FLUKE CORPORATION
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agent
Rights Agreement
Dated originally as of July 11, 1988
As amended and restated on April 25, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions ........................................1
Section 2. Appointment of Rights Agent ................................4
Section 3. Issue of Right Certificates ................................4
Section 4. Form of Right Certificates .................................5
Section 5. Countersignature and Registration ..........................5
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates..........................................6
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights ..................................6
Section 8. Cancellation and Destruction of
Right Certificates..........................................7
Section 9. Reservation and Availability of
Common Shares ..............................................8
Section 10.Common Shares Record Date ..................................8
Section 11.Adjustment of Purchase Price, Number
of Shares or Number of Rights ..............................9
Section 12.Certificate of Adjusted Purchase
Price or Number of Shares..................................14
Section 13.Consolidation, Merger or Sale or
Transfer of Assets or Earning Power........................15
Section 14.Fractional Rights and Fractional
Shares.....................................................17
Section 15.Rights of Action ..........................................18
Section 16.Agreement of Right Holders ................................18
Section 17.Right Certificate Holder Not Deemed
a Stockholder..............................................18
Section 18.Concerning the Rights Agent ...............................19
Section 19.Merger or Consolidation or Change of
Name of Rights Agent ......................................19
Section 20.Duties of Rights Agent ....................................20
Section 21.Change of Rights Agent ....................................21
Section 22.Issuance of New Right Certificates ........................22
Section 23.Redemption ................................................22
Section 24.Exchange ..................................................23
Section 25.Notice of Certain Events ..................................24
Section 26.Notices ...................................................25
Section 27.Supplements and Amendments ................................25
Section 28.Determination and Actions by the Board of Directors, etc...25
Section 29.Successors ................................................26
Section 30.Benefits of this Agreement ................................26
Section 31.Severability ..............................................26
Section 32.Governing Law..............................................26
Section 33.Counterparts ..............................................26
Section 34.Descriptive Headings ......................................27
Exhibit A Form of Right Certificate ................................A-1
Exhibit B Summary of Shareholder Rights Agreement...................B-1
RIGHTS AGREEMENT
Agreement, dated as of July 11, 1988, between Fluke Corporation, a
Washington corporation (the "Company"), and Continental Stock Transfer &
Trust Company, (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one right (a "Right") for each Common Share (as hereinafter
defined) of the Company outstanding as of the close of business on July
22, 1988 (the "Record Date"), each Right representing the right to
purchase one Common Share, upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance
of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date, the Exchange Date and the Final Expiration
Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial owner of 25% or more of the Common Shares then outstanding,
but shall not include the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or any Subsidiary of the Company,
or any entity holding Common Shares for or pursuant to the terms of any
such plan. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such
Person to 25% or more of the Common Shares of the Company then
outstanding; provided, however, that if a Person becomes the Beneficial
Owner of 25% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person", unless such Person disposes of such
additional Common Shares prior to a Distribution Date.
(b) "Act" shall mean the Securities Act of 1933.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934 as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) 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
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or Associates
has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such person in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(iii) which are beneficially owned, directly or indirectly by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for
the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section l(d)(ii)(B)) or disposing of any
securities of the Company; or
(iv) notwithstanding subparagraphs (d)(i), (ii), or (iii) above, a
Person shall not be deemed to beneficially own securities acquired
pursuant to the Employee Stock Purchase Plan of the Company or any other
plans generally applicable to employees, officers, or Directors of the
Company.
(e) "Board of Directors" shall mean the Board of Directors of the
Company; provided, that after such time as any Person has become an
Acquiring Person, any action stated herein to be taken by the Board of
Directors shall require the presence in office of Continuing Directors
and the concurrence of a majority of the Continuing Directors.
(f) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in The Commonwealth of
Massachusetts are authorized or obligated by law or executive order to
close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., New
York time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York time, on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, par value $.25 per share, of the Company and
shall include shares of common stock which holders of other securities
(other than options, warrants or other rights to acquire shares) would
receive assuming they had converted such securities immediately before
any Record Date, Distribution Date, Exchange Date, Final Expiration
Date, Redemption Date, or Share Acquisition Date or other dates, events
or times at which pursuant to this Agreement the number of outstanding
Common Shares is to be determined or the rights of holders of Common
Shares are affected. References to certificates of, or holders of,
Common Shares shall include the certificates or holders of securities
convertible into Common Shares. The Board of Directors in connection
with the authorization and issuance of new securities convertible into
Common Shares (other than Series A Convertible Preferred Shares) shall
have the authority to modify, limit or deny the issuance of Rights to
the holders of such securities. "Common Shares" when used with reference
to any Person other than the Company shall mean the capital stock with
the greatest Voting Power, or the equity securities or other equity
interest having power to control or direct the management of such Person
or, if such other Person is a Subsidiary of another Person, of the
Person or Persons which ultimately control such first mentioned Person
and which has issued and outstanding such capital stock, equity
securities or equity interests.
