in
certain mergers or other business combination transactions or
(ii) 50% or more of the Company's assets or earning power is
sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise
price of the Right.
The Purchase Price payable, and the number of shares of
Common Stock (or the number and kind of other securities or
property, as the case may be) issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common
Stock, (ii) if holders of the Common Stock are granted certain
rights or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common
Stock, or (iii) upon the distribution to holders of the Common
Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends) or of subscription rights or warrants
(other than those referred to above).
No adjustment in the Purchase Price will be required
until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company is not required to issue fractional
shares of Common Stock and in lieu thereof an adjustment in cash
will be made. For fractional shares of Common Stock, the
adjustment will be based on the market price of the Common Stock
on the last trading date prior to the date of exercise.
In general, the Company may redeem the Rights in whole,
but not in part, at any time until ten days following the Stock
Acquisition Date, at a price of $.01 per Right (payable in cash,
Common Stock or other
B-3
consideration deemed appropriate by the Board of Directors).
Under certain circumstances set forth in the Rights Agreement,
the decision to redeem shall require the concurrence of a
majority of the Continuing Outside Directors. Immediately upon
the action of the Board of Directors ordering redemption of the
Rights with, where required, the concurrence of the Continuing
Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 per Right
redemption price.
The term "Continuing Outside Directors" means (i) members
of the Board of Directors who are not Acquiring Persons, or
affiliates, associates or representatives of an Acquiring
Person, and who are not officers of the Company or any of its
subsidiaries, and were members of the Board of Directors prior
to the date of the Rights Agreement or (ii) Persons who
subsequently became members of the Board of Directors, who are
not Acquiring Persons or the affiliates, associates or
representatives of an Acquiring Person and who are not officers
of the Company or any of its subsidiaries, if such Persons'
nominations for election or election to the Board of Directors
are recommended or approved by a majority of the Continuing
Outside Directors.
Notwithstanding the foregoing, in the event that a
majority of the Board of Directors of the Company is elected by
stockholder action at an annual or special meeting of
stockholders then until the 180th day following the
effectiveness os such election (including any postponement or
adjournment thereof), the Rights shall not be redeemed if such
redemption is reasonably likely to have the purpose or effect of
facilitating a Transaction (defined as merger, consolidation or
sale of assets or any acquisition of Common Stock which would
result in a person becoming an Acquiring Person) with an
Interested Person (defined as a person or group who (i) is or
will become an Acquiring Person if such Transaction were to be
consummated, and (ii) is, or directly or indirectly proposed,
nominated or financially supported, a director of the Company in
office at the time of consideration of such Transaction who was
elected at an annual or special meeting of stockholders.
B-4
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
The Rights Agreement may be amended in certain instances so
long as there are Continuing Outside Directors and a majority of
such Continuing Outside Directors votes in favor of the proposed
amendment. Other than those provisions relating to the
principal economic terms of the Rights, any of the provisions
of the Rights Agreement may be amended prior to the Distribution
Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended in order to cure any ambiguity,
to make changes which do not adversely affect the interest of
holders of Rights (excluding the interest of any Acquiring
Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust
the time period governing redemption shall be made at such time
as the Rights are not redeemable.
Notwithstanding the foregoing, in the event that a majority
of the Board of Directors of the Company is elected by
stockholder action at an annual or special meeting of
stockholders, then until the 180th day following the
effectiveness of such election (including any postponement or
adjournment thereof), the Rights shall not be supplemented or
amended in any manner reasonably likely to have the purpose or
effect of facilitating a Transaction with an Interested Person.
Copies of the Rights Agreement are 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 incorporated
herein by reference.
B-5