(i) "Continuing Director" shall have the meaning set forth in Article
VI of the Company's Articles of Incorporation as of the date of this
Agreement. Any action, matter or question which is to be determined by
the Continuing Directors shall be determined by a majority of the
Continuing Directors who shall constitute and have the full authority of
a committee of the Board of Directors.
(j) "Current Value" shall have the meaning set forth in Section 11(a)
(iv) hereof.
(k) "Distribution Date" shall mean (i) the earlier of the tenth day
after the Share Acquisition Date, or the tenth day after the date of the
commencement (determined in accordance with Rule 14d-2 under the
Exchange Act) by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Shares for or
pursuant to the terms of any such plan) of a tender or exchange offer
the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 25% or more of the then
outstanding Common Shares, or (ii) such later date as may be fixed by a
majority vote of the Board of Directors from time to time by notice to
the Rights Agent and publicly announced by the Company.
(l) "Exchange Act" shall have the meaning set forth in Section l(c)
hereof.
(m) "Exchange Date" shall have the meaning set forth in Section 24(b)
hereof.
(n) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(o) "Permitted Offer" shall have the meaning set forth in Section 11(a)
(iii).
(p) "Person" shall mean any individual, firm, partnership, corporation
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Purchase Price" shall have the meaning set forth in Section 4
hereof.
(s) "Security" shall have the meaning set forth in Section 11(d)
hereof.
(t) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(u) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that a Person has
become an Acquiring Person.
(v) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the Voting Power of the voting equity
securities or equity interest is owned, directly or indirectly, by such
Person, or which is otherwise controlled by such Person.
(w) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(x) "Voting Power" shall mean the voting power of all securities of the
Company or other Person then outstanding generally entitled to vote for
the election of directors of the Company or other Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the
Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in
accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof and not
by separate Right Certificates, and (y) the Rights (and the right to
receive Right Certificates therefor) will be transferable only in
connection with the transfer of the underlying Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send) by
first class, insured, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter the
Company will send a copy of a Summary of Rights, in substantially the
form of Exhibit B hereto (the "Summary of Rights"), by first class,
postage prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution
Date (or earlier redemption, expiration or termination of the Rights),
the Rights will be evidenced by such certificates registered in the
names of the holders thereof. Until the Distribution Date (or earlier
redemption, expiration, exchange or termination of the Rights), the
surrender for transfer of any certificate for Common Shares outstanding
on the Record Date, with or without a copy of the Summary of Rights
attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Rights shall be issued in respect of all Common Shares that become
outstanding (whether originally issued or from the Company's treasury or
upon transfer or exchange) after the Record Date but prior to the
earlier of the Distribution Date or the Final Expiration Date or, in
certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates issued for Common Shares that shall
become outstanding or shall be transferred or exchanged after the Record
Date but prior to the earlier of the Distribution Date or the Final
Expiration Date shall also be deemed to be certificates for Rights, and
shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between Fluke
Corporation (the "Company") and Continental Stock Transfer & Trust
Company, dated as of July 11, 1988 (as amended 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 executive
offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of written request therefore. As
described in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights Agreement) shall
become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Common Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as
Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation 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 automated quotation system through
which the Rights are quoted, or to conform to usage. Subject to the
earlier redemption, exchange or termination, the Right Certificates
shall entitle the holders thereof to purchase such number of Common
Shares as shall be set forth therein at the price per share set forth
therein (the "Purchase Price"), but the number of such shares and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its President, or any Vice
President, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for
any purpose unless countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and
delivered by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate.
Subject to the provisions of Section 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close
of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to
Section 11(a) (ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Common Shares as the
Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the Rights Agent, and
shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights
Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the
Company's request, reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7 . Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole
or part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the
Purchase Price for each Common Share (or such other number of shares or
other securities or consideration) as to which the Rights are exercised,
at or prior to the earliest of (i) the Close of Business on July 22,
1998 (the "Final Expiration Date"), (ii) the consummation of a
transaction contemplated by Section 13(d) hereof, (iii) the time at
which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"), or (iv) the time at which such Rights are exchanged
as provided in Section 24 hereof.
(b) The Purchase Price for each Common Share pursuant to the exercise
of a Right shall initially be $60.00, and shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied
by payment of the Purchase Price for the shares (or other securities or
property) to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check, cashier's check,
bank draft or money order payable to the order of the Company, the
Rights Agent shall thereupon, subject to Section 20(j), promptly (I) (A)
requisition from any transfer agent of the Common Shares certificates
for the number of Common Shares to be purchased the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depository agent depository
receipts representing such number of Common Shares as are to be
purchased (in which case certificates for the Common Shares represented
by such receipts shall be deposited by the transfer agent with the
depository agent) and the Company hereby directs the depository agent to
comply with such request, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, deliver such cash to or upon the
order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder
of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, if an
Acquiring Person or an Associate or Affiliate of an Acquiring Person
engages in or there occurs one or more of the transactions set forth in
Section 13(a) on or after the time the Acquiring Person became such,
then any Rights that are or were on or after the earlier of the
Distribution Date or the Share Acquisition Date beneficially owned by an
Acquiring Person or any Associate or Affiliate thereof shall become void
with respect to the rights provided under Section 13(a) and any holder
of such Rights shall thereafter have no right to exercise such Rights
under the provisions of Section 13(a).
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless the certificate
contained in the appropriate form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such exercise
shall have been properly completed and duly executed by the registered
holder thereof and the Company shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired
by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company, or
shall, at the written request of the Company, destroy such canceled
Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares. The Company
covenants and agrees that it shall take all action necessary to comply
with Sections 11(a) (iv) and 24(c) hereof.
If the Common Shares (or other securities issuable upon the exercise of
the Rights) are listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares (or other securities) reserved for
such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Common Shares (and/or other
securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and, with respect to Common Shares or other
securities, fully paid and non assessable.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right
Certificates or of any Common Shares (or other securities delivered)
upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depository receipts for the
Common Shares in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates or depository receipts for Common Shares
upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at
the time of surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
The Company shall use its best efforts to (i) file, as soon as
practicable following the Share Acquisition Date, a registration
statement under the Act, with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of
the Act the rules and regulations thereunder) until the date of the
expiration of the exercisability of the Rights provided by Section 11(a)
(ii). The Company will also take such action as may be appropriate under
the blue sky laws of the various states.
Section 10. Common Shares Record Date. Each person in whose name any
certificate for Common Shares is issued upon the exercise of Rights (or
other securities) shall for all purposes be deemed to have become the
holder of record of the Common Shares (or other securities) represented
thereby on, and such certificate shall be dated, the date upon which the
Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment
is a date upon which the Common Shares (or other securities) transfer
books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Common Shares
transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Common Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares (C) combine
the outstanding Common Shares into a smaller number of Common Shares or
(D) issue any shares of its capital stock in a reclassification of the
Common Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a
time when the Common Shares transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one
Right. If an event occurs which would require an adjustment under both
Section 11(a) (i) and Section 11(a) (ii) the adjustment provided for in
this Section 11(a) (i) shall be in addition to, and shall be made prior
to any adjustment required pursuant to Section 11(a) (ii).
(ii) (A) Subject to Section 24 of this Agreement, in the event any
Person shall become an Acquiring Person (other than through an
acquisition described in subparagraph (iii) of this paragraph (a)), then
each holder of a Right shall, for a period of 60 days after the later of
the occurrence of any such event and the effective date of an
appropriate registration statement pursuant to Section 9 (plus any
period during which the exercise of the Rights has been suspended
pursuant to Section 11(a) (iv) or 24(c) hereof), have a right to
receive, upon exercise thereof on and after the Distribution Date at the
then current Purchase Price in accordance with the terms of this
Agreement, such number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price
by the then number of Common Shares for which a Right is then
exercisable and dividing that product by (y) 50% of the current market
price per share of Common Shares (determined pursuant to Section 11(d))
on the date of the occurrence of the event set forth in this
subparagraph (ii); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a) (ii). In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding, the Company
shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights, other than as specifically
provided for herein.
(B) Notwithstanding anything in this Agreement to the contrary, from and
after the time any Person becomes an Acquiring Person, any Rights
beneficially owned by (i) such Acquiring Person or an Associate or
Affiliate of such Acquiring Person, (ii) a transferee of such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person became such, or (iii) a transferee of such
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person's becoming
such and receives such Rights pursuant to either (A) a transfer (whether
or not for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person, or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which
the Continuing Directors have determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance
of this Section 11(a) (ii), shall become null and void without any
further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section 11(a) (ii) are
complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. No Right Certificate shall be
issued pursuant to Section 3 that represents Rights beneficially owned
by an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights
to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any
nominee of such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence
shall be canceled.
(iii) The right to buy Common Shares of the Company pursuant to
subparagraph (ii) of this paragraph (a) shall not arise as a result of
any Person becoming an Acquiring Person through a purchase of Common
Shares pursuant to a tender or exchange offer for all outstanding Common
Shares made in the manner prescribed by Section 14(d) of the Exchange
Act and the rules and regulations promulgated thereunder; provided,
however, that such tender or exchange offer occurs at a time when
Continuing Directors are in office and the Continuing Directors then in
office have determined that the offer is in the best interest of the
Company and its stockholders (such offer shall be hereinafter defined to
be a "Permitted Offer").
(iv) In the event that there shall not be sufficient Common Share.
authorized and available to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall
either take such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights or alternatively,
at the option of a majority of the Board of Directors, with respect to
each Right (A) pay cash in an amount equal to the Purchase Price, in
lieu of, issuing Common Shares and requiring payment therefore, or (B)
issue debt or equity securities or a combination thereof, having a value
equal to the Current Value of the Common Shares (as defined
hereinafter), where the value of such securities shall be determined by
a nationally recognized investment banking firm selected by the Board of
Directors, and require the payment of the Purchase Price, or (C) deliver
any combination of cash, property, Common Shares and/or other securities
having a value equal to the Current Value, and require payment of all or
any requisite portions of the Purchase Price. The Current Value shall be
the product of the current market price per share of Common Shares
(determined pursuant to Section 11(d) on the date of the occurrence of
the event described above in subparagraph (ii)) multiplied by the number
of Common Shares for-which the Right otherwise would be exercisable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (A), (B)
or (C) of the proviso of this Section 11(a) (iv), the Board of Directors
may temporarily suspend the exercisability of the Rights for a period of
up to 60 days following the date on which the event described in Section
11(a) (ii) shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of
distribution to be made pursuant to the above provision 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.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or securities
convertible into Common Shares) at a price per Common Share (or having a
conversion price per share, if a security convertible into Common
Shares) less than the then current market price per share of the Common
Shares (as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Common Shares outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the total number of Common
Shares to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the number of
Common Shares outstanding on such record date plus the number of
additional Common Shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent. Common Shares
owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in
the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect had such record date not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Common Shares "including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than cash dividends that have been
approved by the Board of Directors in amounts that do not exceed
retained earnings of the Company or dividends payable in Common Shares)
or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record
date shall be determined by subtracting from the Purchase Price in
effect immediately prior to such record date the fair market value (as
determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with and binding on the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants
distributable in respect of one Common Share; provided, however, that in
no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect had such record date not been fixed.
(d) For the purpose of any computation under Section 11(d), the
"current market price" per share of any security (a "Security" for the
purpose of this Section 11(d)) on any date shall be deemed to be the
average of the daily closing prices per share (or other trading unit) of
such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
that in the event that the current market price per share of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current market price
per share shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the American Stock Exchange or, if the
Security is not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or admitted
to trading or, if the Security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over the
counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system
then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors. If on any such date no market maker
is making a market in the Security, the fair value of such Security on
such date as determined reasonably and with good faith by the Continuing
Directors shall be used and shall be binding on the Rights Agent. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Security is not publicly held or not so listed or
traded "current market price" per share shall mean the fair value per
share determined reasonably and with good faith to the holders of Rights
by the Continuing Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one
thousandth of a Common Share, other share or security as the case may
be. Notwithstanding the first sentence of this Section 11(e) any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) the
holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in Section 11(a) through
(c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Common Shares shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of Common Shares (calculated to the nearest thousandth of a
share) obtained by (i) multiplying (x) the number of Common Shares
covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Common Shares
for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the amount of Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and 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 Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Common Shares issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of Common Shares which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Shares
issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
non assessable Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date of the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise
over and above the Common Shares and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11,
as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the
Common Shares, issuance wholly for cash of any Common Shares at less
than the current market price, issuance wholly for cash of Common Shares
or securities which by their terms are convertible into or exchangeable
for Common Shares, dividends on Common Shares payable in Common Shares
or issuance of rights, options or warrants referred to hereinabove in
Section 11, hereafter made by the Company to holders of its Common
Shares shall not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare or pay any
dividend on the Common Shares payable in Common Shares, (ii) subdivide
the outstanding Common Shares, (iii) combine the outstanding Common
Shares into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the outstanding Common Shares, or
issued or delivered thereafter but prior to the Distribution Date, the
number of Rights associated with each Common Share then outstanding
shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Shares following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Shares immediately prior to
such event by a fraction the numerator of which shall be the total
number of Common Shares outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total number of
Common Shares outstanding immediately following the occurrence of such
event.
(o) The exercise of Rights under Section 11(a) (ii) shall only result
in the loss of rights under Section 11(a) (ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent
for the Common Shares or the Common Shares a copy of such certificate
and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof. 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 that, following the Share Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and
into, any other Person, (y) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger (other than in the
case of either transaction described in (x) or (y), a merger or
consolidation which would result in all of the Voting Power represented
by the securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting
Power represented by the securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation and
the holders of such securities not having changed as a result of such
merger or consolidation), or (z) the Company shall sell, mortgage or
otherwise transfer (or one or more of its Subsidiaries shall sell,
mortgage or otherwise transfer), in one or more 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, then, and in each such case, proper provision shall have been
made pursuant to subsection (e) below so that (i) following the
Distribution Date, each holder of a Right, subject to Section 7(e),
shall 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 shares of freely traceable Common Shares of the Principal
Party (as hereinafter defined), free and clear of liens, rights of call
or first refusal, encumbrances or other adverse claims, as shall be
equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of Common Shares for which a Right is then
exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a) (ii) hereof) and dividing that product by (2)
50% of the current market price per share of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on the
date of consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all
of the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply to such Principal Party; and (iv) such
Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
its Common Shares thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y) of the first
sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such
merger or consolidation, and if no securities are so issued, the Person
that is the other party to the merger or consolidation (including, if
applicable, the Company if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such
case, (1) if the Common Shares of such Person are not at such time and
have not been continuously over the preceding twelve month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary or Affiliate of another Person the Common
Shares of which are and have been so registered, "Principal Party" shall
refer to such other Person; (2) in case such Person is a Subsidiary,
directly or indirectly, or Affiliate of more than one Person, the Common
Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer
of the Common Shares having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (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.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Shares that 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 each Principal Party and each other Person who may become a
Principal Party as a result of such consolidation, merger, sale or
transfer shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger, sale or
transfer of assets mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense 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, will use its best efforts to cause
such registration statement to become effective as soon as practicable
after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Final Expiration
Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
material respects with the requirements for registration on Form 10
under the Exchange Act. The provisions of this Section 13 shall
similarly apply to successive mergers or consolidations or sales or
other transfers. The rights under this Section 13 shall be in addition
to the rights to exercise Rights and adjustments under Section 11(a)
(ii) and shall survive any exercise thereunder.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if: (i) such transaction is consummated
with a Person or Persons who acquired Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person or
Persons); (ii) the price per share of Common Shares offered in such
transaction is not less than the price per share of Common Shares paid
to all holders of Common Shares whose shares were purchased pursuant to
such Permitted Offer; and (iii) the form of consideration being offered
to the remaining holders of Common Shares pursuant to such transaction
is the same as the form of consideration paid pursuant to such Permitted
Offer. Upon consummation of any such transaction contemplated by this
subsection (d), all Rights hereunder shall expire.
(e) After the Share Acquisition Date, the Company covenants and agrees
that it shall not (i) consolidate with, (ii) merge with or into, or
(iii) sell or transfer to, in one or more 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, any other Person,
if at the time of or after such consolidation, merger or sale there are
any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding, agreements in effect or any other
action taken which would diminish or otherwise eliminate the benefits
intended to be afforded by the Rights. The Company shall not consummate
any such consolidation, merger or sale unless prior thereto the Company
and such other Person shall have executed and delivered to the Rights
Agent a supplemental agreement evidencing compliance with this
subsection.
(f) The Company covenants and agrees that, after the Share Acquisition
Date, it will not, except as permitted by Section 24 or Section 27
hereof, take any action the purpose or effect of which is to diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
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(n) or to
distribute Right Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the purposes
of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the American
Stock Exchange or, if the Rights are not listed or admitted to trading
on the American Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices in the over the counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the Rights selected by the Continuing Directors. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined in good faith by the Continuing
Directors shall be used.
(b) The Company shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares,
the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Common
Share. For purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of 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 the Right expressly
waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except those rights of action vested in the Rights Agent, are
vested in the respective registered holders of the Right Certificates
(and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the
consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement; provided, that any such
suit alleging that a modification to this Agreement was contrary to the
terms hereof must be brought within six (6) months after any publication
by the Company of such modification. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to
specific performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any Person
subject to, this Agreement. Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys' fees,
incurred by them in any good faith action to enforce the provisions of
this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Bolder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Common
Shares or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Common Shares
or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the stock transfer or corporate trust business
of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates
shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under
its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates
either in its prior name or in its changed name; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by any one of the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or
in any Right Certificate; nor shall it be responsible for any change in
the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for
in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor shall it
by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Common Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any
Common Shares will, when issued, be validly authorized and issued, fully
paid and non assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from any one of the President, any Vice-President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted
by the Rights Agent under this Rights Agreement and the date on and/or
after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by,
or omission of, the Rights Agent in accordance with a proposal included
in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after
the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking any such action (or 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 or become interested in any transaction in
which the Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not
be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of
its rights if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be,
has either not been completed or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first class mail.
The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the
Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such
resignation or incapacity by resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the
laws of the United States or of any state of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer
powers, satisfies all applicable requirements of any national exchange
on which the Common Shares or Rights are listed, is subject to
supervision or examination by federal or state authority and has at the
time of appointment as Rights Agent a combined capital of at least
$50,000,000. After appointment the Rights Agent shall be vested with the
same powers, duties and responsibilities as if it had been or named as
Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to successor Rights Agent any property
at the time held hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment Company shall file
notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares, and mail a notice in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of
this Agreement.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to subsection (b) of this Section 23 and shall not be redeemed
in any other manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth day
after the Distribution Date (or, if the Distribution Date shall have
occurred prior to the Record Date, the Close of Business on the tenth
day following the Record Date), or (ii) the Final Expiration Date,
redeem all but not less than all the 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"), and the Company may,
at its option, pay the Redemption Price in Common Shares (based on the
"current market value", as defined in Section 11(d) hereof, of the
Common Shares at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of Directors.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to subsection (b)
of this Section 23, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price. The Company shall promptly give public notice of any
such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to subsection (b), the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made.
(d) The Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the
manner of redemption of the Rights and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last
addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer
Agent of the Common Shares, and upon such action, all outstanding Rights
Certificates shall be null and void without any further action by the
Company.
Section 24. Exchange.
(a) Subject to subsection (c) below, the Company may, at its option, by
majority vote of the Board of Directors, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect
such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
any such Subsidiary, or any entity holding Common Shares for or pursuant
to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more
of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 (such date, the "Exchange Date") and without any
further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(i) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
authorized and available to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall
either take such action as may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights or alternatively,
at the option of a majority of the Board of Directors, with respect to
each Right (A) pay cash in an amount equal to the Purchase Price, in
lieu of issuing Common Shares in exchange therefore, or (B) issue debt
or equity securities or a combination thereof, having a value equal to
the Current Value of the Common Shares (as defined hereinafter)
exchangeable for each such Right, where the value of such securities
shall be determined by a nationally recognized investment banking firm
selected by the Board of Directors by majority vote of the Board of
Directors, or (C) deliver any combination of cash, property, Common
Shares and/or other securities having a value equal to the Current Value
in exchange for each Right. The Current Value shall be the product of
the current market price per share of Common Shares (determined pursuant
to Section 11(d) on the date of the occurrence of the event described
above in subparagraph (a)) multiplied by the number of Common Shares for
which the Right otherwise would be exchangeable if there were sufficient
shares available. To the extent that the Company determines that some
action need be taken pursuant to clauses (A), (B) or (C) of the proviso
of this Section 24(c), the Board of Directors may by majority vote of
the Board of Directors temporarily suspend the exercisability of the
Rights for a period of up to 60 days following the date on which the
event described in Section 24(a) shall have occurred, in order to seek
any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above
provision 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.
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence Fractional Common
Shares. In lieu of such fractional Common Shares, there shall be paid to
the registered holders of the Right Certificates with regard to which
such fractional Common Shares would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole
Common Share. For the purposes of this subsection (d), the current
market value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Common Shares or to make any
other distribution to the holders of its Common Shares (other than a
regular quarterly cash dividend out of earnings or retained earnings of
the Company), (ii) to offer to the holders of its Common Shares rights
or warrants to subscribe for or to purchase any additional Common Shares
or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Common Shares
(other than a reclassification involving only the subdivision of
outstanding Common Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% of more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to, any other
Person, 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 Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above
at least 20 days prior to the record date for determining holders of the
Common Shares for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
the Common Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) of this Agreement
shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with Section
26 hereof, a notice of the occurrence of such event, which notice shall
describe the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if
delivered or if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
Fluke Corporation
6920 Seaway Boulevard
Everett, WA 98203
Attention: Vice President, General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if delivered or if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing
with the Company) as follows:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate
shall be sufficiently given or made if sent by first-class mail postage
prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein or to make any other
provisions which the Company may deem necessary or desirable and which
shall be consistent with, and for the purpose of fulfilling, the
objectives of the Board of Directors in adopting this Agreement, any
such supplement or amendment to be evidenced by a writing signed by the
Company and the Rights Agent; provided, however, that from and after
such time as any Person becomes an Acquiring Person, this Agreement
shall not be amended in any manner which would adversely affect the
interests of the holders of Rights. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment
unless the Rights Agent shall have determined in good faith that such
supplement or amendment would adversely affect its interests under this
Agreement. Prior to the Distribution Date, the interests of the holders
of Rights shall be deemed coincident with the interests of the holders
of Common Shares.
Section 28. Determination and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common
Shares or any other securities of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act as in effect on the date of this Agreement; provided, however, that
a Person shall not be deemed to beneficially own securities acquired
pursuant to the Employee Stock Purchase Plan of the Company or other
plans generally applicable to employees, officers, or Directors of the
Company. The Continuing Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause
(y) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights
Certificates and all other parties, and (y) not subject the Board to any
liability to the holders of the Rights Certificates.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares)
any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 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.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of
the State of Washington and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State except for
Sections 18, 19, 20 and 21 hereof which for all purposes shall be
governed by and construed under the laws of the State of New York.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above
written.
Attest: FLUKE CORPORATION
a Washington corporation
By By
Title: Corporate Secretary Title: President
Attest: CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By By
Title: Account Manager Title: Vice President
Exhibit A
Form of Right Certificate
Certificate No. R- Rights
NOT EXERCISABLE AFTER JULY 22, 1998 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON, OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
FLUKE CORPORATION
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 July 11, 1988 (the
"Rights Agreement"), between Fluke Corporation, a Washington corporation
(the "Company"), and Continental Stock Transfer & Trust Company (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M., New York time, on July 22, 1998 at the office of the
Rights Agent designated for such purpose, or at the office of its
successor as Rights Agent, one share of common stock, par value $.25 per
share (the "Common Shares"), of the Company, at a purchase price of
$60.00 per Common Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to
Purchase and Certificate duly executed. The number of Rights evidenced
by this Right Certificate (and the number of Common Shares which may be
purchased upon exercise hereof) set forth above, and the Purchase Price
set forth above, are the number and Purchase Price as of , based
on the Common Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of Common Shares which may be purchased upon the exercise of the rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties
and immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on
file at the principal executive offices of the Company and the above
mentioned offices of the Rights Agent and are also available upon
written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a
like aggregate number of Common Shares as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised
(other than pursuant to Section 11(a) (ii) of the Rights Agreement) in
part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole
Rights not exercised. If this Right Certificate shall be exercised in
whole or in part pursuant to Section 11(a) (ii) of the Rights Agreement,
the holder shall be entitled to receive this Rights Certificate duly
marked to indicate that such exercise has occurred as set forth in the
Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption
price of $.01 per Right or (ii) may be exchanged by the Company in whole
or in part for Common Shares or other consideration as determined by the
Company.
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common
Share or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of 19 .
ATTEST: FLUKE CORPORATION
By By
Countersigned: CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By By
Authorized Officer
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
transfers unto .
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: , 19
Signature
Signature Guaranteed
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To FLUKE CORPORATION:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of Common
Stock (or such other securities of the Company) issuable upon the
exercise of the Rights and requests that a certificate for such shares
be issued in the name of and delivered to:
(Please insert social security or other identifying number)
No.
(Please print name and address)
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to the Rights Agreement shall be
returned to the undersigned unless such person requests that the Rights
Certificate be registered in the name of and delivered to:
Please insert social security or other identifying number (complete only
if Rights Certificate is to be registered in a name other than the
undersigned)
(Please print name and address )
Dated: , 19
Signature
Signature Guaranteed
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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 as defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold assigned and
transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person.
Date: , 19
Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
Certificate other than pursuant to Section 11(a)(ii) of the
Rights Agreement.)
To : FLUKE CORPORATION:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates
for such Common Shares be issued in the name of:
Please insert social security or other identifying number
No.
(Please print name and address of transferee)
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to the Rights Agreement shall be
returned to the undersigned unless such person requests that the Rights
Certificate be registered in the name of and delivered to:
Please insert social security or other identifying number
No.
(Please print name and address of transferee)
Dated: ,19
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or
and Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
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 as defined pursuant to the Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the - Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person.
Date: ,19
Signature
NOTICE
The signature to the foregoing Election to Purchase 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.
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is
not completed, the Company and the Rights Agent will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and such Assignment or Election to Purchase will not
be honored.
Exhibit B
SUMMARY OF SHAREHOLDER RIGHTS
AGREEMENT
FLUKE CORPORATION
On July 11, 1988, Fluke Corporation (the "Company") declared a dividend
of one right ("Right") for each outstanding share of Fluke Corporation
common stock and the shares of common stock issuable upon the conversion
of other securities ("Common Shares"), payable to shareholders of record
as of July 22, 1988.
Initially, the Rights will be represented by the Company's Common Share
certificates and will automatically be transferred with and only with
the Company's Common Shares. At some future "Distribution Date," the
Rights could become exercisable and could at the same time begin trading
separately from the Common Shares. Separate Rights certificates would be
mailed to holders of record as of the Distribution Date.
A "Distribution Date" would occur on the tenth day after (1) a person
or group ("Acquiring Person") has acquired 25% or more of the Company's
Common Shares or has commenced a tender or exchange offer which could
result in the acquisition of 25% or more of the Common Shares or (2)
such later date as might be fixed by a majority of the Company's
"Continuing Directors" (members of the Board of Directors who are not
affiliated with the Acquiring Person).
Upon the Distribution Date each Right will entitle the holder to
purchase one Common Share for $60.00. In the event that an Acquiring
Person gains control of 25% or more of the Common Shares, (1) any Rights
held by that person or related persons will be void, and (2) for a
period of at least 60 days, all other Rights holders may purchase Common
Shares having a market value of $120.00 at half the then-current price.
For example, if the average price of the Common Shares for the 30
trading days prior to the announcement of the existence of the Acquiring
Person was $20.00 per Common Share, then each Right holder would be
entitled to purchase 6 additional Common Shares (total market value
$120.00 for $60.00).
If the Company engages in a merger or other business combination with
or transfers more than 50% of its assets or earning power to another
entity (Acquiring Entity) after public announcement that a person or
group has acquired 25% of the Common Shares, each Right not held by the
Acquiring Person or related persons will entitle its holder to purchase
$120.00 worth of the Acquiring Entity's Stock for $60.00, unless the
Acquiring Entity has acquired its Common Shares in a tender or exchange
offer deemed by the Continuing Directors to be in the best interest of
the Company and its shareholders.
While an Acquiring Person controls 25% but before such person has
acquired 50% of the Common Shares, a majority of the Continuing
Directors may cause an exchange of all or part of the Rights (except
those owned by an Acquiring Person) for Common Shares at an exchange
ratio of one Common Share for each Right. The exercise or exchange of
Rights for Common Shares is subject to availability of a sufficient
number of authorized but unissued Common Shares. If the required number
of shares is not authorized, the Company may authorize the issuance of
cash, debt, stock or combinations thereof in exchange for the Rights.
Outstanding Rights may in no event be exercised if a majority of the
Continuing Directors determines that a particular tender or exchange
offer is in the best interest of the Company and its shareholders.
Furthermore, the exercise price payable, the number of Common Shares,
and other securities or property issuable upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution
resulting from (1) a stock dividend on, or subdivision, combination or
reclassification of the Common Shares, or (2) the issuance of certain
rights or warrants to subscribe for or purchase the Common Shares or
securities that are convertible into Common Shares at less than
then-current market price, or (3) a distribution to the Company's
shareholders of evidence of indebtedness or assets (excluding cash
dividends paid out of retained earnings or dividends payable in Common
Shares) or other subscription rights or warrants.
The Company may redeem unexercised Rights for a price of $0.01 per
Right at any time prior to the earlier of their expiration date or 5:00
p.m. New York time on the tenth day following the Distribution Date. The
redemption price may be paid in cash, Common Shares, or any other form
of consideration deemed appropriate by the Continuing Directors. A
majority vote of the Continuing Directors is required to authorize
redemption of the Rights.
The Rights will expire 5:00 p.m. New York time on July 22, 1998 if they
have not been exchanged or redeemed by the Company as described above,
unless the expiration date is extended by the Board of Directors.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights, except that once any
person becomes an Acquiring Person, no amendment may adversely affect
the interests of other Rights holders. At no time will the Rights have
any voting rights.
The distribution of the Rights is not a taxable event for the Company
or its stockholders under the federal income tax laws, and the
distribution of Right Certificates would not of itself create a tax
liability. After such physical distribution, the Rights would be treated
for tax purposes as capital assets in the hands of most stockholders the
tax basis of each Right would be an allocable part of the tax basis of
the stock to which the Right was originally attached, and the holding
period of each Right would relate back to the holding period of the
stock.
When the Rights become exercisable rights to purchase or be exchanged
for additional Company Common Shares, holders probably would not have a
taxable event. However, if the Rights become rights to purchase an
Acquiring Entity's common stock or to receive cash, debt securities or
Company stock that is not considered "common stock" under section 305 of
the Internal Revenue Code of 1986, holders probably would be taxed even
if their Rights were not exercised or exchanged. The redemption of the
Rights for cash would be a taxable event.
The Rights might be treated as "boot" in a tax-free reorganization
involving the Company. If so, their market value would be taxable and
the Company might be precluded from undertaking certain forms of
tax-free reorganization. If the Company has a net operating loss
carryover on the Distribution Date, the distribution of the Rights and
subsequent transactions relating to the Rights could limit the loss.
The Rights have certain anti-takeover effects. They may cause
substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors, but they will
not interfere with any merger or other business combination where the
acquiring party is willing to negotiate with the Board of Directors and
the Board of Directors determines the transaction is in the best
interest of the Company and its shareholders. In addition, the Rights
will not preclude a proxy contest.
The description and terms of the Rights are set forth in full in a
Rights Agreement between the Company and Continental Stock Transfer &
Trust Company. A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated July 11, 1988. A copy of the Rights
Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.